Solv V3 Phase Review: How to Find Reliable Innovation Paths in Web3

Author: Solv Core Team

Solv V3 was released on March 21, and it has been exactly three weeks as of this Monday. In these three weeks, the actual trading volume has exceeded $60 million, and it is expected to surpass $100 million within this month. Moreover, based on our pipeline, this growth momentum is likely to continue. In a few months, Solv V3 will generate hundreds of millions of dollars in actual trading volume.

In the crypto market, this achievement is not particularly impressive. However, it has been hard-earned for us. Although there have been some improvements in the secondary market in recent days, and the industry carnival in Hong Kong is in full swing, it is neither a bull market nor a period of industry expansion. If we draw a historical analogy, this period is akin to the recovery phase between spring and summer of 2019, where the secondary market has shown some recovery, but there is no real growth support.

In such a time, for Solv V3 to achieve these results is indeed beyond our expectations. A couple of days ago, we announced in an internal meeting that Solv V3 has achieved initial success. Of course, we are still far from true success; we must remain calm and closely monitor market changes and risks.

If the growth of Solv V3 can be sustained, its significance may very well transcend the project itself. Solv V3 is a "digital asset fund supermarket," achieving a full-process standard for on-chain fund issuance, trading, and clearing, allowing people to conveniently create funds and quickly raise capital. Solv V3 integrates Gnosis Safe, Cobo, Enzyme, and several custodians including Ceffu and Copper on the backend, ensuring that fund managers do not misuse funds while generating returns through a multi-party custody mechanism and technical means.

On the frontend, investors can monitor fund status, trade investment certificates (SFT), and in the future, will be able to obtain additional liquidity from various collateral lending platforms. For us, if V3 is successful, it signifies that we have finally found a development path that suits the current market conditions and is innovative. This is a new track, something unique, not a copy of any successful project.

For the industry, if we can succeed, it could potentially open a new market for the entire Web3, and we believe this is a market with significant potential. To make a perhaps inappropriate analogy, some of the hottest DeFi projects during the last bull market, such as Uniswap, Compound, and Aave, actually emerged during the bear market, carving out a new track. Although they started very small, they at least proved their value propositions were solid and their business models viable. Then, when the bull market arrived, the new track turned into a large market.

Creating a digital asset fund supermarket is a direction that has been considered in crypto for a long time. Back in the bull markets of 2017 and 2018, I personally heard of at least five such projects, one of which seemed to come from an all-star team at Yale. Yet, after all these years, not a single one has emerged.

Anyone who has started a business knows that pursuing something that many have tried and failed is particularly risky, and generally, one should not choose such a direction. So why are we taking this path? How did we get here? We considered this and decided to conduct a retrospective on Solv's arduous exploration of application scenarios over the past two years, summarizing the publicly available content into writing.

It should be noted that Solv has not yet achieved true success, so this retrospective is not meant to boast; we have nothing to boast about. However, in the Web3 industry, people tend to enjoy mythological stories, preferably with a dazzling background of elite teams who can see through chaos and bring peace with a cup of tea or a fan.

In reality, we all know that the right path is fraught with hardships. Anyone who wants to do something seriously, who does not want to just make a quick buck and hide away, finds it difficult and full of twists and turns. Yet, very few are willing to share the arduous exploration process with the outside world. We have always wanted to read such articles, but have not found any. Since that is the case, we will attempt to do so, hoping it will provide some reference for peers and readers.

Web3 Projects: Imitation or Innovation?

In entrepreneurship, unless absolutely necessary, few people actively pursue groundbreaking innovation. If there is one fundamental lesson from China's success in the Web2 era, it is "do not be original," or more accurately, do not take risks to carve out new tracks; instead, imitate others' successes, follow paths that have already been paved, and then add unique features for specific markets through "micro-innovation" process improvements.

Whether in Web2 or Web3, doing "from 0 to 1" is the riskiest and most challenging endeavor. The deepest fear for entrepreneurs in the early stages is that the ideas they have repeatedly thought through and validated in their minds may not be recognized by the market once released, leaving them unsure how to pivot. In any other endeavor, there are effective routines; the only question is whether you understand them or can find someone who does to collaborate with.

Only in discovering new market opportunities is there no established method to follow. Why is it that Steve Jobs is still revered as an innovation leader years after his death? Why is Elon Musk, regardless of whether he is the world's richest person, still seen as Iron Man? It is because both are extremely rare innovators who have repeatedly made groundbreaking innovations and carved out new tracks.

Because such situations are exceedingly rare, most entrepreneurs are better off not being original and not going solo, but rather improving upon paths that others have already successfully navigated. If someone has succeeded, the market has recognized it, and users have been educated, then you can make an improved product, thus avoiding the greatest risks of entrepreneurship. It is important to understand that entrepreneurship is not about showing off or winning the praise of keyboard warriors; it is about achieving commercial success. Therefore, "not innovating" is a rational, pragmatic, and responsible entrepreneurial attitude.

However, in Web3, being original is a common choice among entrepreneurs; it seems everyone looks down on imitating others and feels compelled to innovate to some extent. Every bull market brings forth a plethora of unique ideas competing for attention, overwhelming the senses. Personally, I was most struck during the DeFi bull market of 2020-2021, when many script kids, having skimmed through a few pages of finance textbooks, began to engage in financial innovation. Suddenly, complex formulas were everywhere, and astonishing financial products flooded the market, creating a significant illusion: could traditional finance really be so ineffective?

So many good ideas that had not been thought of for decades? Of course, in hindsight, most were mere pseudo-innovations, many of which did not even establish basic principles and could even be classified as fabrications.

So why do many Web3 entrepreneurs prefer to fabricate rather than follow the well-proven path of imitation? We believe this is mainly because the Web3 industry is still in its early stages, offering relatively high returns for innovators. Specifically, there are five reasons:

First, the Web3 market places a high premium on "orthodoxy," making imitation projects feel bland. Web2 users do not care who the true innovators are; they only care about usability. Thus, savvy internet veterans never take risks themselves; they constantly watch the market for which fool accidentally stumbles upon a new path, then immediately imitate it, leveraging their advantages in product, user experience, and traffic competition to surpass others. Over time, forgetful users and media often mistake imitators for originals, leading to imitation projects reaping both fame and fortune while the originals are left in despair.

However, at this stage in Web3, the market places great importance on "orthodoxy." If you are the pioneer of a track, the market grants you the highest valuation and the greatest honor; if you are a follower or a bandit, your valuation is less than one-tenth of theirs, and no amount of struggle will change that. Vitalik Buterin observed this phenomenon early on and summarized that "orthodoxy" is the most critical resource in the crypto world. Under the incentive of this high premium for orthodoxy, Web3 naturally tends to be original and independent, donning the hat of orthodoxy.

Second, the Web3 infrastructure is relatively primitive, making it difficult to differentiate products and user experiences, thus limiting the space for micro-innovation, which makes it hard for imitation projects to establish a latecomer advantage.

Third, Web3 traffic is more focused on token economics than on user experience. In Web3, the way to expand traffic is through token economics, while traditional traffic growth methods are merely supplementary. Imitation projects generally rush in after seeing orthodox projects succeed in the crypto market, but at this point, they must contend not only with the existing user and brand advantages of orthodox projects but also with the competitive barriers constructed by the already spinning token economic flywheel. Under this pressure, traditional methods of competing for traffic are ineffective; to gain a competitive edge, many imitation projects can only take risks with high incentive schemes, which come at the cost of sustainability, leading to inevitable collapses.

Fourth, the prematurely developed crypto market encourages irresponsible pseudo-innovation. Many Web3 projects do not even need to wait for market validation; they can achieve profitability through a wave of hype, so why care about whether innovation is reliable or sustainable? The more sensational and original the slogans, the better.

Fifth, market volatility is extreme, and followers have less risk tolerance than the leading players in the track. In the Web2 world, the era of stability is relatively long, and the success of leaders is more stable, giving followers time to imitate or even surpass. In Web3, however, the eras of stability and chaos can switch almost instantaneously; often, before your imitation has even launched, the leader has already collapsed, and the track has been discredited. At this point, no matter how good your idea is, the market will not recognize it.

Based on the above reasons, in Web3, the sentiment of "if you are going to do it, be the first" is more aggressive, with a higher proportion of projects claiming to pursue groundbreaking innovation compared to Web2. But note that this is merely verbal; there are not many that are truly reliable and feasible. If we were to carefully tally, this proportion might not even be higher than that of Web2, which is already in its twilight. An objective reason is that due to the immaturity of Web3 infrastructure, the space for groundbreaking innovation is still quite limited. Therefore, the actual situation of innovation in Web3 is that almost every project carries the halo of innovation, but everyone knows that the number of reliable projects that can actually emerge is extremely small.

The above is a summary. When we launched Solv in 2020, we did not have this level of understanding; initially, we wanted to create an imitation project and make some micro-innovations, which was a typical Web2 mindset. However, we had a basic bottom line: we wanted to create a reliable, practical project. If we did not believe in it ourselves and relied solely on boasting, we simply could not proceed.

As a result, while we were imitating, we vaguely discovered a potentially innovative direction technically and came up with ERC-3525. However, it turned out that gaining market recognition for our innovation was relatively easy; the real challenge was to implement a real business, which was indeed difficult.

Solv V1: A Fortuitous Start

The starting point for Solv was a series of discussions we held between August and October 2020. At that time, the Chinese market was at the peak of imitation DeFi projects, and some imitation projects had indeed made money, so we also wanted to imitate a big project and make some micro-innovations. Our thoughts were limited to this, and we had no ambition to carve out a new track, to the extent that one of our earliest investors once questioned us for being "too rational and not crazy enough."

Our target was MakerDAO for three reasons. First, at that time, MakerDAO was still the largest DeFi project. Second, there were no competing imitation products. Third, Ross Ulbricht, the Silk Road developer who was in prison at the time, wrote a blog pointing out several possible improvement directions for MakerDAO (though it turned out that most of his suggestions were incorrect).

So we spent a few weeks studying MakerDAO and proposed six improvement points. However, as mentioned earlier, we held ourselves to a high standard regarding the reliability of these ideas, so during subsequent in-depth discussions, we convinced ourselves that our improvement points did not hold water in the "digital central bank" track, thus completely overturning the idea of imitating MakerDAO.

Nevertheless, among these six points, one was to transform MakerDAO's "vault" into an NFT, thereby making its ownership transferable, which successfully caught our attention. This idea was actually of little use in the application scenario of MakerDAO; who would sell their bankbook or debit card to someone else?

However, we suddenly realized that this type of NFT, fundamentally different from the game and collectible NFTs that had already emerged, essentially serves as a certificate of financial rights or a financial note. Looking at the DeFi field at that time, no one was using NFTs as financial notes, nor was there a token standard suitable for describing financial notes. Could this be an opportunity?

At that time, we vaguely felt that this financial NFT, if it could be split and merged, should find its place in the DeFi field. However, we could not find a particularly suitable application scenario for this financial NFT. At this point, we took a risk: regardless of the uncertainties, we would first break through technically.

Our thought was that many innovations are like this: logically feasible, seemingly useful, but the application scenario is not yet clear. So we decided to develop the technology first and then find the application scenario; after all, some things would eventually emerge, right? Thus, we raised a little money from friends and jumped in to get started.

However, to be honest, we were quite anxious at that time. We knew that developing technology first and then finding an application scenario was a significant risk, with a gambling element involved. The worst fear was that the technology would be developed, but we would struggle to find a landing scenario and not know what product to create.

It turned out that this concern was not unfounded. We made rapid technical progress, and by December 2020, we had formed a concept for a split NFT technology and initiated the EIP application process. By March 2021, the experimental split NFT was completed.

Of course, looking back, the technical exploration was not entirely smooth. We ultimately took 23 months and went through four drafts before arriving at the ERC-3525 standard that satisfied us, which not only achieved split NFTs but also supported value transfer between notes and optimized the visualization of on-chain and off-chain data.

In the end, we were very satisfied with the result. ERC-3525 is not just a tokenized note; it is a tokenized account, a tokenized asset portfolio, a tokenized digital container, and a tokenized smart contract, with capabilities and plasticity far exceeding our initial expectations when we launched Solv.

However, where could we find an immediately applicable scenario? This remained a life-and-death challenge that haunted us. If we could not solve this problem, we would essentially be making a technical contribution to the industry without any commercial results, "making a wedding dress for others." This situation is not uncommon in either Web2 or Web3, and we certainly hoped to do better.

We split our efforts into two lines: one focused on technical breakthroughs and the other on exploring application scenarios. This exploration was initially driven by financing. In a sense, we were also testing our ideas through discussions with investors.

The first scenario we considered was regular lending. That's right; since we couldn't imitate MakerDAO, we turned our attention to Compound and Aave. Compound and Aave only support on-demand lending, so we wanted to construct an anonymous fixed-term deposit certificate that allows users to deposit for a fixed term, thus earning higher interest, while also allowing users to obtain liquidity by selling the certificate (certificate discounting) if they needed to withdraw before maturity.

We approached some investors based on this idea, and surprisingly, many investors engaged in repeated debates with us over some very fine details of financial logic, especially regarding interest rate setting. The backdrop for this was that after DeFi experienced its first downturn in November 2020, many investment institutions were extremely concerned about whether the financial logic was smooth in detail, fearing that a small break would render the entire project's logic invalid.

This focus on detail did not exist before or after; we just happened to encounter this time period, which was both a torment and a stroke of luck, forcing us to repeatedly think and validate rather than just muddle through. Interestingly, many investors debated with us over the key point of interest rate discovery, but we ultimately realized that interest rate discovery was not a significant issue; the real flaw in the application logic was the pricing and liquidity difficulties caused by sudden liquidation risks.

In summary, the envisioned application scenario was stillborn, and we felt anxious. At this time, one investor proactively suggested, why not tokenize the SAFT agreement using your technology? He also indicated that he would be very willing to use such a product if it were available. This was the first time we received advice from the market, or rather, from potential users, so we took it seriously and quickly worked to develop the product, inadvertently creating the Solv V1 product, which is the Vesting Voucher.

The full name of the SAFT agreement is Simple Agreement for Tokens, which is a contract signed between investors and Web3 project parties. After investing, the project party issues tokens to investors according to the time and method promised in the SAFT. Typically, this process requires manual execution by the project party, but we automated the entire process using our financial NFT technology. Specifically, the project party can package the tokens owed to investors into a Vesting Voucher.

This Vesting Voucher acts like a time-locked safe, containing the full amount of tokens, but they cannot be withdrawn immediately. Only at the predetermined time can they be unlocked and released according to the agreed method, such as continuous linear release or phased release at set intervals. With the Vesting Voucher in hand, investors no longer need to worry about project parties defaulting, and they can also partially or fully transfer it before the official unlocking, creating a convenient, secure, and transparent share trading market.

Solv V1 achieved a certain level of success, issuing a total of over $40 million (based on the issuance price) in Vesting Vouchers, but it did not meet expectations. What was the reason for this? Mainly because V1 was a product that favored investors unilaterally; investors holding Vesting Vouchers could transfer them early, split them freely, or hold them until withdrawal, which was indeed very flexible and reassuring.

However, for project parties, while they also felt this was a good thing, they simultaneously thought the product was too strict. It cannot be said that these project parties had default motives, but deep down, they might still feel that retaining some extraordinary means for extraordinary times would make them feel more secure. Moreover, many project parties felt uneasy about the emergence of a parallel share transfer market outside of token trading. Since SAFT could also raise funds, most project parties had no desire to take this extra step. Meanwhile, investors had no mechanism to unite and demand that project parties must use Vesting Vouchers.

In this situation, a significant problem with the Vesting Voucher was exposed: the asset creators were too narrow, or the supply side was severely insufficient. Apart from project parties, no other roles held a large number of token shares. Once project parties lacked motivation, no one else could create asset supply. Without supply, no matter how good the technology is, it is useless.

Solv V2: Unfortunate Timing but Promising Prospects

During this period, as the development of ERC-3525 deepened, the semi-fungible token (SFT) technology gradually matured. Meanwhile, the contradiction between powerful technology and lack of applicable scenarios became increasingly glaring. From the end of 2021 to mid-2022, we held many internal discussions exploring various possible application scenarios, including:

• Creating a free secondary market for SFTs, allowing users to freely construct and trade various SFTs;
• Using ERC-3525 to achieve NFT fractional trading;
• Using ERC-3525 to implement installment purchases of NFTs;
• Using ERC-3525 for NFT group purchases;
• Using ERC-3525 to implement futures, options, and leveraged contracts;
• Creating a prediction market on ERC-3525 tickets;
• A portfolio copy trading platform similar to eToro;
• Creating ERC-3525 game cards;
• Using ERC-3525 for dynamic artworks, etc.

For each idea, we repeatedly discussed it within different scopes. Internally, to avoid self-satisfaction, we sometimes engaged in role-playing, where one of us would take a critical stance in discussions, trying to negate and challenge the application value of ERC-3525, treating it as optional and deeming it worthless if no concrete value could be found.

After communicating internally and externally, macro-level feedback indicated that everyone felt ERC-3525 was powerful and flexible, destined for great use in the future. However, when it came to specific scenarios, there were always various issues: either the application advantages were not obvious, or gas fees were too high; either competitors were too strong, or user education costs were high; either infrastructure was inadequate, or secondary market liquidity was poor. Throughout this process, we felt anxious: had we really created something utterly useless?

What guided us out of the fog was actually the clients. Due to our extensive interactions with project parties during the V1 phase, we gained deep insights into their needs and pain points, thus realizing that project parties generally hoped to engage in debt financing in addition to token financing. Wasn't the biggest problem with V1 the lack of supply? If we created debt notes, this issue would not exist. Those project parties hesitant about issuing Vesting Vouchers were eager to try out bond financing.

So, in the second half of 2021, we returned to our original idea of regular lending. However, this time our user profile was clearer, our expression simpler, more direct, and our idea more defined: to help Web3 project parties issue ERC-3525 "corporate" bonds, which became Solv V2. V2 supports project parties in issuing various types of bonds, including fully and over-collateralized fixed-term bonds, unsecured credit loan bonds, and convertible bonds with option characteristics, among others, with flexible forms and clear rights, and strong programmability.

Before and during the development of V2, we conducted extensive user and market research, particularly studying lending protocols like Maple, Clearpool, and TrueFi, which we regarded as competitors in adjacent tracks. Although they do not issue bonds, their target customer groups and specific needs are very similar. We viewed this as a positive development; leveraging the experience from V1, seeking a direction that had already been successfully navigated was a safer and wiser choice.

How did V2 develop? Initially, it went smoothly, quickly reaching over $30 million in issuance and transaction volume. If the industry could develop healthily and stably, we believed V2 had the opportunity to become a large market. However, we soon encountered a steep decline in the entire industry.

Throughout 2022, starting from the collapse of Luna in May, to the bankruptcy of Three Arrows Capital in June, and the FTX collapse in November, a series of blows left the entire market severely wounded. In this changing landscape, the bond business quickly exposed three weaknesses.

First, the strength and credit of project parties were severely damaged; they were eager to borrow but unable to provide collateral.

Second, the liquidity of funding parties was tight, and their mental state was also tense, leading to increasingly high demands for collateral and fund safety.

Third, the bond business had multiple centralized technical links, and in the context of a sluggish market and collapsing credit, each centralized link became a potential security risk.

In summary, as the external market collapsed, the entire lending market rapidly shrank, and V2's transactions came to a standstill. Interestingly, we had repeatedly discussed how to catch up and compete with the leading players in adjacent tracks, but before we could get started, they had already been brought to the brink by collapses and defaults.

However, we do not consider V2 a failed product. We believe that in the long term, "corporate bonds" in Web3 will develop into a huge market, especially with the inclusion of real-world assets (RWA) and the gradual maturation of regulations. We believe that unsecured credit lending and credit bonds will also develop in this industry in the future. Unfortunately, due to the market collapse in 2022, the development of the bond market has been severely delayed. But as long as this market recovers, we will continue to improve V2 and seize the opportunity.

In conclusion, both V1 and V2 achieved commendable results at the time and received recognition and support from investors and the community. In fact, we will continue to develop both products, and when the external market environment and industry rules change, we believe both products have the potential for significant growth. However, in the current bear market, neither product can achieve a breakthrough. Regardless of how much the objective environment changes, we must admit that at this moment, we still need to continue searching for the breakthrough sword of ERC-3525.

Reflection: Key User Positioning and Value Proposition

Through the exploration of V1 and V2, we gained four major insights:

First, we built a core technical capability around ERC-3525. Some EIPs can be completed from conception to approval in just a few months, but the reason it took us 23 months was that we were constantly challenging ourselves, striving to find the greatest common divisor of flexibility and simplicity, which is the balance point that can support as many application scenarios as possible with the simplest underlying architecture. We are confident that the ID-SLOT-VALUE three-layer structure we ultimately presented is this optimal balance point, capable of supporting a rich variety of application scenarios while remaining sufficiently simple.

Of course, ERC-3525 is not a straightforward technology like ERC-20 or ERC-721; correctly applying it still poses certain difficulties. Through long-term refinement, we have not only built a highly capable development team but also established a secondary development framework that enables us to quickly develop new functional products based on ERC-3525.

Second, we have established a capable team. As a Chinese team operating in overseas markets, we now have a full set of configurations in technology, product, marketing, operations, and business development, small but complete, able to provide real services to clients and even tackle some challenging business.

Third, we have deepened industry partnerships. Both V1 and V2's business models are primarily B2B, and throughout the product and business development process, we have built strong relationships with many leading players in different ecological niches of the industry. They have not only become our partners but some have also become our investors. Many nascent Web3 projects hope to launch a successful B2C product right away, unwilling to spend time participating in deep industry cooperation networks, thinking it is too slow and cumbersome.

However, from our practice, being able to deeply participate in or even integrate into this cooperation network is extremely valuable; it is not just a network of relationships but also an information and resource network, an important means for projects to build their competitive advantages, worthy of time and resources for deep cultivation.

Fourth, we have developed the capability and resources for deep expansion across the boundaries of on-chain and off-chain. One important evolution of Web3 compared to pure crypto applications is the integration of the on-chain and off-chain worlds, providing the best balance of performance, security, transparency, and business richness. While the overall direction of the industry is to enhance decentralization, we believe that Web3 will always present a hybrid form, with everyone seeking their best balance point within their business space.

Therefore, if a product can cross the boundaries of on-chain and off-chain in terms of technical and business logic, it can provide users with more balanced and competitive products. In the development of V2, we integrated technology and business with multiple exchanges, market makers, custodial platforms, and other important entities, allowing the business functions presented in the form of on-chain tokens and smart contracts to penetrate boundaries and reflect and manage the real world off-chain.

Thus, when we clarified the reality of facing a bear market and began developing the Solv V3 product, our technical and business capabilities, as well as industry resources, were no longer comparable to those at the beginning; the space for strategic choices was much larger than before. However, what exactly to do remained a difficult decision. The core team of the project engaged in long discussions, even arguments, around this issue.

The breakthrough lay in rethinking the fundamental question: Who are our customers? What problems are we solving for them?

In general entrepreneurship courses, the first requirement from instructors is usually to identify target customers and then pinpoint their problems, which is known as the "value proposition." In those courses, clarifying the value proposition often serves as a prerequisite for subsequent teaching and discussion; a few minutes spent writing it on the board, and then the routine begins. However, in actual entrepreneurship, the latter routines are not difficult; establishing customer and value proposition clarity is the most challenging part.

Many onlookers might think, how can you start a business without knowing who your customers are or what problems you are solving? But the reality is that the vast majority of startups, including those following imitation routes, not only do not have a clear understanding of this issue when they start but must also continuously rethink and revise their answers even after achieving some success. It can be confidently stated that the number one reason for business failure is unclear customers and ambiguous value propositions.

The issue of customer positioning is challenging in Web2 and even more pronounced in Web3. We can even assert that entrepreneurs who can quickly answer this question often have not thought it through. As we mentioned earlier, the infrastructure of this industry is still quite weak; there are only a few things you can do, and only a few needs you can meet, all of which have already been addressed by others. How can you discover new customers and new markets? It is not easy at all.

Moreover, there are some unique aspects to entrepreneurship in Web3, such as frequently encountering situations where customers explode overnight. You have researched the market, conducted long analyses and explorations, painstakingly identified customers, validated market needs, formed a value proposition, established relationships with customers, and even developed the product and run a few business transactions. But suddenly, an event occurs in the market that you thought had little to do with your business, and then boom, customers die right in front of you, and the market opportunity you anticipated vanishes into thin air.

The value proposition is equally challenging. In an ideal world, if the value proposition is unclear, you should not start working. However, in the current stage of Web3 entrepreneurship, by the time you have fully clarified and confirmed the value proposition, the opportunity has mostly disappeared. The successful teams we see are those that run, switch guns, and change shooting targets simultaneously.

However, this does not mean you can neglect to think about the value proposition. In fact, in both Solv V1 and V2, our reflections on the value proposition were not deep enough, which is also the area we have reflected on the most before V3.

Like most DeFi projects, Solv is a trading matching platform, so we must address the value proposition for both the supply and demand sides. In other words, you need to give sellers an irresistible reason to sell here and buyers an irresistible reason to buy here.

In V1, we handled the value proposition for investors (the demand side) well, but our value proposition for project parties (the supply side) was relatively weak. Thus, we made efforts to communicate with project parties to grasp their pain points. By V2, the value proposition for project parties was clear, but at this point, they became the demand side for funds, and the main contradiction was why the supply side (lenders) would want to buy high-risk project bonds, especially during turbulent market conditions when the value proposition became very weak.

After repeated summarization, we clarified that we could not position early-stage project parties as our main customers at this stage. In both V1 and V2, we had treated project parties as our primary customers. We thought we understood the mindset and needs of project parties well. However, after the practices of V1 and V2, we realized that early-stage project parties are not good target customers in the current Web3 landscape. First, the vast majority of early-stage project parties cannot provide quality assets.

Second, many early-stage project parties have a strong speculative mentality; once market issues arise, their bottom line is very low or even nonexistent. Third, the crypto market is largely built on the two mainstream assets, BTC and ETH; chasing long-tail assets outside of this mainstream is not the optimal choice for the ERC-3525 system.

So who should we target as customers? What needs do they have? Who are their trading counterparts? What problems can we solve for them? What kind of value proposition can we offer? Deep reflection on these questions led us to Solv V3. (To be continued)