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

Solv Protocol is a project established in 2020, dedicated to lowering the barriers to creating and using on-chain financial tools, bringing diverse asset classes and yield opportunities to the crypto space. The project focuses on minting and trading NFTs related to financial ownership certificates. In 2024, with the development of the BTCFi sector, Solv Protocol will shift its focus to BTCFi, creating the all-chain yield Bitcoin asset SolvBTC, aimed at providing new opportunities for Bitcoin holders while building an efficient BTCFi ecosystem. Recently, Solv Protocol launched the stake abstraction layer (SAL), which simplifies and standardizes the cross-chain Bitcoin staking process, abstracting the complexity of Bitcoin staking scenarios to enable users and developers to adopt quickly.

Project Basic Information

Basic Information

Website:

Twitter:

Launch time: Mainnet launched in June 2021, Solv Protocol has not issued tokens.

project team

Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University, he was a co-founder at Beijing Youzan Technology, dedicated to applying blockchain technology to automotive industry databases. Additionally, he served 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-Homogenized Token Standard" and has 20 years of experience in the financial IT sector, having led the design and development of the world's largest banking accounting system based on open platforms and distributed technology. He is the 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, it was announced that a $6 million angel round of financing was completed, led by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Matrix Partners, BincVentures, and Emirates Consortium.

Seed Round

• On May 8, 2021, it was announced that a $2 million seed round financing had been completed, with investment from Binance Labs.

• On August 30, 2021, announced the completion of a $4 million seed round financing, 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 was completed, with investments from institutions such as Laser Digital under 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 strategic financing of $11 million 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 $29 million, with significant investments from well-known institutions such as Binance Labs, Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures, indicating optimism in the capital sector regarding the future development of Solv Protocol.

Development Strength

In 2020, the Solv Protocol was initiated. The key events in the project's development are as follows:

From the development history of the Solv Protocol project, it has been committed to lowering the threshold for creating and using on-chain financial tools. This has enabled Solv Protocol to quickly issue the wrapped asset SolvBTC after the rise of the BTCFi track and swiftly capture the BTC-based LST market. Solv Protocol has achieved timely completion of various key technological milestones, demonstrating the strong capabilities of its technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market value exceeding $1.3 trillion. However, for a long time, BTC holders have merely held their assets without unlocking their potential value. Therefore, the Solv Protocol advocates unlocking the $1.3 trillion BTC asset potential through BTC staking. In 2024, the Solv Protocol will shift its project focus to BTCFi, launching the full-chain yield BTC asset SolvBTC, releasing the staking liquidity of BTC, and recently introduced the Staking Abstraction Layer ( SAL ) staking abstraction layer concept, marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated stake platform

The Solv Protocol architecture breaks down the staking process into four key roles, tightly connected through an integrated platform architecture:

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

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

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

• 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 has built a complete Bitcoin stake ecosystem by integrating these four key roles, achieving seamless interaction between the Bitcoin mainnet and EVM-compatible chains, and simplifying the stake implementation for users and developers. It provides users with a more convenient, safer, and more attractive staking experience.

Staking Abstraction Layer(SAL)stake Abstraction Layer

Staking Abstraction Layer(SAL) is a modular architecture designed to facilitate secure and efficient BTC accounting through key components interacting with the Staking Parameter Matrix(SPM). The key modules of SAL include the LST generation module, transaction generation module, validation 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 role of the SPM module is to standardize 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 role of the LST generation module is to simplify the issuance of cross-chain liquidity staking Token ( LST ). The issuance process of cross-chain staking Tokens has been standardized and automated, allowing users to avoid manual participation in complex cross-chain operations. This module enables LST issuers to quickly and conveniently issue liquidity staking Tokens and distribute these Tokens to users.

• Transaction Generation Module: The function 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 complete most of the work for users, making the staking process much simpler.

• Validator Nodes: Real-time verification of the legality and security of staking transactions. The role of validator nodes is to ensure that all staking transactions are legitimate and secure. When users stake, these nodes check and verify the correctness of the transactions and will only confirm them after ensuring there are no issues.

• Earnings Distribution Module: Responsible for correctly mapping staking rewards to LST holders. When users earn rewards through staking, the earnings distribution module is responsible for correctly allocating these rewards to the user's LST Token. Users can receive corresponding staking rewards based on the proportion of LST Tokens they hold.

In summary, SAL, as a staking abstraction layer, is characterized by the 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 greater adoption of dApps. For example, 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 complexity 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 faces many projects with a high degree of homogeneity in the market, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone. After launching SAL, Solv Protocol began to focus on integrating BTC's Liquidity, which gives it a significant advantage compared to other projects:

( Security Protection

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

) Process Optimization

The Solv Protocol optimizes the staking process of the project while integrating BTC liquidity, allowing users to perform staking operations more conveniently. Users only need to deposit Bitcoin into the platform, without the need for any other on-chain operations, thereby ensuring user safety while improving staking efficiency, and earning returns from it.

All-chain Yield Aggregation Platform

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

( Industry Standardization

After launching SAL, Solv Protocol aims not only to integrate BTC's Liquidity but also to promote the industry standardization of BTC-based LSTs. As a standardized staking process that regulates BTC staking procedures and parameter systems, establishing industry standards can foster cooperation and communication among various parties in the industry, promote healthy development, and provide users with more stable and reliable staking services.

) Unified Liquidity

Solv Protocol, as a unified liquidity entry in the BTCFi industry, integrates various liquidity resources and investment opportunities into one platform by launching SAL. Users can find and manage their investments on Solv Protocol without having to access multiple different platforms or protocols, simplifying the operation process.

In summary, after launching SAL, the Solv Protocol aims to further aggregate the decentralized BTC liquidity across the entire chain and provide a scalable and transparent unified solution. SAL can simplify user interactions with Bitcoin stake protocols, facilitating a convenient staking experience, while this abstraction layer will define a complete set of general functions including LST asset issuance, distributed node staking verification, profit distribution, and Slash rules.