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

Basic Project Information

Basic Information

Website: solv.finance

Twitter: @SolvProtocol, Followers 272,000

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, 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 blockchain technology integration and financial regulation.

Will Wang: Co-founder. Created "ERC-3525: Semi-Homogeneous Token Standard". He has 20 years of experience in the financial IT sector, having 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 Status

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, led jointly 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 a seed round financing of 2 million USD was completed, invested by a trading platform.
• 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 was completed, with investments from institutions including Laser Digital, an investment institution under the Japanese banking giant Nomura Securities, UOB Venture Management, Mirana Ventures, Emirates Consortium, Matrix Partners 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 OKX Ventures.

During the three rounds of financing, Solv Protocol raised a total of 29 million USD, with well-known investment institutions such as Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures making significant investments. It can be seen that the capital sector is quite optimistic about the future development of Solv Protocol.

Development Strength

In 2020, Solv Protocol 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 diligently working towards lowering the threshold for creating and using on-chain financial tools. As a result, this has enabled Solv Protocol to quickly issue SolvBTC, a wrapped asset of BTC, after the emergence of the BTCFi sector, and swiftly capture the LST market based on BTC. In terms of the timeline for achieving various key technical milestones, Solv Protocol has completed the technical development of the project as scheduled, demonstrating the strong capabilities of the Solv Protocol technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, with a market cap exceeding $1.3 trillion, has long been held by its owners without unlocking its potential value like ETH. Therefore, Solv Protocol advocates for unlocking the $1.3 trillion BTC asset potential 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, it also introduced the concept of Staking Abstraction layer (SAL), marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated stake platform

In the Solv Protocol architecture, the staking process is broken down into four key roles, which are closely linked together through an integrated platform architecture:

• LST Issuers (LST Issuers): Create liquidity yield tokens linked to staking 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) and Bitcoin, participating in DeFi and other yield activities.

• Staking Protocols (Staking Protocols): Manage users' deposited BTC and provide secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, etc., provide sources of BTC staking returns. By staking BTC 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 promptly updating the validation status.

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

Solv Protocol integrates these four key roles to build a complete Bitcoin stake ecosystem. By integrating the stake protocol, LST issuers, validators, and yield distributors, it achieves seamless interaction between the Bitcoin mainnet and EVM-compatible chains, simplifying the stake implementation for both users and developers. The stake protocol provides the source of yield for staked Bitcoin, LST issuers issue liquid stake 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 yield generated from staking to LST holders. It provides users with a more convenient, safer, and more attractive staking experience.

Staking Abstraction layer(SAL)Staking 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, allowing users to maximize returns while minimizing risks associated with the accounting process and cross-chain interactions.

Staking Parameter Matrix ( SPM ): The function 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, making it easier for them to 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 stake Token(LST). The issuance process of the cross-chain stake Token has been standardized and automated, allowing users to participate in complex cross-chain operations without manual involvement. This module enables LST issuers to quickly and conveniently issue liquidity stake 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 simpler.

Verification Nodes: Real-time verification of the legality and security of staking transactions. The role of verification nodes is to ensure that all staking transactions are legal and secure. When users stake, these nodes will check and verify the correctness of the transactions, and only confirm them 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 serves as an abstraction layer for staking, characterized by the integration of multiple staking participants (, including Bitcoin staking providers, yield acquisition, and DeFi scenario unlocking ), encapsulating these complex processes into standardized modules. This allows developers to quickly integrate Bitcoin staking functionality into their own applications and enables 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 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. 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, faces many projects in the market with a high degree of homogeneity, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone. Each of these 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 Guarantee

Solv Protocol ensures the security of staking transactions by integrating active verification service (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 preventing errors or malicious actions. This comprehensive monitoring and verification mechanism provides reliable protection for users' staking 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 having to perform any other on-chain operations, which ensures user safety while improving staking efficiency and generating profits.

Full-Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform that adopts the CeDeFi model, combining CeFi and DeFi, and providing transparent contract management services. Through the multi-signature contract address of a certain trading platform and the Solv Vault Guardian, it achieves refined permissions and conditional execution, ensuring asset security and efficient system operation.

Industry Standardization

After the launch of SAL, Solv Protocol aims not only to integrate BTC liquidity but also to promote industry standardization of BTC-based LST. As a standardized staking process that regulates BTC staking procedures and parameter systems, establishing industry standards can facilitate cooperation among various parties in the industry.