Solv Protocol: Exploring the staking abstraction layer and liquidity mechanisms in the BTCFi ecosystem

Introduction

Solv Protocol was established in 2020 with the aim of 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 shifted its focus to BTCFi, creating a full-chain yield Bitcoin asset SolvBTC, aimed at providing new opportunities and possibilities for Bitcoin holders while creating an efficient BTCFi ecosystem. Recently, Solv Protocol launched the staking abstraction layer (SAL), designed to simplify and standardize the cross-chain Bitcoin staking process, abstracting the complexity of Bitcoin staking scenarios to allow users and developers to adopt it quickly.

Project Basic Information

Basic Information

Website:

Twitter:

Launch time: June 2021 mainnet launch, Solv Protocol has not issued tokens.

project 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 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 "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, led by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Jingwei Ventures, BincVentures, and Emirates Consortium.

Seed Round

• On May 8, 2021, it was announced that they completed a $2 million seed round financing, invested by a certain trading platform.
• 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, among others;
• On August 1, 2023, it was announced that they completed a $6 million seed round financing, with investments from institutions such as Laser Digital, a 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 a strategic financing of $11 million was completed, with participation from companies such as Laser Digital, Blockchain Capital, and a certain trading platform.

During the three rounds of financing, Solv Protocol raised $29 million, and several well-known investment institutions made significant investments, indicating a strong confidence in the future development of Solv Protocol in the capital sector.

Development Strength

In 2020, the Solv Protocol was established. 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 diligently working to lower the barriers to creating and using on-chain financial tools. This effort has allowed Solv Protocol to quickly issue the wrapped asset SolvBTC after the rise of the BTCFi sector and swiftly capture the BTC-based LST market. In terms of the timing of 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 capitalization 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 for unlocking $1.3 trillion of BTC asset potential through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi, launching the all-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 staking platform

In the Solv Protocol architecture, the staking process is broken down into four key roles, tightly connecting them through an integrated platform architecture:

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

• Staking Protocols ): Manage users' deposited BTC and provide secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, and others offer sources of BTC staking returns. By staking BTC in POS networks, users earn rewards from POS chains.

• Staking Validators (: For example, Ceffu, Cobo, Fireblocks, Solv Guard, etc. are responsible for validating transactions to ensure 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 ): Ensure that stake earnings are transparently and fairly distributed to LST holders, guaranteeing that users can receive their stake rewards in a timely manner. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.

By integrating these four key roles, Solv Protocol has built a complete Bitcoin staking ecosystem. It achieves seamless interaction between the Bitcoin mainnet and EVM-compatible chains through the integration of staking protocols, LST issuers, validators, and yield distributors, simplifying the staking implementation for users and developers. The staking protocol provides a 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, while yield distributors are responsible for transparently allocating 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 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 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. The SPM provides developers with a simple and standardized 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 LST generation module simplifies the issuance of cross-chain liquidity stake Token ( LST ). The issuance process for cross-chain stake Tokens has been standardized and automated, allowing users to avoid complex cross-chain operations manually. This module enables LST issuers to quickly and conveniently issue liquidity stake Tokens and distribute these Tokens to users.

Transaction Generation Module: The purpose 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 assist users in completing most of the work, 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 correctly 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 integrating 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 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 the 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 with it, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone, each of which has a high similarity to Solv Protocol. After Solv Protocol launched SAL and began focusing on integrating BTC's Liquidity, Solv Protocol has a significant advantage compared to other projects.

( Security Assurance

Solv Protocol ensures the security of staking transactions by integrating the active verification service )AVS(. The AVS system comprehensively monitors all aspects of staking transactions, including target addresses, script hashes, staking durations, etc., to ensure the validity and security of the 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 also optimizes the project's staking process, allowing users to perform staking operations more conveniently. Users only need to deposit Bitcoin into the platform, without the need to perform other on-chain operations, which ensures user security while improving staking efficiency and allowing users to earn returns.

All-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. It implements 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, Solv Protocol aims to not only integrate the liquidity of BTC but also promote the B-based.