Solv Protocol is a blockchain platform pioneering the creation of a decentralized Bitcoin reserve. A decentralized Bitcoin reserve is a system comprised of bitcoins pooled from different blockchain participants and not under the control of a central authority.

The Solv protocol aims to unlock Bitcoin’s full potential. Through its decentralized Bitcoin reserve, Solv allows Bitcoin holders to pool their Bitcoins into a shared system, allowing them to share other aspects of DeFi, including borrowing and lending.

SolvBTC is the native token of the Solv blockchain protocol. It represents the Bitcoin kept in Solv’s decentralized reserves. The SolvBTC token aims to make Bitcoin more usable by spreading its liquidity across blockchains.

Although Bitcoin is by far the most popular cryptocurrency, with a net market cap of more than $1 Trillion, it was not intrinsically designed for cross-chain use. By breaking the inter-chain barrier and extending Bitcoin’s use beyond the Bitcoin network, SolvBTC allows Bitcoin to be used across different blockchain networks, thereby providing liquidity for other DeFi-based projects.

History of the Solv Protocol

Solv Protocol was founded in 2020 by Ryan Chow, Meng Yan, and Will Wang. The goal of its founders is to make Solv Protocol a pivotal infrastructure that connects liquidity across decentralized finance (DeFi), centralized finance (CeFi), and traditional finance (TradFi).

The founders also aimed to unlock Bitcoin’s full potential, transforming it from an idle, underutilized asset to an active, liquid asset that offers holders a wide range of opportunities.

Six months after its founding, the Solv protocol launched its first product, “The Vesting Voucher.” Using the Rinkeby faucet tokens, users could mint and list these vouchers on OpenSea, allowing users to interact with the protocol.

On July 15, 2021, Solv released an upgraded version of their vouchers, “The Bond Voucher.” These vouchers represent tokens locked in non-fungible tokens (NFTs). The upgraded “bond” voucher allowed users to mint and manage these NFTs.

By the end of 2021, Solv Protocol hit a significant funding milestone when it closed a $4 million Series A funding led by industry-leading companies and investors, including Blockchain Capital, Sfermion, Gumi Cryptos Capital, etc.

With many more features available to users, Solv Protocol launched the third version of its voucher, the “V3” voucher. This voucher is an industry-facing decentralized liquidity infrastructure that provides a unified, secure, and transparent way of creating, issuing, managing, and settling on-chain funds.

The V3 voucher also allowed investors to access different crypto investments and assets on one transparent and secure platform, the Solv Protocol platform. This made it easy for fund managers to raise capital efficiently and build on-chain credibility.

In August 2023, Solv Protocol hit another significant funding milestone when it secured another $6 million in funding from institutions and investors, including Laser Digital, UOB Venture Management, Mirana Ventures, Emirates Consortium, and Matrix Partners.

To foster more public interest and awareness of its project, Solv Protocol, in collaboration with Binance Web3 wallet, launched a 150,000 SOLV token airdrop campaign on June 4th, 2024. The goal of this partnership was to make it easy for users to begin their DeFi journey with Bitcoin.

Its SolvBTC token provided a seamless Bitcoin integration into DeFi, unlocking several yield opportunities for users and enabling them to dive easily into Bitcoin decentralized finance (BTCFi). While this campaign was a huge success, Solv Protocol launched a bigger airdrop campaign barely a month later.

On July 15, 2024, it collaborated with OKX Web3 wallet to launch a 12.6 million SOLV token airdrop campaign. Participants who completed some tasks received the SOLV tokens and were allowed to share in the Solv protocol Prize pool.

How Does Solv Protocol Work? Liquidity Consensus Network (LCN), UTXO-3525 and Compliant Bridge

Source: Solv’s Documentation

Liquidity Consensus Network (LCN)

A liquidity consensus network is a core feature of Solv Protocol that helps maintain the integrity of the protocol’s Bitcoin reserve.

Source: Solv’s Documentation

The liquidity consensus network performs the following functions;

• Dynamic Liquidity Management: The liquidity consensus network ensures the efficient handling and management of the Bitcoin reserve, providing seamless and easy access to liquidity across different blockchains.
• Cross-Chain Interoperability: The liquidity consensus network supports the seamless transfer of Bitcoins between blockchains, integrating liquidity from different sources and enhancing Bitcoin’s utility.
• Transparency and security: The liquidity consensus network ensures the legitimacy of transactions and the safety of the Solv blockchain network by using transparent, auditable records and reporting.

UTXO-3525

UTXO-3525, or Unspent Transaction Output-3525, is a Bitcoin mapping protocol that enables decentralized and non-custodial Bitcoin transfers from its native chain to the EVM-compatible blockchain network.

The UTXO-3525 performs two main roles within Solv Protocol - decentralized asset transfer and improving efficiency.

• Decentralized Asset Transfer: The UTXO-3535 enables the non-custodial, trustless transfer of Bitcoins, Ordinals, and Runes from the Bitcoin network to the EVM-compatible chains.
• Scalability and Efficiency: By ensuring the efficient and secure transfer of crypto assets, UTXO-3525 supports the scalability of the Bitcoin reserve, accommodating its [Bitcoin’s reserve] growing demand.

Compliant Bridge

The compliant bridge is an essential feature of the Solv protocol. It creates the infrastructure that enables financial institutions to pool their crypto assets (Bitcoins) into the Bitcoin reserve.

The compliant bridge helps tokenize Bitcoin ETFs and reporting and auditing.

• The tokenization of Bitcoin ETFs: A Bitcoin ETF is an exchange-traded fund that directly exposes traditional investors to Bitcoin’s price movements. ETFs allow investors to profit from Bitcoin without having to become crypto-savvy.

A crucial role of the compliant bridge is to ensure strict adherence to relevant financial regulations and standards. It also offers compliant custody options suitable for Bitcoin ETFs and institutional investors.

• Reporting and Auditing: The compliant bridge provides comprehensive reporting and auditing to meet the requirements of traditional finance participants interested in exploring the Solv Protocol.

Features of the Solv Protocol: Solv Guard, Liquid Staking Tokens and Yield Market

Solv Guard

Source: Solv’s Documentation

Solv Guard is an essential security feature of the Solv Protocol. It is an intermediary between the underlying Bitcoin assets and the users’ SolvBTC assets. Solv Guard ensures the safety and security of the Solv Protocol’s transactions through smart contracts.

The Solv guard is built on top of the smart contract wallet “Safe,” which has multi-signature capabilities. A multi-signature wallet, also known as a multi-signature wallet, demands the signatures of two or more entities or participants to authenticate or execute a transaction.

The primary role of the Solv guard is to limit or control how the multi-sig feature of the “Safe” wallet is used. Instead of approving any transaction, the Solv guard sets the boundaries or rules on when and how these multi-signatures are used.

This is paramount as it makes the multi-sig feature more specific and secure within certain pre-defined conditions, reducing the chances of unauthorized transactions getting approved.

A Solv guard typically sets up or configures a vault guardian for each vault in the protocol. A vault is a storage place in the protocol infrastructure where assets are kept. The vault guardian is a security manager who specifies the target address and permissions.

Once this is done, both the Solv guard and the “Safe” smart contract wallet can verify the validity of any transaction, ensuring that the transaction matches the target address and that the specific permissions or rules governing the transaction are followed before it can be approved.

Solv Guard Governance System

Solv Guard’s governance comprises two main entities;

• The Solv Vault guardian
• The Governor

As we have learned, the Solv guard is responsible for executing the security mechanisms that keep the Solv Protocol safe and secure. The governor, on the other hand, controls the governance power.

Some of the governance powers of the governor include;

• The upgrading of the Solv vault guardian
• Adding and removing authorizations
• Managing native token transfers and whitelisted addresses

An advantage of this governance system is that even if there is an issue with the guardian, the governor can still take timely action to fix it, ultimately protecting the users’ assets.

Liquid Staking Tokens

The Solv protocol has two liquid staking tokens: SolvBTC Babylon (SolvBTC.BBN) and SolvBTC Ethena (SolvBTC.ENA).

SolvBTC Babylon (SolvBTC.BBN)

Source: Solv’s Documentation

SolvBTC.BBN is a liquid staking token (LST) representing Bitcoin staked in Babylon, a new protocol designed to support Bitcoin staking. Stakers will receive SolvBTC.BBN in exchange for SolvBTC when they lock their tokens on the Babylon protocol.

Notably, stakers will not be able to earn yields from SolvBTC.BBN. But token holders will be positioned as Bitcoin liquid staking pioneers when Babylon launches its mainnet, and may benefit from subsequent rewards thereof. Stakers can also benefit from shared economic security with other networks.

SolvBTC Ethena (SolvBTC.ENA)

Source: Solv’s Documentation

SolvBTC.ENA is a Bitcoin liquid staking token that taps into Ethena’s basis trade strategy, offering holders Ethena yields and up to 10x returns on borrowed stablecoins. Based on the Ethena basis strategy, Bitcoin is used as collateral to acquire stablecoins, and the stablecoins acquired are used to mint and stake USDe (Ethena’s stablecoin).

Thus, yields could be generated from hedging derivative positions and staking. Liquid stakers are taxed 20% of the profits accrued from this strategy. The Solv protocol requires users to complete their KYC before staking. However, users can also purchase SolvBTC.ENA on some specific decentralized exchanges.

Yield Market

Source: Solv’s Documentation

Solv protocol’s yield market enables users to earn an annual percentage yield from their assets. Solv’s yield market boasts over 453,000 users and a TVL of over $1.3 billion. The yield market also supports multiple chains, such as the Mantle network, Arbitrum, and the BNB chain.

The average APY yield farmers earn on Solv is about 10% annually. APY values fluctuate based on the market conditions, but typically, the Solv yield market has an upper limit APY of 23% and a lower limit APY of about 1%.

What is the SolvBTC Token?

Solv protocol’s BTC holding is ranked 5th among chains | Source: Solv’s Documentation

SolvBTC has a maximum supply of 100 million tokens. Since its launch, the SolvBTC token has been deployed on over five major blockchain networks, including Ethereum and BNB mainnet. The high-utility value of the SolvBTC token has also led to the Bitcoin reserve attracting well over 19,000 Bitcoins, making SolvBTC one of the key liquidity providers in the DeFi space.

This robust liquidity has attracted key DeFi players like Babylon Protocol and Ethena, among other projects interested in building with SolvBTC. To maintain a stable and transparent reserve system, Solv Protocol constantly ensures that SolvBTC has a 1:1 backing with Bitcoins.

Since Bitcoin is the underlying asset of the SolvBTC token, the Solv Protocol has usually been extensively audited by leading security companies like Quantstamp, Certik, and Slowmist. This audit ensures transparency, bridging the gap between traditional and decentralized finance.

Uses of the SolvBTC Token

SolvBTC allows users to generate yields or earn profits through liquid staking tokens. Liquid staking tokens are a particular type of cryptocurrency token that users get when they stake their crypto assets in a staking protocol.

By staking their SolvBTC, users can convert it and get staking tokens like the SolvBTC Babylon token (SolvBTC.BBN). The SolvBTC.BBN represents Bitcoins staked or locked up in the Babylon Protocol.

So when users stake their SolvBTC, they can get the SolvBTC.BBN tokens and thus earn staking yields, allowing holders easy access and flexibility to explore and benefit from the exciting world of DeFi.

Is the SolvBTC Token a Good Investment?

Investing in the SolvBTC token might be a good investment strategy for Bitcoin holders interested in exploring and benefiting from decentralized finance (DeFi) and other crypto yield-generating activities not supported by the Bitcoin blockchain network.

While investing in SolvBTC may seem like a potentially profitable investment, especially for Bitcoin holders who are also DeFi enthusiasts, users are strongly advised to do their due diligence in studying and understanding the Solv Protocol’s blockchain project.

Reading the Solv Protocol’s whitepaper and monitoring what other crypto enthusiasts are discussing is a surefire way to grasp and understand its blockchain projects.

Risk Analysis

Advantages

A significant advantage of the Solv Protocol is its high-yield opportunities for Bitcoin holders interested in staking their Bitcoins. Users can use the SolvBTC token to explore and benefit from other income-earning DeFi activities like lending and staking.

Another advantage of the Solv Protocol is its large user base. Since the Solv Protocol is currently the biggest Bitcoin staking platform, there is vast potential for its growth, attracting more blockchain collaboration and benefiting its users.

Disadvantages

A major disadvantage of the Solv Protocol is its potential centralization risk. Unlike Bitcoin, which is completely decentralized, SolvBTC may rely on centralized custodians to manage their Bitcoins. So, users will have to trust the custodian to manage their Bitcoins, which goes against the Bitcoin decentralization principle, allowing users complete control over their assets.

How Can You Own the SolvBTC Token

To own the SolvBTC token and become a part of users benefiting from the multi-chain usability provided by the Solv Protocol, follow the simple step-by-step process:

Set up a Wallet

To own a SolvBTC token, you need to purchase it from a cryptocurrency exchange. To do this, you must create a Gate.io account, complete the KYC process, and add funds to the account to purchase the token.

Useful References

For the latest updates about SolvBTC, you can visit:

• Official website
• Twitter

Take Action on SolvBTC

Users can sign up and purchase or trade SolvBTC tokens here.