Take a look at the development of BTCFi from the perspective of SolvBTC.
Interviewee: Ryan Chow, Founder of SolvBTC
Interview & Article: Pzai, Foresight News
In the long history of cryptocurrency, Bitcoin , as the longest river, has always played a vital role in the popularization of assets. In recent years, whether in terms of compliance or on-chain ecological construction, the Bitcoin ecosystem has been growing very strongly. However, in terms of ecological construction, unlike other ecosystems that are uniform, Bitcoin has experienced multiple rounds of forks, and its expansion technology routes are also differentiated. In terms of assets, due to the lack of scalability of Bitcoin's native assets, the existing custody solutions also have their own advantages, resulting in a relative split in the liquidity of each ecosystem, which requires a certain degree of integration.
As one of the early protocols involving asset innovation (such as ERC-3525 semi-fungible tokens), Solv began to pay attention to opportunities related to the issuance of new assets at the end of 2022, and Bitcoin eventually became the team's favorite. Since April this year, SolvBTC has fully integrated assets such as BTC and BTCB, and successfully introduced and circulated more than 20,000 BTC in nearly 10 ecosystems. With the official launch of re-staking protocols such as Babylon and the construction of more Bitcoin-related income scenarios, SolvBTC will prepare for a more comprehensive outbreak of BTCFi. How will the BTCFi-related ecosystem develop in the future? What role will SolvBTC play in it? This issue of Foresight News conducted an exclusive interview with Ryan Chow, co-founder of SolvBTC, to explore the development of BTCFi from the perspective of SolvBTC.
Financial innovation enters the asset side
In terms of financial innovation, Ryan said, "In the financial innovation of cryptocurrency, it is divided into algorithmic innovation and asset innovation. The algorithmic innovation in the last cycle is mainly reflected in stablecoins and protocol innovations such as Aave and Compound, which I can call version 1.0. Then DeFi began to focus on asset innovation, such as Ondo focusing on RWA, Ethena introducing derivative income, and re-pledge layers such as EigenLayer/Babylon are all aimed at introducing a variety of assets (income) into the crypto field." The growth of the crypto market is inseparable from these innovations, and under the overall involutionary environment of current market projects, asset innovation has become the key to ecological breakthroughs. And choosing underlying assets has become the top priority for many teams. Good underlying assets can be a catalyst and booster for the flywheel effect, and can also be the first step to future prosperity.
In terms of asset selection, Ryan's team has made many achievements in the DeFi track. "At the beginning, we were observing more promising tracks including BTC, ETH and stablecoins. Later, due to factors such as Bitcoin halving and the entry of traditional funds, we also considered focusing on Bitcoin as a single asset class for construction." He also admitted that narratives such as inscription assets and BTC Layer2 have also brought certain asset innovations to BTCFi. "According to my definition, BTCFi specifically refers to the pan-ecological development of the entire Bitcoin. In simple terms, it is how to make good use of Bitcoin, how to make good use of the main chain of Bitcoin to create new assets, how to serve Bitcoin well, and to have more usage scenarios, more consumption scenarios, and more interest-bearing scenarios. These are all part of the BTCFi ecosystem. So I think inscriptions and runes are actually counted in this. At least we can see that a large number of users, the money they make after hyping inscriptions and runes is actually holding Bitcoin, and they are in the process of looking for what Bitcoin can do next. So I think that inscriptions, runes and BTCFi are actually complementary. They are all in the same ecosystem and influence each other."
In the Bitcoin ecosystem, a stable underlying asset is the cornerstone of circulation and prosperity. In the past decade of cryptocurrency development, Bitcoin has successfully established its position as a store of value as digital gold. However, if it is only a static asset, the potential of Bitcoin will never be fully released. Liquidity is not only the key to the booming Bitcoin ecosystem, but also the core driving force for the full reflection and growth of the value of Bitcoin itself. Once, WBTC emerged in the DeFi Summer of 2020 and began to determine its position in the ecosystem. But recently, Justin Sun’s subtle connection with BitGo has begun to raise questions about WBTC in the crypto industry. At the same time, the development of Bitcoin L2 is in full swing. Ryan said, "These Bitcoin L2s have actually become low-cost hype aids for previous assets such as inscriptions and runes." Starting from these assets, the basic liquidity construction on the chain is also being undertaken by assets such as wBTC and cbBTC. "After four years of development, $10 billion of the scale of these DeFi comes from WBTC. This is actually a very good number. So it can be said that WBTC has actually reaped this dividend and has already occupied a place." In the future, Ryan believes that with the massive entry of traditional institutions and the ecological development of BTCFi, "We have always believed that BTCFi will bring a wave of explosions as the scale of assets grows, so SolvBTC was born to undertake the trillions of liquidity brought about by the explosion."
Start from multiple points and strive for excellence
When discussing how SolvBTC solves the challenges faced by the BTCFi field, Ryan discussed three issues: "The first issue is security reserves, which should be the most important. We can all see that Bitcoin reserves such as tBTC also emphasize security, and we will cooperate with trusted custodians (such as Fidelity) while ensuring decentralization and on-chain transparency. The second issue is that users need low friction costs in transactions, such as multi-chain liquidity provision and interoperability, which requires complex technological innovation to support. The third issue is how to build a yield infrastructure for users. On the one hand, we have built a Ce-DeFi model and use technical architecture to allow users to package any related assets, such as quantitative and option returns. In fact, in the past four years, we have seen that the scale of the entire DeFi is about 80 to 100 billion."
Through a long and tortuous exploration of asset innovation and on-chain practice, Solv chose to focus on BTC staking and has become the platform with the highest TVL in this field. With its high consensus, SolvBTC has more than 200,000 users and more than 20,000 BTC reserves, with a total market value of over $1 billion. It ranks in the top 60 on CoinMarketCap and is currently one of the BTC assets with the highest consensus in the entire network. It ranks fourth in the world in on-chain reserves, second only to Ethereum, TON and BNB Chain, and surpasses most BTC ETFs, ranking sixth in the world.
In terms of underlying asset security, "we have built a flexible storage capability based on the Liquidity Consensus Layer (LCN) and achieved 1:1 transparent correspondence through smart contracts. In terms of asset endorsement, we also adopted a risk stratification design of "core area" and "observation area". The observation area allows users to deposit their relatively unpopular assets (such as tBTC, FBTC, etc.) in the observation area. The backward compatibility of the core area not only ensures overall security but also improves the liquidity of user assets. In terms of underlying infrastructure, we have built a complex and ingenious back-end architecture to ensure the security of users' assets. In addition, we also borrowed from the design of Rollup and introduced a proof mechanism to ensure the withdrawal process. In addition, we use Chainlink CCIP to build SolvBTC's full-chain liquidity. "
In addition to solving the challenges brought by the assets themselves, the user's usage scenarios are also important considerations for asset operations. In this regard, Ryan said, "The existing usage scenarios are mainly concentrated in on-chain transactions. For example, users can make general purchases through SolvBTC, and use the asset to borrow and lend, and can also split assets through protocols such as Pendle. In addition, through SolvBTC, users can participate in the profit opportunities on various public chains and obtain reward points." In addition, the recent launch of Babylon's pledge also provides a broader application space for Bitcoin assets. SolvBTC has already launched its Babylon-related pledge pool. Ryan also expressed his favor for cooperation with Babylon in an exclusive interview: "In the re-pledge track, we have always liked the new Bitcoin asset type built by Babylon. As a protocol with a large Bitcoin reserve, SolvBTC has also created a dedicated SolvBTC.BBN pledge pool, allowing users to directly participate in the re-pledge income. We also believe that re-pledge can be sufficient to undertake asset income of tens of billions of dollars. In addition, we have also built SolvBTC.ENA in cooperation with Ethena The staking pool will then unlock a rich profit scenario for Bitcoin holders. "
In fact, SolvBTC.BBN has also become the largest Babylon LST, with a total circulation of more than 3,000 and more than 30,000 participating users. In addition, based on the strong multi-chain circulation ecology that covers the mainstream blockchain ecosystem, this LST not only supports multi-chain casting, but also supports efficient inter-chain intercommunication. It is the only Babylon LST that supports multi-chain casting and cross-chain intercommunication. On the chain, SolvBTC has also been integrated with more than 20 DeFi protocols, providing users with rich DeFi applications and income opportunities. It is currently the only BTC LST that fully builds DEX liquidity, integrates Lending protocols, and supports high-quality income mining opportunities.
Welcome the next trillion liquidity
Trillions of liquidity are pouring in, and how to package these liquidity into on-chain assets is also a bottleneck that needs to be solved urgently. SolvBTC hopes to introduce the real needs of institutions for on-chain returns through ETF, one of the entry options for traditional institutions. In addition, Ryan also expressed the hope that Solv will participate in the value setting of Bitcoin reserve assets to increase its attractiveness to institutions. "In the future, we have always hoped to introduce hundreds of billions or even trillions of dollars of liquidity into the Bitcoin ecosystem. We have maintained a good cooperative relationship with chains such as BNBChain and Base to jointly promote the adoption of SolvBTC. In addition, as I just said, I have always believed that the outbreak of BTCFi will leverage the circulation of trillions of dollars of assets. In this process, three core needs of assets are involved. The first is financial services, the second is interest-bearing direction, and the third is the transaction of inscriptions and runes. This year, we have seen that Bitcoin has broken through the circle, and the Bitcoin ecosystem has become more and more mature due to various factors. Therefore, both the asset side and the ecological side have seen an outbreak this year. SolvBTC's goal is to fully cover these needs, build full-chain liquidity in financial services, and introduce Babylon's pledge in interest-bearing."
In addition to integrating BTC liquidity in the EVM ecosystem, SolvBTC also plans to open up diversified asset channels. In the next six months, SolvBTC will officially launch a decentralized mapping solution for BTC mainnet assets. SolvBTC will also actively cooperate with traditional financial institutions and BTC ETFs to introduce a large amount of institutional liquidity for construction.
Almost every staking project will face the test of real demand, and Ryan also believes that "many people said that our protocol can only attract users through point emission, but I think we can also transfer value to products and businesses through these demands. I think SolvBTC is the largest Bitcoin reserve solution on the chain, with a reserve of nearly 20,000 Bitcoins, and the scale is still expanding. We actually think that our platform also provides a large number of users with the ability to switch to earn income with one click. And I always think that it will be the biggest one among these benefits, because it does have the ability to be the easiest to understand and has the largest capacity."
Finally, Ryan said, "I have always believed that SolvBTC will undoubtedly become the entry-level portal of BTCFi. And we are heading there. We have always hoped that SolvBTC can become a portal for users to better participate in BTCFi. Overall, our goal is actually very clear: we hope to detonate the BTCFi ecosystem in this cycle. In the past month, I think this momentum is still continuing. And because of the emergence of various BTCFi ecological projects, this feeling has become stronger and stronger. Then in this process, Solv actually hopes to play the role of the largest reserve on the Bitcoin chain and an entrance to BTCFi. So although we can be said to be the largest at present, we still have a lot of efforts to do. For us, I think it is 1 billion US dollars now, and it may be 5 billion, 10 billion US dollars, or even tens of billions of US dollars. It is a reasonable range. We can see the capacity of the real demand market and can receive such an expectation. So this is a role we need to work hard to play at present." We also hope that SolvBTC can forge ahead on the eve of the flourishing of BTCFi.
