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

Solv Protocol was established in 2020 with the aim of 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 shifted its focus to BTCFi, creating a full-chain yield Bitcoin asset called SolvBTC, providing new opportunities for Bitcoin holders while establishing an efficient BTCFi ecosystem. Recently, Solv Protocol launched the Staking Abstraction Layer (SAL), simplifying and standardizing the cross-chain Bitcoin staking process, abstracting the complexities of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Project Basic Information

• Website: solv.finance
• Launch time: Mainnet launched in June 2021
• Solv Protocol has not issued tokens

Project Team

Core team members include:

• Ryan Chow: Co-founder, graduated from Beijing Foreign Studies University
• Will Wang: Co-founder, creator of the ERC-3525 semi-homogeneous token standard.
• Meng Yan: Co-founder, former Vice President of CSDN

Financing Situation

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

• Angel Round: 6 million USD
• Seed Round: 12 million USD
• Strategic Round: 11 million USD

Investors include well-known institutions such as Binance Labs, Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures.

Development Strength

Since its establishment in 2020, Solv Protocol has been continuously focused on lowering the threshold for creating and using on-chain financial tools. The project has achieved the development of various key technological milestones, showcasing the strength of its technical team. After the emergence of the BTCFi track, Solv Protocol quickly issued the wrapped asset SolvBTC, based on BTC, and rapidly captured the LST market.

Operating Mode

Solv Protocol unlocks $1.3 trillion BTC asset potential through BTC staking. In 2024, the project will shift its focus to BTCFi, launching the full-chain yield BTC asset SolvBTC, releasing BTC staking liquidity. The recently launched Staking Abstraction Layer (SAL) staking abstraction layer marks the beginning of Solv Protocol's aggregation of BTC liquidity.

The Solv Protocol has built a complete Bitcoin staking ecosystem, including four key roles:

1. LST Issuer: Create liquidity yield tokens pegged to staked BTC
2. Staking Agreement: Manage the Bitcoin deposited by users and provide secure returns.
3. Staking Validators: Validate transactions, ensure the legality and security of staking transactions.
4. Income Distributor: Ensure that staking rewards are transparently and fairly distributed to LST holders.

By integrating these four roles, the Solv Protocol achieves seamless interaction between the Bitcoin mainnet and EVM compatible chains, simplifying the staking implementation process.

Staking Abstraction Layer (SAL) Staking Abstraction Layer

SAL is a modular architecture that facilitates secure and efficient BTC accounting through interaction with the Staking Parameter Matrix (SPM). The main components include:

• Staking parameter matrix ( SPM ): Various settings and parameters for standardized BTC stake.
• LST Generation Module: Simplifies the issuance of cross-chain Liquidity stake Tokens
• Transaction Generation Module: Automatically generate and broadcast BTC stake transactions
• Validator nodes: Real-time verification of the legality and security of staking transactions.
• Earnings distribution module: responsible for correctly mapping staking rewards to LST holders.

SAL integrates multiple stake participants, abstracting and encapsulating complex processes into standardized modules, simplifying the implementation of staking and promoting the adoption of more dApps.

Advantages Compared to Other BTCFi Projects

After launching SAL, Solv Protocol has the following advantages compared to other BTCFi projects:

1. Security Assurance: Integrating active verification service ( AVS ) to ensure stake transaction safety.
2. Process Optimization: Simplifying User Stake Operation Process
3. Full-chain Yield Aggregation Platform: Adopts CeDeFi model, combining CeFi and DeFi
4. Industry standardization: Promote the standardization of the LST industry based on BTC.
5. Unified Liquidity: As a unified liquidity entry in the BTCFi industry

Project Model

Business Model

The Solv Protocol economic model consists of two roles:

1. BTC and LST stakers: can stake BTC or wrapped BTC on multiple chains to earn SolvBTC.
2. Cooperative Project: Solv Protocol will stake users' assets into various DeFi protocols to earn returns.

The revenue source of Solv Protocol: charging a certain percentage of user earnings.

Token Model

Solv Protocol has not released any tokens or token issuance plans.

On-chain Data

TVL

The TVL of Solv Protocol has grown rapidly from January 2024 to the present, increasing from $1.153 billion to $1.783 billion, a growth rate of 54.64%.

User Count

The number of SolvBTC users has grown rapidly, increasing from 185,799 in August to 397,324, an increase of 113.85%.

Supported Projects

The Solv Protocol has received support from multiple public chains and DeFi projects, with its wrapped assets SolvBTC, SolvBTC.BBN, SolvBTC.ENA, and SolvBTC.CORE being adopted in various chains and DeFi projects.

Comparison with Babylon

Solv Protocol and Babylon have a close collaboration in the BTC staking space, but they are positioned differently.

• Babylon: A protocol focused on BTC staking, extending Bitcoin's security to other networks.
• Solv Protocol: A comprehensive yield and liquidity protocol that simplifies the Bitcoin stake process.

The TVL of Solv Protocol ( is 1.783 billion USD ), which has surpassed Babylon ( at 1.605 billion USD ).

Project Risk

1. Smart Contract Vulnerability Risks
2. Lack of a clear token economic model
3. Challenges of Decentralized Management
4. Liquidity Risk
5. The risks of high-risk DeFi protocols
6. Market Acceptance and User Trust

Summary

Solv Protocol is an innovative project in the BTCFi sector that integrates the Bitcoin staking ecosystem through SolvBTC and SAL technology, lowering the entry barrier for users. The project demonstrates rapid growth in TVL and user numbers, reflecting market recognition.

However, Solv Protocol also faces a series of challenges and potential risks, such as security vulnerability risks, a lack of token economic models, and decentralized governance challenges. Nevertheless, these risks are common across BTCFi projects and are not unique to Solv Protocol.

After the launch of SAL technology, the development direction of Solv Protocol has significantly diverged from simply providing BTC-based LST projects, with a greater upper limit for aggregating the dispersed liquidity of BTC across the entire chain. Overall, Solv Protocol is a project worth investing in and paying attention to.