Unified "Measurement and Weighing"? The Solv stake abstraction layer provides a new interpretation of the BTCFi "Standardization".

From a certain perspective, the $1.75 trillion scale of Bitcoin can be considered the largest "sleeping pool of funds" in the crypto world.

Unfortunately, for most of the time, these funds have neither brought returns to the holders nor injected vitality into the on-chain financial ecosystem. Although there have been many attempts in the industry to release liquidity of Bitcoin assets since the DeFi summer of 2020, most of them are just reinventing the wheel, and the inflow of BTC funds has been limited overall, failing to truly leverage the BTCFi market.

So where is the main battlefield of BTCFi? Or what problem must Bitcoin staking first solve? This is a question worth at least hundreds of billions of dollars, and it is also a question that the Bitcoin ecosystem, especially Bitcoin staking projects, must answer.

As a leading seed project in the current Bitcoin Staking field, Solv has proposed a forward-looking solution, the core of which lies in the concept of "standardization" of the SAL( Staking Abstraction Layer).

The "Liquidity Fragmentation" Dilemma of Bitcoin

We can first review the development history of the Ethereum staking ecosystem.

As of November 12, 2024, the total amount of staked Ethereum has exceeded 34.55 million ETH. At the same time, statistics from CryptoQuant show that the proportion of staked ETH to the total supply of ETH has surged from 15% in April 2023 to about 29%, nearly doubling, with the total scale surpassing 100 billion USD.

In contrast, the Bitcoin ecosystem that has emerged alongside the Ordinals wave has a staking penetration rate that is far lower than that of Ethereum during the same period. Even though the market capitalization and price growth of BTC far exceed those of ETH, it has never been able to catch up with the expansion speed of the Ethereum Staking ecosystem.

It is worth noting that if the liquidity of BTC can be released by 10%, it would create a market of about $175 billion. If a staking rate similar to that of ETH can be achieved, it would release about $500 billion in liquidity, propelling BTCFi to become a super on-chain ecosystem far exceeding the generic EVM networks.

To some extent, the impressive performance of the Ethereum Staking ecosystem is not only due to its programmability advantages but also benefits from the Ethereum Foundation's leadership at the protocol level, which has established a clear and comprehensive set of standards for ETH staking. This includes a staking threshold of 32 ETH, a slash penalty mechanism, and a comprehensive consideration of hardware and network costs, meticulously designed to cover everything from the funding requirements for ordinary users to the economic security of node operations.

It is this unified standardized framework design that not only enhances the degree of decentralization and security of the network but also lowers the threshold for development and participation, prompting projects like Lido Finance, Rocket Pool, and Frax Finance to rise rapidly, driving the Ethereum staking ecosystem to achieve a leap in scale and diversification in a short period of time.

In contrast, the Bitcoin ecosystem has "no founders" and "no centralized promoting organization," which has formed its extremely decentralized unique "chain sentiment." This is both a unique advantage of the Bitcoin ecosystem and, to some extent, a kind of "development curse":.

This completely decentralized structure means that the establishment of key technical standards such as the staking mechanism lacks a leader that can play the role of the "Ethereum Foundation," and it needs to be implemented under a broad consensus among global developers and node operators, a process that is often long and complex.

Therefore, a complete set of clear standardized frameworks in the Ethereum ecosystem has laid a solid foundation for the rapid growth of its staking and liquidity ecosystem. For BTCFi to make similar progress, it is necessary to introduce similar standardized mechanisms in the staking field to address various challenges in liquidity and asset management.

Especially in the current situation where the liquidity of Bitcoin assets is accelerating fragmentation, the demand for "unity" has become particularly urgent:

On one hand, when BTC is bridged to Ethereum and other EVM-compatible networks in the form of various wrapped Bitcoins like WBTC and cbBTC, it provides users with the opportunity to use Bitcoin assets to participate in DeFi and earn returns. However, this also leads to the further dispersion of BTC liquidity across different chains, forming "liquidity islands" that are difficult to circulate and utilize freely, greatly limiting the development potential of BTCFi. Recently, WBTC has also attracted community attention due to custodial risks, making decentralization and standardization imperative.

On the other hand, with the launch of Bitcoin ETFs and the further strengthening of global asset consensus, Bitcoin is accelerating its expansion into CeFi and CeDeFi, with more and more BTC flowing into institutional custody services, forming large pools of deposited funds.

According to DeFiLlama data, the currently yield-generating Bitcoin has been dispersed across 95 chains, 448 protocols, and 766 liquidity pools. However, due to the lack of a unified staking standard and cross-chain liquidity mechanisms, BTC assets across chains, platforms, and institutions not only face high friction costs but also have dispersed liquidity that cannot be efficiently integrated and utilized.

In this context, if the BTCFi and Bitcoin staking ecosystem are to continue to expand, there is an urgent need to establish a universal and standardized industry security standard and framework to efficiently integrate the Bitcoin liquidity resources that are dispersed across multiple chains and platforms.

Therefore, objectively speaking, BTCFi and the Bitcoin ecosystem currently call for a leading role that can dominate these standardization processes, allowing for the integration of cross-chain Bitcoin liquidity to form a consensus, establish a unified technical framework and standards, thereby bringing broader applicability, liquidity, and scalability to the Bitcoin stake market, further promoting the financialization process of staked assets, and pushing the BTCFi ecosystem towards maturity.

Solv: The "Leader" in the Bitcoin Stake Field

As the largest Bitcoin stake platform in the current market, Solv has quickly seized the development opportunities in the Bitcoin stake field over the past six months. Since April of this year, the platform has attracted over 25,000 Bitcoins including BTCB, FBTC, WBTC, accumulating over $2 billion in asset management scale.

More than 70% of SolvBTC has been deployed in various staking scenarios, making Solv the protocol with the highest TVL and capital efficiency in the current Bitcoin space.

With strong liquidity and market penetration, Solv has pioneered the new concept of Staking Abstraction Layer ( SAL ), aiming to aggregate the fragmented BTC liquidity across the entire chain and provide a scalable and transparent unified solution.

To achieve this goal, Solv first conducted a systematic review of the Bitcoin staking ecosystem and divided the core participants into four key roles, from bottom to top:

Stake Agreement: A protocol that allows users to deposit Bitcoin assets and generate income through staking activities, such as Babylon, CoreDao, Botanix, etc.

Stake Validator: Entities responsible for verifying the integrity of the staking and transaction process, ensuring that the LST issuer genuinely performs the staking, preventing errors or fraudulent activities, such as Ceffu, Cobo, Fireblocks, and Solv Guard;

Yield distributors: entities that manage the distribution of staking rewards, responsible for efficiently and fairly distributing rewards, such as Pendle, Gauntlet, Antalpha, and most LST issuers also play the role of yield distributors.

LST issuer: The protocol that converts users' Bitcoin stake assets into liquidity tokens (LST), allowing stakers to earn returns while maintaining liquidity control over their assets, such as Solv, BedRock, etc.

These four major roles complement each other, forming the core structure of the Bitcoin staking ecosystem—staking protocols serve as the underlying foundation of the entire system, managing and supporting all other roles; staking validators operate above the protocol, maintaining on-chain security; yield distributors allocate returns according to the protocol rules, ensuring the incentive mechanism of the system operates; and LST issuers provide liquidity to the staked assets through tokenization.

Therefore, the design of SAL closely revolves around these roles, launching key modules that cover the entire process, including LST generation services, stake verification services, transaction generation services, and profit distribution services, utilizing smart contract technology and Bitcoin mainnet technology for efficient integration.

Specifically, SAL includes the following five core modules:

Stake parameter matrix ( SPM ): Core parameters required for the abstract staking process, including Bitcoin script configuration, staking transaction parameters, LST contract parameters, and profit distribution rules. These parameters are not only shared among various modules of SAL but also support cross-role collaboration in the staking process.

Stake verification service: Based on the Bitcoin mainnet algorithm, it ensures the correctness and completeness of each staking transaction, while checking whether the issuance of LST matches the underlying BTC quantity to prevent malicious acts;

LST Generation Service: Responsible for the issuance and redemption of BTC LST, while supporting interactions between the Bitcoin mainnet and EVM chains;

Transaction Generation Service: Automatically generate stake transactions, estimate the best transaction fees, and broadcast the transactions to the Bitcoin mainnet.

Revenue Distribution Service: Transparent calculation of stake earnings, distributing earnings proportionally to users through oracle mechanisms or revenue exchange services.

Through these modules, SAL not only effectively integrates the technical differences of different protocols in the Bitcoin ecosystem, but also provides a clear operational framework for different roles, building a new system for efficient collaboration:

For staking users: SAL provides a convenient and secure staking process, reducing the asset risks caused by operational errors and protocol opacity.

For the staking agreement: The standardized interface of SAL allows for quick integration into the Bitcoin staking market, shortening the development cycle and achieving ecological cold start.

For LST issuers: SAL provides comprehensive yield calculation and verification tools, enhancing user trust while simplifying the issuance process, allowing them to focus on product innovation;

For custodians: SAL has opened a new business model for participating in the Bitcoin stake ecosystem, bringing additional income opportunities for custodians.

This greatly simplifies the participation threshold of the Bitcoin staking ecosystem, providing a unified solution that can effectively meet the needs of multiple parties for co-construction and sharing.

As of now, multiple protocols and service providers have joined the SAL protocol ecosystem, including BNB Chain, Babylon, ChainLink, Ethena, CoreDAO, etc., which not only proves the wide applicability of SAL but also brings richer application scenarios for Bitcoin stake, accelerating the sustainable development of business models in this field.

Revitalizing the Diversified Income Ecosystem of Bitcoin Stake

DefiLlama data shows that in the Ethereum LSD track, Lido Finance holds the first place with a market share of 68.53% and 1981 million ETH. Although its centralization concerns have been questioned for a long time, it is undeniable that Lido has promoted the deep integration of staked assets and the DeFi yield ecosystem through the innovative design of LST, significantly enhancing the utilization efficiency of staked assets.

The Bitcoin staking also requires a foundational framework that promotes the efficient utilization of assets, and the SAL( Staking Abstraction Layer) has been launched for this purpose: it not only lowers the participation threshold for all parties and provides a consistent user experience for the Bitcoin staking ecosystem, but also significantly enhances capital utilization efficiency through a unified liquidity management mechanism, allowing Bitcoin assets to flow freely between different chains and laying the foundation for various financial innovations in the DeFi ecosystem.

Therefore, a more anticipated imaginative space is that SAL can essentially derive a diversified yield solution based on the whole chain BTC, allowing Bitcoin holders to obtain a diverse and dynamic yield flow without affecting liquidity, opening up new development space for BTCFi( Bitcoin financialization).

The main focus is on the cross-chain functionality based on SAL, supporting users to unlock various income-generating opportunities, transforming Bitcoin from a passive store of value into an interest-bearing & productive asset, allowing participation in DeFi and other on-chain use cases to create new value:

1. Users can stake BTC on platforms that benefit from the security of the Bitcoin economy ( such as Babylon ), utilizing Restaking to earn local token rewards;

2. Users can stake based on holding