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 diversified asset classes and yield opportunities to the cryptocurrency space. The project focuses on minting and trading NFTs related to financial ownership certificates. In 2024, as the BTCFi sector continues to evolve, Solv Protocol has shifted its focus to BTCFi, creating a full-chain yield Bitcoin asset, SolvBTC, designed to provide new opportunities and possibilities 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 complexity of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Project Basic Information

Basic Information

• Website: solv.finance
• Twitter: @SolvProtocol, Followers 272,000
• Launch Time: Mainnet launched in June 2021, Solv Protocol has not issued tokens.

Project Team

Core 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 the automotive industry database. Additionally, he served 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 the recipient of the "Zhongguancun 20th Anniversary Outstanding Contribution Award."

• Meng Yan: Co-founder. Formerly served as Vice President of CSDN, and 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, JD Capital, BincVentures, and Emirates Consortium co-leading the investment.

Seed Round

• On May 8, 2021, it was announced that $2 million in seed round financing had been completed, invested by a certain trading platform.
• On August 30, 2021, it was announced that a $4 million seed round financing 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 $6 million seed round financing has been completed, with investments from institutions such as Laser Digital, a subsidiary 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 Wheel

On October 14, 2024, it was announced that a strategic financing of $11 million 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 USD, with several well-known investment institutions making significant investments, reflecting the optimism of the capital sector regarding the future development of Solv Protocol.

Development Strength

In 2020, the Solv Protocol was established. 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, which has allowed Solv Protocol to quickly issue the wrapped asset SolvBTC after the emergence of the BTCFi track and rapidly occupy the BTC-based LST market. Solv Protocol has completed the development of project technology as scheduled, demonstrating the strong capabilities of its technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market value of over 1.3 trillion dollars. However, for a long time, BTC holders have simply held onto it without unlocking its potential value like ETH has. Solv Protocol advocates for unlocking the potential of 1.3 trillion dollars of BTC assets through BTC staking. In 2024, Solv Protocol will shift its project focus to BTCFi, launching the all-chain yield BTC asset SolvBTC, which can release the staking liquidity of BTC. Recently, the concept of Staking Abstraction layer(SAL) has been introduced, marking the start of Solv Protocol's aggregation of BTC liquidity.

Integrated Staking Platform

The Solv Protocol architecture decomposes the staking process into four key roles and closely connects them through an integrated platform architecture:

• LST Issuers (: Create and stake liquidity yield tokens linked to Bitcoin ) LST (. Solv is currently the largest Bitcoin LST Issuer in the market. It allows users to maintain asset liquidity while staking the stake Token ) LST (, 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, etc. offer sources of BTC staking returns by staking BTC in POS networks, allowing users to earn rewards from POS chains.

• Staking Validators (: For example, 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 updating the verification 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 staking returns. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.

Solv Protocol integrates these four key roles to build a complete Bitcoin staking ecosystem, achieving seamless interaction between the Bitcoin mainnet and EVM-compatible chains, and simplifying the staking implementation for both users and developers. The staking protocol provides the source of income for staking Bitcoin, LST issuers issue liquidity staking tokens, allowing users to maintain asset liquidity during the staking period, validators are responsible for verifying the legality and security of staking transactions, and the revenue distribution party is responsible for publicly and transparently distributing the income generated from staking to LST holders. This 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 promote 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 their 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 various settings and parameters for BTC staking. SPM provides developers with a simple and standard set of rules, making it easier for them to integrate BTC staking scenarios into their applications without having to design complex systems from scratch.

LST Generation Module: The function 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 is 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 staking transactions. In simple terms, this module's job is to automatically create and send staking 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 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, ensuring that there are no issues before confirming the transactions.

Revenue Distribution Module: Responsible for correctly mapping staking rewards to LST holders. When users earn rewards through staking, the revenue distribution module will be responsible for correctly distributing 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 ), 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 promote 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, 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

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 the launch of SAL, Solv Protocol began to focus on integrating the liquidity of BTC, giving it a significant advantage over other projects.

Security Guarantee

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

Process Optimization

Solv Protocol has optimized 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 having to perform any other on-chain operations, which not only ensures user safety but also improves staking efficiency, allowing them to earn profits.

Full Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform that adopts a CeDeFi model, combining CeFi and DeFi to provide 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, Solv Protocol aims not only to integrate the liquidity of BTC but also to promote the industry standardization of BTC-based LST. As a standardized staking process that regulates the staking procedures and parameter system of BTC, establishing industry standards can facilitate 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 serves as a unified liquidity gateway in the BTCFi industry, integrating various liquidity resources and investment opportunities into a single platform through the launch of SAL. Users can find and access these resources on Solv Protocol without needing to visit multiple different platforms or protocols.