Solv Protocol: Exploring the Staking Abstraction Layer and Liquidity Mechanism in the BTCFi Ecosystem

Solv Protocol is a project established in 2020, aiming to lower the barriers to creating and using on-chain financial tools, bringing a diverse range of asset classes and yield opportunities to the crypto space. Solv Protocol focuses on minting and trading NFTs related to financial ownership certificates. In 2024, with the continuous development of the BTCFi track, Solv Protocol has shifted its focus to BTCFi, creating the full-chain yield Bitcoin asset SolvBTC, aimed at providing new opportunities and possibilities for Bitcoin holders while creating an efficient BTCFi ecosystem. Recently, Solv Protocol launched the staking abstraction layer (SAL), designed to simplify and standardize the cross-chain Bitcoin staking process, abstracting the complexity of Bitcoin staking scenarios, enabling users and developers to adopt it quickly.

Project Basic Information

Basic Information

Website:

Twitter:

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DC:

Github:

White Paper:

Launch time: June 2021 mainnet launch, Solv Protocol has not issued tokens.

Project Team

Core Team

Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University, previously served as co-founder at Beijing Youzan Technology, focusing on applying blockchain technology to automotive industry databases. Additionally, he worked as a financial analyst at Singularity Financial, researching the integration of blockchain technology and financial regulation.

Will Wang : Co-founder. He created "ERC-3525: Semi-homogeneous Token Standard" and has 20 years of experience in the financial IT field. He has led the design and development of the world's largest banking accounting system based on open platforms and distributed technology, and is a recipient of the "20th Anniversary Outstanding Contribution Award of Zhongguancun."

Meng Yan: Co-founder. Formerly served as Vice President of CSDN, and he is also an active KOL in the Crypto industry.

Financing Status

Solv Protocol has raised approximately $29 million through three rounds of financing.

Angel Round

• On November 10, 2020, announced the completion of a $6 million angel round financing, led by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, JD Capital, BincVentures, and Emirates Consortium.

Seed Round

• On May 8, 2021, it was announced that a seed round financing of 2 million dollars was completed, invested by Binance Labs.

• On August 30, 2021, it was announced that a $4 million seed round financing had been completed, led jointly by Blockchain Capital, Sfermion, and Gumi Cryptos Capital, with participation from DeFi Alliance, Axia 8 Ventures, TheLao, CMSholdings, Apollo Capital, Shima Capital, SNZ Holding, Spartan Group, and others;

• On August 1, 2023, it was announced that a $6 million seed round financing has been completed, with investments from institutions including Laser Digital, an investment arm of Japanese banking giant Nomura Securities, UOB Venture Management, Mirana Ventures, Emirates Consortium, Matrix Partners China, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.

Strategic Round

• On October 14, 2024, it was announced that a $11 million strategic financing has been completed, with participation from companies such as Laser Digital, Blockchain Capital, and OKX Ventures.

During the three rounds of financing, Solv Protocol raised a total of 29 million USD, and well-known investment institutions such as Binance Labs, Blockchain Capital, Laser Digital, Jingwei China, and OKX Ventures made significant investments in it, indicating that the capital sector is quite optimistic about the future development of Solv Protocol.

Development Strength

The Solv Protocol was established in 2020. Key events in the project's development are shown in the table:

From the perspective of key events in the development of the Solv Protocol project, Solv Protocol has been diligently working to lower the threshold for creating and using on-chain financial tools. This has enabled Solv Protocol to quickly issue SolvBTC, a wrapped asset of BTC, after the emergence of the BTCFi track, and swiftly capture the LST market based on BTC. In terms of the timeline for achieving various key technical milestones, Solv Protocol has completed the development of project technology on schedule, demonstrating the strong capabilities of the Solv Protocol technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market value of over $1.3 trillion. However, BTC holders have long simply held their BTC without unlocking its potential value like ETH. Therefore, Solv Protocol advocates unlocking $1.3 trillion of BTC asset potential through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi, launching the full-chain yield BTC asset SolvBTC, which can release the staking liquidity of BTC. Recently, it also introduced the concept of Staking Abstraction layer (SAL), marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated staking platform

In the Solv Protocol architecture, the staking process is broken down into four key roles, which are closely linked together through an integrated platform architecture:

• LST Issuers (LST Issuers): Create liquidity yield tokens (LST) that are pegged to staked Bitcoin. Solv is currently the largest Bitcoin LST Issuer in the market. It allows users to maintain asset liquidity while staking the Token (LST), participating in DeFi and other yield activities.

• Staking Protocols (Staking Protocols): Manage users' deposited BTC and provide secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, etc. offer sources of BTC staking returns, allowing users to earn rewards from POS chains by staking BTC in POS networks.

• Staking Validators (Staking Validators): For example, Ceffu, Cobo, Fireblocks, Solv Guard, etc., are responsible for verifying transactions, ensuring the legality and security of staking transactions, verifying that the staked Bitcoin corresponds to LST Token, and timely updating the verification status.

• Yield Distributors (Yield Distributors): Ensure that staking rewards are transparently and fairly distributed to LST holders, guaranteeing that users can receive their staking returns in a timely manner. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.

Solv Protocol integrates these four key roles to build a complete Bitcoin staking ecosystem. By integrating the staking protocol, LST issuers, validators, and yield distributors, it achieves seamless interaction between the Bitcoin mainnet and EVM-compatible chains, simplifying staking implementation for users and developers. The staking protocol provides the source of yield from staking Bitcoin, LST issuers issue liquidity staking tokens to keep users' assets liquid during the staking period, validators are responsible for verifying the legality and security of staking transactions, and yield distributors are responsible for transparently distributing the yields generated from staking to LST holders. This provides users with a more convenient, secure, and attractive staking experience.

Staking Abstraction layer(SAL)staking abstraction layer

Staking Abstraction Layer (SAL) is a modular architecture designed to facilitate secure and efficient BTC accounting through key components that interact with the Staking Parameter Matrix (SPM). The key modules of SAL include LST generation module, transaction generation module, verification nodes, and yield distribution module, all of which rely on SPM to define transaction rules, validation standards, and yield calculations. These components together form a framework that ensures the security, transparency, and efficiency of BTC accounting and LST issuance, enabling users to maximize returns while minimizing risks associated with the accounting process and cross-chain interactions.

Staking Parameter Matrix ( SPM ): The function of the SPM module is to standardize the various settings and parameters for BTC staking. SPM provides developers with a simple and standard set of rules, allowing them to more easily integrate BTC staking scenarios into their applications without having to design complex systems from scratch.

LST Generation Module: The purpose of the LST generation module is to simplify the issuance of cross-chain liquidity stake Token ( LST ). The issuance process of cross-chain stake Tokens has been standardized and automated, allowing users to participate in complex cross-chain operations without manual involvement. This module enables LST issuers to quickly and conveniently issue liquidity stake Tokens and distribute these Tokens to users.

Transaction Generation Module: The purpose of the transaction generation module is to automatically generate and broadcast BTC stake transactions. Simply put, the job of this module is to automatically create and send stake transactions to the BTC mainnet. Previously, users had to manually perform many steps, but now this module will automatically help users complete most of the work, making the staking process much easier.

Verification Nodes: Real-time verification of the legality and security of staking transactions. The role of verification nodes is to ensure that all staking transactions are lawful and secure. When users stake, these nodes will check and verify the correctness of the transaction, confirming it only after ensuring there are no issues.

Revenue Distribution Module: Responsible for correctly mapping the staking rewards to LST holders. When users earn rewards through staking, the revenue distribution module will be responsible for correctly distributing these rewards into the users' LST Tokens. Users can receive corresponding staking rewards based on the proportion of LST Tokens they hold.

In summary, SAL serves as a staking abstraction layer, characterized by its integration of multiple staking participants (, including Bitcoin staking providers, yield acquisition, and DeFi scenario unlocking ), abstracting and encapsulating these complex processes into standardized modules. This enables developers to quickly integrate Bitcoin staking functionality into their own applications and allows users to initiate staking in a comprehensive manner. SAL is simplifying the implementation of staking to facilitate broader adoption of dApps. For instance, DeFi applications or wallet applications only need to integrate SAL to provide a range of staking options for their user base. However, since Bitcoin itself does not support staking, all third-party staking may pose certain security risks, and SAL is no exception. As SAL integrates staking-related solutions, the technical complexities and compatibility behind the integration may also introduce new security risks. Therefore, SAL needs to continuously address challenges related to operational robustness and security.

Advantages Compared to Other BTCFi Projects

As an LST project in the BTCFi track, Solv Protocol has many projects on the market with a high degree of homogeneity, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone, each of which is quite similar to Solv Protocol. After the launch of SAL, Solv Protocol began to focus on integrating BTC liquidity, which gives it a significant advantage compared to other projects.

Security Assurance

Solv Protocol ensures the security of stake transactions by integrating the active verification service (AVS). The AVS system comprehensively monitors all aspects of stake transactions, including target addresses, script hashes, stake duration, etc., to ensure the validity and security of transactions, thereby avoiding errors or malicious behavior. This comprehensive monitoring and verification mechanism provides users with reliable protection for their stake transactions.

Process Optimization

Solv Protocol optimizes the staking process of the project while integrating BTC liquidity, allowing users to stake more conveniently. Users only need to deposit Bitcoin into the platform, without needing to perform any other on-chain operations, which ensures user safety while also improving staking efficiency, allowing them to earn returns.

All-Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform that adopts the CeDeFi model, combining CeFi and DeFi, and providing transparent contract management services. It achieves refined permissions and conditional execution through the multi-signature contract address of Gnosis Safe and Solv Vault Guardian, ensuring asset security and efficient system operation.

Industry Standardization

After the launch of SAL by Solv Protocol, in addition to integrating BTC's liquidity.