Solv Protocol Launches Bitcoin Staking Token on Solana to Woo BTC Holders
- DDDOriginal
- 2024-10-18 10:32:15634browse
New BTC yield options in the Bitcoin network's emerging ecosystem of layer-2 scaling chains (L2s) and decentralized Finance (DeFi) protocols
Solv Protocol has launched a Bitcoin (BTC) staking token on Solana in a bid to woo BTC holders as yield opportunities proliferate for the digital currency.
The new BTC yield options in the Bitcoin network's emerging ecosystem of layer-2 scaling chains (L2s) and decentralized Finance (DeFi) protocols are forcing projects on other networks — such as Ethereum and Solana — to compete for BTC liquidity.
Solv's new token, dubbed SolvBTC.JUP, is a liquid staking derivative (LSD) designed to generate BTC-denominated yield from transaction fees on Jupiter Exchange, one of Solana’s most popular decentralized exchanges (DEX).
The token launch is still in the pilot phase but is part of an “ongoing effort to enhance Bitcoin’s role in decentralized finance,” Solv said in a statement shared with Cointelegraph on Oct. 17.
Solv is targeting a yield of roughly 12% annual percentage returns (APR) on BTC, which is considerably higher compared to BTC staking on L2s, which typically pay APRs in the low single digits.
The higher yield is meant to offset additional risks from hedging against volatile token price exposures in Jupiter's liquidity pool.
“Solv mitigates risk by deploying a delta neutral strategy, which involves hedging the traders’ net open interest on centralized exchanges,” Solv said.
Jupiter is among Solana's most active decentralized exchanges, boasting roughly $1.3 billion in total value locked (TVL), according to data from DefiLlama.
Some Bitcoin-native L2s — including Core Chain, Babylon, and Spiderchain — are exploring native BTC staking options. Similar to proof-of-stake (PoS) networks like Ethereum, Bitcoin L2 stakers lock up BTC as collateral to secure the networks in exchange for rewards.
EigenLayer, a restaking protocol on Ethereum, has also sought to attract BTC holders by adding wrapped Bitcoin to the list of tokens that EigenLayer accepts as restaking collateral.
Restaking involves taking a token that has already been staked — posted as collateral with a validator in exchange for rewards — and using it to simultaneously secure other protocols.
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