Solv Protocol: Exploring the staking abstraction layer and liquidity mechanisms 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 diverse asset classes 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 all-chain yield Bitcoin asset SolvBTC, designed to provide 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 the Bitcoin staking scenario, allowing users and developers to adopt it quickly.

Project Basic Information

Basic Information

Website:

Twitter:

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DC:

Github:

White Paper:

Launch time: June 2021 mainnet launch, Solv Protocol has not issued 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 automotive industry databases. In addition, he also worked as a financial analyst at a financial institution, 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 field. He has led the design and development of the world's largest banking accounting system based on open platforms and distributed technology, and is a recipient of the "Zhongguancun 20th Anniversary Outstanding Contribution Award."

Meng Yan: Co-founder. He previously served as the vice president of a technology company and 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 a certain digital asset company, a certain investment company, and a certain technology company.

Seed Round

• On May 8, 2021, it was announced that they had completed a $2 million seed round financing, invested by the investment department of a certain trading platform;
• On August 30, 2021, it was announced that a $4 million seed round financing has been completed, led by a certain capital and a certain investment fund, with participation from a certain alliance and a certain investment company;
• On August 1, 2023, it was announced that the seed round financing of 6 million USD has been completed, with investments from an investment institution under a certain bank, a certain investment management company, and certain venture capital firms.

Strategic Round

• On October 14, 2024, announced the completion of a $11 million strategic financing, participated by a certain digital asset company, a certain capital, and a certain trading platform's venture capital.

During the three rounds of financing, Solv Protocol raised $29 million, and several well-known investment institutions made large investments in it, indicating that the capital sector is quite optimistic about the future development of Solv Protocol.

Development Strength

The Solv Protocol project was initiated in 2020. Key events in the project's development are shown in the table:

From the perspective of the key events in the development of the Solv Protocol project, Solv Protocol has been diligently working to lower the barriers for creating and using on-chain financial tools. This has enabled Solv Protocol to quickly issue the wrapped asset SolvBTC after the emergence of the BTCFi track and swiftly capture the BTC-based LST market. In terms of the timeline for achieving various key technological milestones, Solv Protocol has completed the development of project technology as scheduled, demonstrating the strength of the Solv Protocol technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market value of over $1.3 trillion. However, for a long time, BTC holders have simply held onto their BTC without unlocking its potential value like ETH. Therefore, Solv Protocol advocates unlocking the $1.3 trillion potential of BTC assets through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi, launching the full-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 architecture, the staking process is broken down into four key roles, and they are closely linked together through an integrated platform architecture:

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

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

• Staking Validators (: For example, Ceffu, Cobo, Fireblocks, Solv Guard, etc., are responsible for verifying transactions, ensuring the legality and security of staking transactions, verifying that the staked Bitcoin corresponds to the LST Token, and promptly updating the verification status.

• Yield Distributors )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 Research Report: Exploring the Staking Abstraction Layer and Liquidity Mechanism in the BTCFi Ecosystem])https://img-cdn.gateio.im/webp-social/moments-c35acdb36f146b6be75b5d1974229bdb.webp(

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 users and developers. The staking protocol provides the source of yield for staking Bitcoin, LST issuers issue liquid 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 yield distributors are responsible for transparently distributing the yield 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 facilitate secure and efficient BTC accounting through key components that interact with the Staking Parameter Matrix )SPM(. Key modules of SAL include the LST generation module, transaction generation module, verification 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, allowing users to maximize their returns while minimizing the 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 stake Token ) LST (. The issuance process of cross-chain stake 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 stake Tokens and distribute these Tokens to users.

Transaction Generation Module: The role of the transaction generation module is to automatically generate and broadcast BTC stake transactions. In simple terms, this module's job 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 help users complete most of the work, making the staking process much simpler.

Validator Nodes: Real-time verification of the legality and security of stake transactions. The role of validator nodes is to ensure that all stake transactions are legitimate and secure. When users stake, these nodes check and verify the accuracy of the transactions, ensuring that there are no issues before confirming the transaction.

Yield Distribution Module: Responsible for correctly mapping staking rewards to LST holders. When users earn rewards through staking, the yield distribution module is responsible for accurately distributing these rewards 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 Mechanism in the BTCFi Ecosystem])https://img-cdn.gateio.im/webp-social/moments-37b6dfcb308108cd05055f1d3cdd3da7.webp(

In summary, SAL, as a staking abstraction layer, is characterized by integrating 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 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

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, which gives it a significant advantage compared to other projects.

) Security Guarantee

Solv Protocol ensures the security of staking transactions by integrating the active verification service ###AVS(. The AVS system comprehensively monitors various 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 verification mechanism provides reliable protection for users' staking transactions.

) Process Optimization

The Solv Protocol not only integrates BTC liquidity but also optimizes the staking process of the project, allowing users to perform staking operations more conveniently. Users only need to deposit Bitcoin into the platform without having to perform other on-chain operations, which ensures user safety while improving staking efficiency and allows them to earn returns.

Full Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform that adopts the CeDeFi model, combining CeFi and DeFi to provide transparent contract management services. Through a multi-signature contract address and Solv Vault Guardian, it achieves refined permission and condition execution, 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 standardization of the industry for BTC-based LSTs. As a standardized staking process that regulates the staking procedures and parameter systems of BTC, establishing industry standards can facilitate cooperation and communication among various parties in the industry, promote healthy development of the industry, and provide users with more stable and reliable staking services.

Unified Liquidity

Solv Protocol serves as a unified liquidity entry in the BTCFi industry.