The Solv Protocol launched SAL (Staking Abstraction Layer), which aims to push Bitcoin staking into the era of large-scale application by improving the standardization and interoperability of the Bitcoin staking ecosystem.
Written by: Solv Protocol
BNB Chain, Ceffu and Chainlink are the first launch partners.
The particularity of the Bitcoin network and the complexity of Bitcoin staking have brought many challenges to Bitcoin staking. Solv Protocol launched SAL (Staking Abstraction Layer), which aims to promote Bitcoin staking into the era of large-scale application by improving the standardization and interoperability of the Bitcoin staking ecosystem.
SAL consists of a series of smart contracts, which use smart contract technology and Bitcoin mainnet technology to achieve seamless cooperation between pledgers, LST issuers, pledge agreements, and other pledge service providers, while simplifying the interaction between users and the Bitcoin pledge agreement and providing a convenient pledge experience.
Solv began to focus on Bitcoin staking in April 2024, allowing users to stake their Bitcoin assets, including BTCB, FBTC, WBTC, etc. As of September 30, 2024, more than 20,000 BTC (worth about $1.4 billion) have been staked to the Solv protocol, of which more than 13,000 are from BNB Chain. Ceffu, as a staking validator, ensures that all staked assets are authentically and completely staked in staking protocols such as Babylon and CoreDAO.
Why is SAL important?
Today, the market value of Bitcoin has exceeded 1.2 trillion US dollars, but due to the lack of valuable use cases, 99% of the liquidity is idle. Bitcoin staking is the best solution to unlock large-scale Bitcoin liquidity, but the current adoption rate of Bitcoin staking is very low, far behind Ethereum (28%). Imagine if Bitcoin can achieve a staking rate similar to Ethereum, it means that about 330 billion US dollars of value will be released, which will greatly promote the outbreak of BTCFi and become a huge pump for the entire industry.
However, Bitcoin staking has encountered bottlenecks in its actual development. First, in the past six months, we have witnessed the rapid emergence of various Bitcoin staking protocols in the market, such as Babylon, CoreDAO, Botanix, etc. These protocols support different public chains, underlying technical architectures, and asset security solutions, which brings extremely high screening, decision-making and operation costs to users.
In addition, since the Bitcoin mainnet does not support smart contracts, Bitcoin staking involves cross-chain assets between the Bitcoin mainnet and other chains, and staking activities often occur on different chains. This requires users to perform complex interactions between different networks, which not only raises the threshold for user participation, but also increases the opacity and risk of the entire process.
How SAL works
SAL attempts to solve the above challenges by abstracting the technical differences and operation methods of different pledges and building a standardized Bitcoin pledge solution. Developers can use existing service providers in the SAL system to quickly implement Bitcoin pledge business, which not only lowers the entry threshold for developers, but also promotes rapid innovation in the Bitcoin pledge ecosystem.
In essence, the Bitcoin staking ecosystem consists of four core roles:
LST issuer: refers to the protocol that issues and pledges Bitcoin-related liquid staking tokens (LST). They build a bridge between users and staking protocols. Typical examples include Solv, Lombard, BedRock, etc.
Staking agreement: refers to an agreement that accepts Bitcoin assets and generates income through operations, such as Babylon, CoreDao, Botanix, etc.
Staking validators: refer to entities responsible for verifying the integrity of the staking and trading process. They ensure that the LST issuer executes the staking truthfully and completely, and prevent errors or fraud by the LST issuer and the staking agreement. Such as Ceffu, Cobo, Fireblocks, and Solv Guard.
Revenue distributor: refers to the entity that distributes staking rewards, responsible for distributing rewards efficiently and fairly. Typical examples include Pendle, Gauntlet, Antalpha, and most LST issuers also play the role of revenue distributor.
SAL uses smart contract technology and Bitcoin mainnet technology to efficiently integrate these four roles.
Specifically, SAL consists of five core modules, including a core data model and a series of services:
Staking Parameter Matrix (SPM)
The core data model of the pledge abstraction layer is called the pledge parameter matrix, which abstracts the parameters used in multiple pledge processes, including Bitcoin script configuration, pledge transaction parameters, LST contract parameters, and profit distribution rules. These parameters are shared not only between the various modules of SAL, but also between the various roles involved in the pledge process.
LST generation module
This module will ensure the issuance and redemption of BTC LST. The LST generation module will be responsible for interacting between the Bitcoin mainnet and the EVM chain, including a set of smart contracts on the EVM chain and services for creating and monitoring transactions on the Bitcoin mainnet.
Transaction Building Blocks
The transaction generation module is responsible for creating staking transactions, estimating the best transaction fee, and broadcasting the transaction to the Bitcoin mainnet. All parameters of the constructed transaction are defined in the SPM for verification by validators.
Validation Node
Verification nodes are a set of algorithms based on the Bitcoin mainnet that check the correctness and integrity of each pledge transaction according to the pledge transaction parameters defined in the SPM. They can also participate in the verification of the number of LST issued, ensuring that the number of LST issued is equal to the number of underlying BTC assets, and preventing errors or fraud by LST issuers and pledge agreements.
Revenue distribution module
The revenue distribution module is responsible for calculating the value of the revenue and mapping it to the price of LST, or providing a solution to airdrop the revenue assets to users. The functions of the revenue distribution module include LST price oracle, revenue exchange service, revenue storage and redemption service, and points exchange.
SAL: A one-stop solution for win-win situations
Next, as the BTCFi narrative continues to ferment, Bitcoin staking, as a key business for releasing Bitcoin liquidity, is destined to become a key part of the future of the Bitcoin ecosystem. The market urgently needs a set of secure and scalable solutions, and SAL is a universal solution that can effectively meet the needs of all parties.
For pledgers, they can get a convenient Bitcoin staking experience while reducing the risk of asset loss caused by operational errors and protocol opacity; for pledge protocols, joining SAL can greatly reduce development costs, quickly obtain liquidity and achieve an ecological cold start; for LST issuers, cooperation with various service providers within the SAL system can enhance the trust of the protocol, simplify the development process, and obtain efficient profit distribution plans, thereby improving product user experience; for custodians, this is a new business model that can effectively increase business revenue.
SAL Development Status
So far, many protocols and service providers have joined the SAL protocol ecosystem created by Solv. Babylon, CoreDAO, Stacks, Eigenlayer, and GMX are the first batch of staking protocols that adopt SAL, Pendle is the first batch of revenue distribution protocols to join, and Chainlink uses its CCIP technology to achieve cross-chain and underlying asset transparency proof for LST assets generated based on SAL. It is expected that more and more protocols will join in the coming months.
Conclusion
As Bitcoin staking further develops, its impact on the blockchain ecosystem will grow. The growing demand from stakers seeking to maximize their earnings potential and developers seeking protocol innovation will continue to unlock new on-chain opportunities. SAL brings tangible benefits to developers, users, and the entire Bitcoin community by improving the standardization and interoperability of the Bitcoin staking ecosystem. It is expected to trigger a series of chain reactions for the continued growth of Bitcoin, reshape Bitcoin staking, and pave the way for true mass adoption.
