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

Solv Protocol is a project established in 2020, aimed at lowering the barriers to creating and using on-chain financial tools, bringing a diversified asset class 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 sector, 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), aimed at simplifying and standardizing the cross-chain Bitcoin staking process, thereby abstracting the complexity of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Project Basic Information

Basic Information

Website:

Twitter:

TG:

DC:

Github:

White Paper:

Launch time: The mainnet was launched in June 2021, and Solv Protocol did not issue tokens.

Project Team

Core Team

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

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

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

Financing Situation

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, with Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Jingwei Ventures, BincVentures, and Emirates Consortium jointly leading the investment.

Seed Round

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

• On August 30, 2021, it was announced that a seed round financing of $4 million was 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 seed round financing of $6 million has been completed, with investments from institutions including Laser Digital, a subsidiary of Japanese banking giant Nomura Securities, UOB Venture Management, Mirana Ventures, Emirates Consortium, Jingwei 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 was 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, and well-known investment institutions such as Binance Labs, Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures made significant investments, indicating a strong optimism in the capital field regarding the future development of Solv Protocol.

Development Strength

The Solv Protocol was initiated 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 rapidly 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 with a market capitalization exceeding 1.3 trillion dollars, has long been held by its holders without unlocking its potential value like ETH. Therefore, Solv Protocol advocates unlocking the potential of 1.3 trillion dollars in BTC assets through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi, launching the all-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 stake platform

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

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

• Staking Protocols (Staking Protocols): Manage users' deposited BTC, providing secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, etc., offer sources of BTC staking returns. By staking BTC in POS networks, users receive rewards from POS chains.

• 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, validating the staked Bitcoin against LST Token, and updating the validation status in a timely manner.

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

Solv Protocol integrates these four key roles to build a complete Bitcoin staking ecosystem. By integrating staking protocols, LST issuers, validators, and yield distributors, it achieves seamless interaction between the Bitcoin mainnet and EVM-compatible chains, simplifying the staking implementation for both users and developers. The staking protocol provides the source of yield for staking Bitcoin, LST issuers issue liquid staking tokens to allow users to maintain asset liquidity during the staking period, validators are responsible for verifying the legitimacy 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, safer, and more attractive staking experience.

![Solv Protocol Research Report: Exploring the Staking Abstraction Layer and Liquidity Mechanism in the BTCFi Ecosystem])https://img-cdn.gateio.im/webp-social/moments-37b6dfcb308108cd05055f1d3cdd3da7.webp(

Staking Abstraction layer)SAL(stake Abstraction layer

Staking Abstraction Layer )SAL( is a modular architecture designed to promote secure and efficient BTC accounting through key components that interact with the Staking Parameter Matrix )SPM(. The key modules of SAL include the LST generation module, transaction generation module, verification nodes, and profit distribution module, all of which rely on SPM to define transaction rules, verification standards, and profit calculations. These components together form a framework that ensures the security, transparency, and efficiency of BTC accounting and LST issuance, enabling users to maximize profits 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 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 staking Token ) LST (. The issuance process of cross-chain staking 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 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. In simple terms, 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 Node: Real-time verification of the legality and security of staking transactions. The role of the validator node is to ensure that all staking transactions are legitimate and secure. When users stake, these nodes check and verify the correctness of the transactions, ensuring that there are no issues before confirming the transaction.

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

![Solv Protocol Research Report: Exploring the Staking Abstraction Layer and Liquidity Mechanisms in the BTCFi Ecosystem])https://img-cdn.gateio.im/webp-social/moments-1ea32d825bd1d4aaa261982462c6b0c8.webp(

In summary, SAL, as a staking abstraction layer, is characterized by integrating multiple staking participants ), including Bitcoin staking providers, yield generation, and DeFi scenario unlocking (, encapsulating these complex processes into standardized modules. This allows developers to quickly integrate Bitcoin staking functionalities into their own applications and enables users to initiate staking in a comprehensive manner. SAL is simplifying the implementation of staking to facilitate the adoption of more 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, as Bitcoin itself does not support staking, all third-party staking may pose certain security risks, and SAL is no exception. Since 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

Solv Protocol, as an LST project in the BTCFi track, has many projects in the market with a high degree of homogeneity, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone, each of which has a high similarity to Solv Protocol. After Solv Protocol launched SAL and began focusing on integrating BTC's Liquidity, it has a significant advantage compared to other projects.

) Security Guarantee

Solv Protocol ensures the security of staking transactions by integrating the active validation service ###AVS(. The AVS system comprehensively monitors all aspects of staking transactions, including target addresses, script hashes, staking periods, etc., to ensure the validity and security of transactions, thereby avoiding errors or malicious actions. This comprehensive monitoring and validation mechanism provides reliable protection for users' staking transactions.

) Process Optimization

The Solv Protocol optimizes the staking process of the project while integrating BTC liquidity, allowing users to carry out staking operations more conveniently. Users only need to deposit Bitcoin into the platform without performing any other on-chain operations, which ensures the safety of users while improving their staking efficiency and allowing them to earn returns.

![Solv Protocol Research Report: Exploring the Staking Abstraction Layer and Liquidity Mechanism in the BTCFi Ecosystem]###https://img-cdn.gateio.im/webp-social/moments-eae6591842d725d428bbb5f26705431d.webp(

) All-Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform.