Introduction
Solv Protocol is a project established in 2020, aimed at lowering the barriers for 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 track, Solv Protocol has shifted its focus to BTCFi, creating the full-chain yield Bitcoin asset SolvBTC, aiming to provide new opportunities and possibilities for Bitcoin holders while creating an efficient BTCFi ecosystem. Recently, Solv Protocol has launched the Staking Abstraction Layer (SAL), aiming to simplify and standardize the cross-chain Bitcoin staking process, abstracting the complexities of Bitcoin staking scenarios, enabling users and developers to adopt quickly.
Project Basic Information
Basic Information
Website: https://solv.finance/
Twitter: https://twitter.com/SolvProtocol, 272,000 followers
TG: https://t.me/Solv_Protocol
DC: https://discord.com/invite/solvprotocol
Github: https://github.com/solv-finance
White Paper: https://docs.solv.finance/
Launch Time: The mainnet launched in June 2021, and Solv Protocol has not issued tokens.
Project Team
Core Team
Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University and was a co-founder at Beijing Youzan Technology, dedicated to applying blockchain technology to automotive industry databases. Additionally, he served as a financial analyst at Singularity Financial, researching the integration of blockchain technology and financial regulation.
Will Wang: Co-founder. He created the 'ERC-3525: Semi-Homogeneous Token Standard' and has 20 years of experience in the financial IT field. He 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 '20th Anniversary Outstanding Contribution Award' of Zhongguancun.
Meng Yan: Co-founder. He previously served as Vice President of CSDN and is also an active KOL in the Crypto industry.
Financing situation:
Solv Protocol has raised approximately 29 million dollars through three rounds of financing.
Angel Round
On November 10, 2020, it was announced that they completed a $6 million angel round financing, led by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Jingwei Venture Capital, BincVentures, Emirates Consortium;
Seed Round
On May 8, 2021, it was announced that they completed a $2 million seed round financing, with investment from Binance Labs;
On August 30, 2021, it was announced that they completed a $4 million seed round financing, led 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, etc.;
On August 1, 2023, it was announced that they completed a $6 million seed round financing, with investments from major Japanese bank Nomura Securities' investment institution Laser Digital, UOB Venture Management, Mirana Ventures, Emirates Consortium, Jingwei China, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, Bytetrade Labs, and others.
Strategic Round
On October 14, 2024, it was announced that they completed a strategic financing of $11 million, with investments from companies such as Laser Digital, Blockchain Capital, and OKX Ventures.
During the three rounds of financing, Solv Protocol raised $29 million, with significant investments from well-known investment institutions such as Binance Labs, Blockchain Capital, Laser Digital, Jingwei China, and OKX Ventures, indicating strong optimism about the future development of Solv Protocol in the capital field.
Development Strength
Solv Protocol was established in 2020. Key events in the project's development are shown in the table:
From the key events in Solv Protocol's project development, it is clear that Solv Protocol has consistently worked to lower the barriers for creating and using on-chain financial tools, which has enabled it to quickly issue the wrapped Bitcoin asset SolvBTC after the rise of the BTCFi track and rapidly occupy the BTC-based LST market. In terms of the timeline for achieving various key technical milestones, Solv Protocol has completed the development of project technologies on schedule, reflecting the strength of the Solv Protocol technical team.
Operational Model
As the largest asset in the Crypto industry, BTC has a market value of over $1.3 trillion. However, for a long time, BTC holders have simply held BTC without unlocking its potential value like ETH. Therefore, Solv Protocol advocates unlocking $1.3 trillion of BTC asset potential through BTC staking. In 2024, Solv Protocol shifted its focus to BTCFi, launching the full-chain yield BTC asset SolvBTC, which can release the staking liquidity of BTC, and recently introduced the Staking Abstraction Layer (SAL) concept, marking Solv Protocol's beginning to aggregate BTC liquidity.
Integrated Staking Platform
Solv Protocol Architecture (Image source: https://docs.solv.finance/staking-abstraction-layer-sal/the-ecological-view)
In the Solv Protocol architecture, the staking process is broken down into four key roles, tightly connected through an integrated platform architecture:
LST Issuers: Create liquidity yield tokens (LST) pegged to Bitcoin staking. Solv is currently the largest Bitcoin LST issuer in the market. It allows users to maintain asset liquidity while staking the staking tokens (LST) and participate in DeFi and other yield activities.
Staking Protocols: Manage the Bitcoin deposited by users and provide secure yields. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, etc., provide sources of Bitcoin staking yield by staking Bitcoin 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 and ensuring the legality and security of staking transactions, verifying that the staked Bitcoin corresponds to the LST tokens, and updating validation statuses in a timely manner.
Yield Distributors: Ensure that staking rewards are transparently and fairly distributed to LST holders, ensuring users can timely receive staking returns. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.
By integrating these four key roles, Solv Protocol has built a complete Bitcoin staking ecosystem. Through the integration of 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. Staking protocols provide sources of yield for staked Bitcoin, LST issuers issue liquidity staking tokens to maintain asset liquidity during staking, validators ensure the legality and security of staking transactions, and yield distributors transparently allocate the generated staking rewards to LST holders. This provides users with a more convenient, secure, and attractive staking experience.
Staking Abstraction Layer (SAL)
Technical Architecture of SAL (Image source: https://docs.solv.finance/staking-abstraction-layer-sal/the-technical-architecture)
The 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). 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 collectively form a framework that ensures the security, transparency, and efficiency of BTC accounting and LST issuance, allowing users to maximize their yields while minimizing the risks associated with accounting processes 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 standardized set of rules, allowing them to more easily integrate BTC staking scenarios into their applications without starting from scratch to design complex systems.
LST Generation Module: The role of the LST generation module is to simplify the issuance of cross-chain liquidity staking tokens (LST). The issuance process of cross-chain staking tokens is standardized and automated, allowing users to participate without manually engaging in complicated 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 role of the transaction generation module is to automatically generate and broadcast BTC staking transactions. Simply put, this module automatically creates and sends staking transactions to the BTC mainnet. Previously, users needed to manually perform many steps, but now this module will automatically complete most of the work for users, making the staking process simpler.
Validation Nodes: Real-time validation of the legality and security of staking transactions. The role of validation nodes is to ensure that all staking transactions are legal and secure. When users stake, these nodes will check and verify the accuracy of the transactions, confirming them only when no issues are found.
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 correctly distributing these rewards to the users' LST tokens. Users can receive corresponding staking rewards based on the proportion of LST tokens they hold.
In summary, SAL, as a staking abstraction layer, integrates multiple staking participants (including Bitcoin staking providers, yield generation, and DeFi scenario unlocking) and abstracts 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 way. 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 offer a range of staking options to 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. Since SAL integrates staking-related solutions, the technical complexity and compatibility behind the integration may also bring new security risks. Therefore, SAL needs to continuously address challenges related to operational robustness and security.
Advantages Compared to Other BTCFi Projects
As an LST project in the BTCFi track, Solv Protocol has many highly homogenized projects in the market, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone, each of which has a high degree of similarity to Solv Protocol. After Solv Protocol launched SAL, it began to focus on integrating BTC liquidity, giving Solv Protocol a significant advantage over other projects.
Security Assurance
Solv Protocol ensures the security of staking transactions by integrating Active Verification Services (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 behavior. This comprehensive monitoring and verification mechanism provides reliable protection for users' staking transactions.
Process Optimization
While integrating BTC liquidity, Solv Protocol has also optimized the staking process of the project, allowing users to stake more conveniently. Users only need to deposit Bitcoin into the platform without needing to perform other on-chain operations, which ensures user safety while improving staking efficiency and yielding returns.
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. By utilizing Gnosis Safe's multi-signature contract address and Solv Vault Guardian, it achieves refined permission and conditional execution, ensuring asset security and efficient system operation.
Industry Standardization
After launching SAL, Solv Protocol aims not only to integrate BTC liquidity but also to promote the industry standardization of BTC-based LSTs. As a standardized staking process that regulates BTC staking processes and parameter systems, establishing industry standards can promote cooperation and communication among all parties in the industry, foster healthy development, and provide users with more stable and reliable staking services.
Unified Liquidity
As a unified liquidity entrance in the BTCFi industry, Solv Protocol integrates various liquidity resources and investment opportunities into one platform through the launch of SAL. Users can find and manage their investments on Solv Protocol without accessing multiple different platforms or protocols, simplifying the operation process.
In summary, after launching SAL, Solv Protocol aims to further aggregate the dispersed BTC liquidity across the full chain and provide a scalable and transparent unified solution. SAL can simplify the interaction between users and Bitcoin staking protocols, facilitating a convenient staking experience, while this abstraction layer will define a complete set of universal functions including LST asset issuance, distributed node staking verification, yield distribution, and slash rules, among others. Meanwhile, it can not only integrate the wrapped tokens of other LST projects into its own liquidity but also greatly simplify the operations of on-chain users.
Project Model
Business Model
The Solv Protocol economic model consists of two roles: BTC and LST stakers, and projects cooperating with Solv.
BTC and LST stakers: Solv Protocol can support BTC mainnet (currently only accepting stakers with more than 100 BTC), Merlin, Mantle, Avalanche, BOB, and other on-chain users to deposit their held BTC or wrapped BTC into Solv Protocol. After the launch of SAL, it can absorb BTC liquidity from many scenarios including Ethereum EVM, BNBChain, CeDeFi, etc. Users can deposit their held BTC or wrapped BTC into Solv Protocol to mint SolvBTC at a 1:1 ratio, and are allowed to re-mint SolvBTC into other forms of LST. Users can achieve the goal of obtaining other returns while holding BTC through Solv Protocol.
Cooperating Projects with Solv: Solv Protocol can deposit the BTC and wrapped BTC staked by users into various DeFi protocols according to the different needs of its cooperating projects and the yields provided. For example, it can be deposited into Merlin Chain, Stacks, Bsquare, etc., for staking rewards; it can also be deposited into projects like Babylon for restaking rewards; or deposited into DeFi projects in L2s like Arbitrum and BNB Chain for providing liquidity rewards. This not only increases the earnings of Solv Protocol users but also enhances the liquidity and security of the projects cooperating with Solv.
From the above analysis, we can see that Solv Protocol's income is:
Solv Protocol charges a certain percentage of user earnings.
Token Model
Solv Protocol has not released any tokens or token issuance plans.
On-Chain Data
TVL
Solv Protocol TVL (Image source: https://defillama.com/protocol/solv-protocol?denomination=USD)
From the chart, it can be seen that Solv Protocol's TVL has experienced a significant increase from January 2024 to the present, and has grown rapidly in the past month, rising from $1.153 billion to $1.783 billion, an increase of 54.64%. This indicates user optimism about its future development.
Number of Users
SolvBTC User Count (Image source: https://dune.com/picnicmou/solv-protocol)
From the chart, it can be seen that the number of SolvBTC users has grown rapidly, particularly accelerating from August to now, increasing from 185,799 in August to 397,324 now, a growth rate of 113.85%. It is evident that more and more users are choosing SolvBTC and are very optimistic about Solv Protocol.
Supported Projects
As a LST-focused project in the BTCFi track, whether more projects adopt its LST — SolvBTC determines its success. From Solv Protocol's financing process, we can see that Solv Protocol has a very strong background in the Crypto industry, allowing it to connect with more projects and gain support from other projects. After Solv Protocol achieves initial success, more projects and public chains support it, forming a positive cycle.
Chains Supporting Solv Protocol:
DeFi projects supporting Solv Protocol (APY of 0 is not included in the table):
From the above table, we can see that there is currently significant support from many chains and projects for Solv Protocol, enhancing the wrapped assets of Solv Protocol:
SolvBTC, SolvBTC.BBN, SolvBTC.ENA, and SolvBTC.CORE have received significant support, enabling them to be adopted across many chains and DeFi projects, facilitating users’ arbitrage on their wrapped assets. This also increases users' earnings.
Comparison with Babylon
Solv Protocol and Babylon have a close cooperative relationship in the BTC staking field, but each has its own unique functions and positioning. Babylon is a protocol focused on BTC staking, aiming to extend the security of Bitcoin to other networks through shared economic security. It allows BTC holders to earn rewards through staking, and after the mainnet goes live, Solv Protocol will be one of the first participants. Babylon extends the security of BTC to PoS chains, AVS, and roll-ups through its native BTC staking protocol.
Solv Protocol is a full-chain yield and liquidity protocol that utilizes SAL to simplify the Bitcoin staking process, enabling users to stake SolvBTC across different blockchains. Solv Protocol not only provides more than 20% of the BTC staking assets to Babylon but also becomes the main liquidity provider in the Babylon ecosystem. Additionally, Solv Protocol has launched SolvBTC.BBN, a liquidity staking token, allowing users to earn native PoS chain token rewards through Babylon while maintaining liquidity access to their BTC.
Thus, through the comparison of the two, we can see that Babylon is more similar to Eigenlayer in BTCFi, while Solv Protocol is more like Lido, so the relationship between Solv Protocol and Babylon should be parallel. Solv Protocol has a large amount of liquidity and is not limited to supporting Babylon alone. In addition, Solv Protocol has also launched BTC staking tokens on other chains, such as the BTC staking token launched on Solana.
For BTCFi projects, TVL is an important indicator of project development. Let's compare the TVL of Solv Protocol and Babylon: Solv Protocol's TVL is $1.783 billion, while Babylon's TVL is $1.605 billion. From the comparison, we can see that Solv Protocol's TVL has surpassed that of Babylon.
In summary, Babylon focuses on achieving the secure expansion of Bitcoin staking through its native protocol, while Solv Protocol simplifies and enhances the staking experience of BTC across multiple DeFi ecosystems through its staking abstraction layer and liquidity staking tokens.
Project Risks
Smart Contract Vulnerability Risks: Although Solv uses multi-signatures and other security mechanisms to protect assets, smart contracts themselves may still have vulnerabilities or risks of being attacked. This risk could lead to the loss or theft of users' assets. Smart contract vulnerability risk has always been an important challenge faced by crypto asset management services.
Lack of a Clear Token Economic Model: Solv Protocol has always incentivized users to participate in Solv Protocol's BTC staking activities through a points reward mechanism, but has not released a token economic model or issuance plan, which may somewhat reduce user participation enthusiasm.
Challenges of Decentralized Governance: Solv Protocol aims to resolve the transparency issues in traditional crypto asset management services through decentralized governance. Although decentralized management can address transparency problems in traditional crypto asset management services, it also brings about trust issues. Decentralized management may complicate decision-making processes and in some cases may have difficulty responding quickly to market changes, thus requiring an appropriate solution to balance the relationship between decentralization and efficiency.
Liquidity Risks: As a liquidity layer, Solv Protocol relies on the participation of a large number of users and capital input. If the market experiences severe fluctuations or user confidence declines, it may lead to liquidity depletion, thereby affecting the platform's stability and security.
Risks of High-Risk DeFi Protocols: Solv Protocol manages the risks of high-risk DeFi protocols through features like Convertible Vouchers, but these mechanisms do not completely eliminate potential financial risks. In highly volatile markets, these risks may be amplified.
Market Acceptance and User Trust: Although Solv Protocol has gained support from well-known institutions like Binance and OKX, its market acceptance and user trust still need time to build. If user trust in the platform cannot be effectively enhanced, it may affect its long-term development.
Summary
As an innovative project in the BTCFi track, Solv Protocol successfully integrates key roles in the Bitcoin staking ecosystem through its full-chain yield Bitcoin asset SolvBTC and Staking Abstraction Layer (SAL) technology, significantly lowering the barriers for user participation. Its advantages lie in robust security guarantees, optimized staking processes, full-chain yield aggregation capabilities, and efforts to promote industry standardization. The project has received support from several well-known investment firms in the Crypto industry, helping Solv Protocol gain support from some well-known public chains and DeFi projects, and also showing rapid growth in TVL and user numbers, reflecting market recognition. Solv Protocol creates more value for Bitcoin holders by providing a unified liquidity entrance and diverse staking choices, while promoting the development of the BTCFi ecosystem.
However, Solv Protocol faces a series of challenges and potential risks. First, its complex cross-chain operations and interactions with smart contracts increase the potential for security vulnerabilities, especially when handling large amounts of user assets. Second, the project has not yet issued tokens and lacks a clear token economic model, which may affect the effectiveness of long-term incentive mechanisms. Additionally, as a third-party staking solution, Solv Protocol may face challenges regarding user trust. The degree of decentralization and governance mechanisms of the project also need further improvement to ensure long-term sustainable development. Finally, although TVL is growing rapidly, the user base is relatively small, and market education and user adoption still require time.
In summary, although Solv Protocol has certain project risks, the risks it faces are those that BTCFi track projects currently encounter and do not have unique risks specific to the Solv Protocol project. After launching the staking abstraction layer (SAL) technology, it is clear that Solv Protocol's future development direction has undergone a significant change compared to other projects that simply provide BTC-based LST, and the potential for developing aggregated full-chain BTC dispersed liquidity is much greater. Therefore, we believe Solv Protocol is a project worth investing in and paying attention to.
