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 instruments, bringing diversified 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 all-chain yield Bitcoin asset SolvBTC, aiming to provide new opportunities and possibilities for Bitcoin holders while creating an efficient BTCFi ecosystem. Recently, Solv Protocol launched the stake abstraction layer (SAL), aimed at simplifying and standardizing the cross-chain Bitcoin staking process, thereby abstracting the complexity of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Project Basic Information

Basic Information

Website:

Twitter:

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, focusing on applying blockchain technology to the automotive industry database. Additionally, he 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 the recipient of the "20th Anniversary Outstanding Contribution Award of Zhongguancun."

Meng Yan: Co-founder. Formerly served as Vice President of CSDN, 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, co-led by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, JD Capital, BincVentures, and Emirates Consortium.

Seed Round

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

• 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 seed round financing of 6 million USD 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, JD Capital, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.

Strategic Round

• 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, with well-known investment institutions such as Binance Labs, Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures making significant investments, indicating a strong confidence in the future development of Solv Protocol in the capital sector.

Development Strength

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

From the perspective of key events in the development of the Solv Protocol project, Solv Protocol has been working hard to lower the threshold for creating and using on-chain financial tools. This has enabled Solv Protocol to quickly issue the wrapped asset SolvBTC after the rise of the BTCFi track, and to rapidly occupy the LST market based on BTC. In terms of the timeline for achieving various key technical milestones, Solv Protocol has completed the development of project technology 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 USD. 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 USD potential of BTC assets through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi, launching the all-chain yield BTC asset SolvBTC, which can release BTC's staking liquidity. Recently, they also introduced the concept of Staking Abstraction layer(SAL), marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated Staking Platform

In the architecture of the Solv Protocol, the staking process is broken down into four key roles and tightly integrated through a unified platform architecture:

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

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

• Staking Validators (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 validation status in a timely manner.

• Yield Distributors (Yield Distributors): Ensure that staking rewards are transparently and fairly distributed to LST holders, guaranteeing that users can receive staking returns in a timely manner. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.

Solv Protocol integrates these four key roles to build a complete Bitcoin staking ecosystem. By combining 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 earnings for staking Bitcoin, LST issuers issue liquid staking tokens to allow 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 earnings 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). The 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, verification 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 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 cross-chain liquidity staking Token ( LST ). The issuance process of cross-chain staking Tokens has been standardized and automated, allowing users to avoid manually participating 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 stake transactions. In simple terms, the job of this module 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.

Validation Nodes: Real-time verification 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 check and verify the correctness of the transactions, confirming the transactions 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 will be responsible for correctly distributing these rewards to the users' LST Token. Users can receive the corresponding staking rewards based on the proportion of LST Tokens they hold.

In summary, SAL serves as a staking abstraction layer, characterized by the integration of multiple staking participants (, including Bitcoin staking providers, yield generation, 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 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 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 projects on 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 BTC's Liquidity, giving it a significant advantage over other projects.

Security Assurance

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, stake duration, etc., to ensure the validity and security of the transactions, thereby avoiding errors or malicious behaviors. This comprehensive monitoring and verification mechanism provides reliable protection for users' stake transactions.

Process Optimization

Solv Protocol optimizes the staking process of the project while integrating BTC liquidity, allowing users to stake more conveniently. Users only need to deposit Bitcoin into the platform without the need to perform other on-chain operations, which ensures user safety while improving staking efficiency and allowing them to earn rewards.

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. 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 by Solv Protocol, in addition to integrating the liquidity of BTC, it is also necessary to promote the industry standardization of BTC-based LSTs. As a standardized staking process that regulates the staking processes and parameter systems of BTC, the establishment of industry standards can promote.