Dialogue with SolvBTC Founder Ryan Chow: Asset Innovation for the Next Trillion in Liquidity

Interviewee: Ryan Chow, Founder of SolvBTC

Author: Pzai, Foresight News

In the long history of cryptocurrency, Bitcoin has played a crucial role in asset adoption as the longest river. In recent years, whether in terms of compliance or on-chain ecosystem building, the Bitcoin ecosystem has experienced very strong growth. However, unlike the uniformity of other ecosystems, Bitcoin has undergone multiple forks, leading to various technical paths for scalability. In terms of assets, due to Bitcoin's inherent lack of asset scalability, existing custody solutions each have their strengths, resulting in relatively fragmented liquidity across different ecosystems that requires some integration.

As one of the early protocols involved in asset innovation (such as the ERC-3525 semi-fungible token), Solv began to focus on opportunities for new asset issuance at the end of 2022, with Bitcoin ultimately becoming the team's favorite. Since April of this year, SolvBTC has fully integrated assets like BTC and BTCB, successfully introducing and circulating over 20,000 BTC across nearly 10 ecosystems. With the official launch of re-staking protocols like Babylon and the construction of more Bitcoin-related yield scenarios, SolvBTC is preparing for a more significant explosion in BTCFi. How will the BTCFi-related ecosystem develop in the future? What role will SolvBTC play in it? In this issue, Foresight News conducted an exclusive interview with SolvBTC co-founder Ryan Chow to explore the development of BTCFi from SolvBTC's perspective.

Financial Innovation Enters the Asset Side

Regarding financial innovation, Ryan stated, "In the financial innovation of cryptocurrency, there are two categories: algorithmic innovation and asset innovation. The previous cycle's algorithmic innovation was mainly reflected in stablecoins and protocols like Aave and Compound, which I would call version 1.0. Subsequently, DeFi began to focus on asset innovation, such as Ondo, which focuses on RWA, Ethena, which introduces derivative yields, and re-staking layers like EigenLayer/Babylon, all aimed at bringing various assets (yields) into the crypto space." The growth of the crypto market cannot be separated from these innovations, and in the current environment of overall project competition, asset innovation has become the key to ecosystem breakthroughs. Choosing the underlying assets has become the top priority for many teams. Good underlying assets can act as a catalyst and a strong booster for the flywheel effect, serving as the first step towards future prosperity.

In choosing assets, Ryan's team has made significant achievements in the DeFi space. "Initially, we were observing promising sectors including BTC, ETH, and stablecoins. Later, due to factors like Bitcoin halving and traditional capital entering the market, we considered focusing on Bitcoin as a single asset category for development." He also admitted that narrative assets like inscriptions and BTC Layer 2 have brought certain asset innovations to BTCFi. "In my definition, BTCFi specifically refers to the overall development of the Bitcoin ecosystem, simply put, how to make good use of Bitcoin, how to leverage the main chain of Bitcoin to create new assets, and how to serve Bitcoin to provide more use cases, more consumption scenarios, and more yield scenarios. All of these are part of the BTCFi ecosystem. Therefore, I believe inscriptions and runes are also included here. At the very least, we can see a large number of users who, after speculating on inscriptions and runes, actually earn money by holding Bitcoin and are looking for what else Bitcoin can do next. So I believe that inscriptions, runes, and BTCFi are complementary; they all exist within the same ecosystem and influence each other."

In the Bitcoin ecosystem, a stable underlying asset is the cornerstone of prosperous circulation. Over the past decade of cryptocurrency development, Bitcoin has successfully established its position as a store of value as digital gold. However, if Bitcoin is merely treated as a static asset, its potential will never be fully realized. Liquidity is not only the key to the thriving of the Bitcoin ecosystem but also the core driving force for the full expression and growth of Bitcoin's value. Once, WBTC emerged during the DeFi Summer of 2020 and began to establish its position within the ecosystem. However, recently, the subtle connection between Sun Yuchen and BitGo has begun to raise questions in the crypto industry regarding WBTC. Meanwhile, the development of Bitcoin L2 is also in full swing. Ryan commented, "These Bitcoin L2s have actually become low-cost speculative aids for previous assets like inscriptions and runes." From these assets, the construction of basic on-chain liquidity is being supported by assets like wBTC and cbBTC. "After four years of development, about $10 billion of the DeFi scale comes from WBTC. This is already a very impressive figure. So WBTC has already captured this dividend and occupies a place in the market." In the future, Ryan believes that with the massive entry of traditional institutions and the development of the BTCFi ecosystem, "We have always believed that BTCFi will bring a wave of explosion with the growth of asset scale, so SolvBTC was born to accommodate the trillion-dollar liquidity that this explosion will bring."

Multiple Approaches, Striving for Excellence

When discussing how SolvBTC addresses the challenges faced in the BTCFi space, Ryan explored three issues: "The first issue is security reserves, which should be the most important. We can see that Bitcoin reserves like tBTC also emphasize security, and while ensuring decentralization and on-chain transparency, we will also collaborate with trusted custodians (like Fidelity). The second issue is that users need low friction costs in trading, such as multi-chain liquidity provision and interoperability, which requires complex technological innovations to support. The third issue is how to build yield infrastructure for users. In this regard, we have constructed a Ce-DeFi model and through our technical architecture, users can package any related assets, such as quantitative and options yields. In fact, over the past four years, we have seen the entire DeFi scale is around $80 to $100 billion."

Through a long and winding exploration of asset innovation and on-chain practice, Solv has chosen to focus on BTC staking and has become the platform with the highest TVL in this field. SolvBTC, with its high consensus, has over 200,000 users and more than 20,000 BTC in reserves, with a total market cap exceeding $1 billion, ranking in the Top 60 on CoinMarketCap, making it one of the most recognized BTC assets in the network. It ranks fourth globally in on-chain reserves, only behind Ethereum, TON, and BNB Chain, and surpasses most BTC ETFs, ranking sixth globally.

Regarding the security of underlying assets, "We have built a resilient storage capability based on a Liquidity Consensus Layer (LCN) and achieved 1:1 transparency through smart contracts. In terms of asset backing, we have also adopted a risk-layered design with a 'core zone' and an 'observation zone.' The observation zone allows users to deposit relatively obscure assets (like tBTC, FBTC, etc.), while the downward compatibility of the core zone ensures overall security while enhancing the liquidity of user assets. On the infrastructure side, we have constructed a complex and ingenious backend architecture to ensure the safety of users' assets. Additionally, we have drawn on Rollup's design approach, introducing a proof mechanism to ensure the withdrawal process, and we are building SolvBTC's full-chain liquidity through Chainlink CCIP."

Beyond addressing the challenges posed by the assets themselves, the user scenarios are also a crucial consideration for asset operations. In this regard, Ryan stated, "The existing use cases mainly focus on on-chain trading, for example, users can make general purchases through SolvBTC, achieve lending with this asset, and also split assets through protocols like Pendle. Additionally, through SolvBTC, users can participate in yield opportunities across various public chains and earn reward points." Furthermore, the recent launch of Babylon's staking has provided a broader application space for Bitcoin assets, and SolvBTC had already launched its Babylon-related staking pool earlier. Ryan expressed his enthusiasm for collaborating with Babylon in the interview: "In the re-staking space, we have always appreciated the new types of Bitcoin assets that Babylon is building. As a protocol with a significant Bitcoin reserve, we have also established a dedicated SolvBTC.BBN staking pool, allowing users to directly participate in re-staking yields. We believe that re-staking can adequately accommodate asset yields on the scale of billions of dollars. Additionally, we have built a SolvBTC.ENA staking pool in collaboration with Ethena, further unlocking rich yield scenarios for Bitcoin holders."

In fact, SolvBTC.BBN has also become the largest Babylon LST, with a total issuance exceeding 3,000 and the number of participating users surpassing 30,000. Moreover, based on a robust multi-chain circulation ecosystem covering mainstream blockchain ecosystems, this LST not only supports multi-chain minting but also enables efficient cross-chain interoperability, making it the only Babylon LST that supports multi-chain minting and cross-chain interoperability. On-chain, SolvBTC has also integrated with over 20 DeFi protocols, providing users with a wealth of DeFi applications and yield opportunities. It is currently the only BTC LST that has fully constructed DEX liquidity, integrated lending protocols, and supports high-quality yield mining opportunities.

Embracing the Next Trillion-Dollar Liquidity

The future of trillion-dollar liquidity is pouring in, and how to package this liquidity into on-chain assets is a bottleneck that needs urgent resolution. In this regard, SolvBTC hopes to use one of the entry points for traditional institutions—ETFs—to introduce the genuine demand for institutional on-chain yields. Additionally, Ryan expressed a desire for Solv to participate in the value formulation of Bitcoin reserve assets to enhance its appeal to institutions. "In the future, we have always hoped to bring hundreds of billions or even trillions of dollars of liquidity into the Bitcoin ecosystem. We maintain good cooperative relationships with chains like BNBChain and Base to jointly promote the adoption of SolvBTC. Furthermore, as I just mentioned, I have always believed that the explosion of BTCFi will leverage the circulation of assets on the scale of trillions of dollars. This process involves three core asset demands: the first is financial services, the second is yield direction, and the third is trading of inscriptions and runes. This year, we have seen Bitcoin break out even more, and the Bitcoin ecosystem has matured in terms of infrastructure preparation and various financial service infrastructures due to various factors. Therefore, both the asset side and the ecosystem side have experienced an explosion this year. SolvBTC's goal is to comprehensively cover these demands, building full-chain liquidity in financial services and introducing Babylon's staking in yield."

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 collaborate with traditional financial institutions and BTC ETFs to attract substantial institutional liquidity for development.

Almost every staking project faces the challenge of genuine demand, and Ryan believes, "Previously, many people said our protocol could only attract users through point emissions, but I think we can also transfer value to the product and business itself through these demands. I believe SolvBTC is currently the largest Bitcoin reserve solution on-chain, with reserves nearing 20,000 BTC, and the scale continues to expand. We actually feel that our platform simultaneously provides a large number of users with the ability to switch to obtain yields with just one click. Moreover, I have always believed it will be the largest among these yields because it indeed has the most easily understandable and largest capacity."

Finally, Ryan stated, "I have always believed that SolvBTC will undoubtedly become the gateway to BTCFi. And we are moving towards that direction. We have always hoped that SolvBTC can serve as a portal for users to better participate in BTCFi. Overall, our goal is very clear: we hope to ignite the BTCFi ecosystem in this cycle. In the past month, I feel this momentum is still continuing. With the emergence of various BTCFi ecosystem projects, this feeling has become increasingly strong. In this process, Solv aims to play the role of the largest Bitcoin reserve on-chain and as a gateway to BTCFi. So while we can already say we are the largest, we still have a lot of work to do. For us, I think the current $1 billion could reasonably grow to $5 billion, $10 billion, or even hundreds of billions of dollars. We can see the capacity of the genuine demand market and receive such expectations. So this is the role we need to strive to play." We also hope that on the eve of BTCFi's flourishing, SolvBTC can forge ahead.