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

Solv Protocol was established in 2020, aiming to lower the barriers to creating and using on-chain financial instruments, bringing diverse asset classes and yield opportunities to the crypto space. The project focuses on minting and trading NFTs related to financial ownership certificates. With the continuous development of the BTCFi track in 2024, Solv Protocol has shifted its focus to BTCFi, creating a full-chain yield Bitcoin asset 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

Basic Information

Website: solv.finance

Twitter: 272,000 followers

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, he was a co-founder at Beijing Youzan Technology, dedicated to applying blockchain technology to the automotive industry database. In addition, he also worked 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 a 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 had been completed, with Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Matrix Partners, BincVentures, and Emirates Consortium jointly leading the investment.

Seed Round

On May 8, 2021, it was announced that a $2 million seed round financing had been completed, invested by Binance Labs.

On August 30, 2021, it was announced that a $4 million seed round financing was completed, 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, and others.

On August 1, 2023, it was announced that a $6 million seed round financing had 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, Jingwei China, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.

Strategic Round

On October 14, 2024, it was announced that $11 million in strategic financing had been 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, and well-known investment institutions such as Binance Labs, Blockchain Capital, Laser Digital, JD Capital, and OKX Ventures made significant investments in it, indicating a strong confidence in the future development of Solv Protocol in the capital field.

Development Strength

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

From the perspective of key events in the development of the Solv Protocol project, Solv Protocol has been dedicated to lowering the threshold for creating and using on-chain financial tools. This has allowed Solv Protocol to quickly issue the wrapped asset SolvBTC after the rise of the BTCFi track and rapidly capture the BTC-based LST market. In terms of the timeline for achieving various key technical milestones, Solv Protocol has completed the project's technical development as scheduled, demonstrating the strong capabilities 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 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, the concept of Staking Abstraction layer(SAL) was introduced, marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated stake platform

In the Solv Protocol architecture, the staking process is divided into four key roles, which are closely connected 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 the liquidity of their assets while staking Token ) LST ( in Bitcoin, participating in DeFi and other yield activities.

Staking Protocol ): Manage the Bitcoin deposited by users, providing secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, and others provide sources of Bitcoin staking returns. By staking Bitcoin in POS networks, users receive rewards from POS chains.

Staking Validators (: Responsible for verifying transactions, ensuring the legality and security of staking transactions, verifying that the staked BTC corresponds to the LST Token, and timely updating the validation status.

Yield Distributors ): Ensure that staking rewards are transparently and fairly distributed to LST holders, guaranteeing that users can timely receive their staking returns.

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 both 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 yields 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 interacting with the Staking Parameter Matrix(SPM). The key modules of SAL include the LST generation module, transaction generation module, validation nodes, and profit distribution module, all of which rely on SPM to define transaction rules, validation standards, and profit 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 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 function of the LST Generation Module is to simplify the issuance of the cross-chain liquidity staking Token ( LST ). The cross-chain staking Token issuance process has been 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 purpose of the Transaction Generation Module is to automatically generate and broadcast BTC staking transactions. In simple terms, the job of this module 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 complete most of the work for users, 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, confirming them only after ensuring there are no issues.

Revenue Distribution Module: Responsible for accurately mapping staking rewards to LST holders. When users earn rewards through staking, the revenue 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, is characterized by the integration of multiple staking participants, including BTC staking providers, yield generation, and DeFi scenario unlocking, which abstracts and encapsulates these complex processes into standardized modules. This enables developers to quickly integrate BTC 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. DeFi applications or wallet applications only need to integrate SAL to offer a range of staking options to their user base. However, since BTC 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 is quite similar to Solv Protocol. After the launch of SAL, Solv Protocol began to focus on integrating BTC liquidity, which gives it a significant advantage compared to other projects.

( Security Guarantee

Solv Protocol ensures the security of stake transactions by integrating the active verification service )AVS(. The AVS system comprehensively monitors all aspects of stake 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' stake transactions.

) Process Optimization

Solv Protocol not only integrates BTC liquidity but also optimizes the project's staking process, allowing users to stake more conveniently. Users only need to deposit Bitcoin into the platform without any further on-chain operations, ensuring user security while improving staking efficiency and earning profits.

( All-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. It achieves refined permissions and conditional execution through Gnosis Safe's multi-signature contract address 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 LSTs. As a standardized staking process that regulates the BTC staking process and parameter system, establishing industry standards can facilitate cooperation and communication among all 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 entry in the BTCFi industry, integrating various liquidity resources and investment opportunities into one through the launch of SAL.