Solv x Babylon AMA transcript: The era of Bitcoin liquidity staking is coming

Original author: Chase Blue

Last Friday, the first round of SolvBTC.BBN, a Bitcoin liquidity staking token jointly launched by Solv Protocol and Babylon, was sold out within 14 hours of its launch. The enthusiasm of users has not been affected by the recent bleak market conditions. Why are users so FOMO about Solv.BBN, and why do they choose Solv to participate in Babylon Bitcoin staking?

Solv Protocol is a unified layer protocol for Bitcoin liquidity. Its products have been launched on Ethereum, BNB Chain, Arbitrum, and Merlin, which means that Bitcoin assets on various public chains can participate in Babylon through Solv. In addition, SolvBTC.BBN, a liquidity pledge token obtained through Solv investment, has a wide range of application scenarios such as DeFi lending and trading, allowing users to obtain more benefits from their assets.

Yesterday, Solv founder Ryan Chow and Babylon co-founder and CTO Fisher shared their views on the development of the Bitcoin ecosystem and Bitcoin liquidity staking in an online discussion. They also revealed that SolvBTC.BBN Phase II will be launched in four or five days and will provide richer functions and more generous incentive plans.

1. Babylons design goals and original intentions

Fisher: In 2021, when our team was doing research on the security of decentralized systems, we found that many emerging small public chains were not secure enough and were vulnerable to attacks, and the future trend is for large chains to provide protection for small chains. Therefore, we proposed the concept of security sharing, allowing large chains with high security to provide protection for small chains with low security and gain benefits. Our friend the Eigenlayer team chose ETH as the security provider, and we chose Bitcoin. We believe that Bitcoin, as the cryptocurrency with the largest market value and the highest security, can provide strong security for other public chains.

2. Why choose Bitcoin as a security provider?

Fisher: When we choose technology, we pay more attention to security rather than market popularity. BTC uses the PoW consensus mechanism, which is different from POS public chains such as ETH. We hope to combine the PoW security advantages of BTC with the POS system to create a more secure and reliable decentralized world.

3. Difficulties faced by Bitcoin DeFi outbreak and Solv’s response measures

Ryan: BTCFi faces several challenges in its outbreak:

1. Most Bitcoin holders are accustomed to long-term holding and are unwilling to participate in on-chain operations, resulting in limited participation funds in Bitcoin DeFi.

2. In the past, Bitcoin interest-bearing products have experienced security incidents, such as the collapse of some centralized lending platforms, which has led to users lack of confidence in Bitcoin DeFi.

3. Bitcoin L2 is an important infrastructure for expanding the functions of Bitcoin. Although it carries some Bitcoin assets, its security and degree of decentralization are still controversial, and the market has doubts about its value.

4. Currently, Bitcoin DeFi lacks a sustainable source of income, which makes it difficult to solve the yield and capacity problems, limiting the development of Bitcoin DeFi.

5. The threshold for users to participate in Bitcoin DeFi is high, and there is a lack of convenient entry. Many users do not know how to participate and cannot operate conveniently.

Solvs solutions for the industry

1. Launch Solv BTC as a reservoir to aggregate Bitcoin liquidity on different chains and improve capital utilization.

2. Cooperate with Babylon to explore new sustainable sources of income, such as using Bitcoin for security staking of POS chains, to provide users with stable and reliable income.

3. Lower the threshold for user participation, create a convenient entry, connect different public chains and products, so that users can participate in Bitcoin DeFi with one click and easily manage their assets.

4. Market space and development path of Bitcoin Staking

Fisher: In the short term, we hope that the market size will grow slowly. We don’t want to see too much money pouring in at once, so that we have enough time to test and iterate the Babylon protocol to ensure its security and stability. The long-term goal is to activate all Bitcoin staking roles so that all Bitcoin holders can participate in Staking and earn income. Because Bitcoin Staking is a brand-new technology, it is different from the traditional way of holding Bitcoin and needs to be based on a solid foundation to achieve long-term development. At the same time, we must also take into account the balance of market supply and demand to avoid excessive growth that leads to too low a rate of return and damages the interests of users. We will gradually expand the market size to allow Bitcoin Staking to develop healthily and sustainably.

5. Introducing SolvBTC.BBN, the Bitcoin Liquidity Staking Token

Ryan: Solv BTC is an asset that is 1:1 anchored to BTC, similar to Alipays Yuebao, which can centralize users Bitcoin assets scattered across different platforms, solve the problem of Bitcoin asset dispersion, and provide users with more ways to play, such as participating in DeFi lending and trading. SolvBTC.BBN is a LSD (liquidity pledge derivative) converted from Solv BTC by Solv BTC holders participating in the Babylon cooperation project. Users can obtain the Staking income provided by Babylon by holding SolvBTC.BBN, while maintaining the liquidity of assets and can trade in the market at any time. The popularity of the product exceeded expectations, indicating that the market has a strong demand for safe and convenient Bitcoin Staking products. In order to meet the needs of users, we will launch the second phase of SolvBTC.BBN this week, so stay tuned.

6. Babylon’s opinion on SolvBTC.BBN’s liquid assets

Fisher: We are very happy to see Solv launch SolvBTC.BBN. We believe that Solv is a good complement to Babylon BTC Staking. It can provide Bitcoin holders with a better entry and user experience, simplify the participation process, and allow more users to easily participate in Staking. At the same time, SolvBTC.BBN, as LSD, provides users with Liquid Staking options in addition to Native Staking, increasing user flexibility and selectivity.

7. How to activate idle Bitcoins

Ryan: We have observed that most Bitcoins are in cold wallets, and users are reluctant to participate in on-chain operations, resulting in a large amount of Bitcoin assets not being fully utilized. Currently, BTC L2, as an important infrastructure for expanding Bitcoin functions, has attracted $3-5 billion in funds, but this is still a long way from our expected goal of 100 billion. We believe that the launch of Babylon and other BTC DeFi products will bring more innovation and opportunities to the market, and are expected to push the scale of Bitcoin DeFi to tens or even hundreds of billions of dollars. The introduction of compliant funds in the future will be an important factor in promoting the development of Bitcoin DeFi, and we are also actively exploring how to combine traditional finance with Bitcoin DeFi.

Fisher: Bitcoin lacks smart contract functions, which limits its application scenarios. Many users are worried about the security of their assets and are unwilling to participate in on-chain operations, resulting in a large number of Bitcoin assets being idle. Babylon BTC Staking provides a trustless, self-custodial method. Users can participate in Staking without transferring Bitcoin to a third party or relying on Oracle, breaking the users concerns and allowing them to safely use their Bitcoin for Staking and earn income, thereby activating idle Bitcoin assets.

8. How Babylon makes Bitcoin holders trustless

Fisher: The core innovation of Babylon BTC Staking is that we transform Bitcoin into an asset that can be pledged in the POS system, and through clever protocol design, we have achieved the confiscation of Bitcoin. Users can participate in Staking without transferring Bitcoin to a third-party institution or relying on Oracle. The entire process is completely transparent, and users can control their own private keys to ensure the security of their assets. Users will only be fined if they actively attack the POS chain. In other cases, the assets are absolutely safe, which can meet the high security requirements of whales.

9. Planning, prediction and future pillars of the Bitcoin financial ecosystem

Ryan: I think the future of the Bitcoin financial ecosystem will develop around three core rigid needs: inscription asset speculation, BTC L2, and Bitcoin asset interest. Inscription asset speculation brings new investment opportunities, BTC L2 expands the functionality of Bitcoin, and Bitcoin asset interest allows Bitcoin holders to earn passive income. Babylon solves the problem of the source of income from Bitcoin interest and provides users with sustainable income, while Solv is committed to aggregating liquidity, lowering the threshold for user participation, and allowing more users to easily participate in Bitcoin DeFi. In the future, financial applications such as Bitcoin lending, trading, and leverage will also be important development directions. We believe that the future of Bitcoin DeFi is full of infinite possibilities.

Fisher: As a protocol, Babylon is more concerned about the sustainable development of the ecosystem. We believe that only truly valuable products and services can stand the test of time. Therefore, we will focus on developing the demand for BTC Staking on the POS chain. We believe that this will be a huge market and can bring a win-win situation to the entire ecosystem. This will bring more interest-earning opportunities to Bitcoin holders, bring higher security, stronger liquidity and more high-quality users to the POS chain, and promote the prosperity and development of the entire crypto world.

10. Views on the current market environment and future analysis

Fisher: We believe that short-term price fluctuations are not a cause for concern. The market is always full of cyclical fluctuations. The important thing is to adhere to long-termism and focus on building truly valuable products and services. The bear market is a good time for precipitation and accumulation. Babylon will continue to polish its products and develop new technologies to prepare for the next bull market.

Ryan: I personally think that the current market is at a stage bottom, which is a good opportunity to buy at the bottom. Market sentiment is pessimistic, but we are full of confidence in the future. Market liquidity will be tight in July and August, and many investors will choose to wait and see, but after September and October, with the improvement of the macroeconomic environment, the market may usher in a new turn. Bitcoin Staking will become an important topic in the market in the next few months. We believe that this will bring new growth momentum to Bitcoin DeFi. We suggest that everyone pay close attention and participate.

11. Suggestions for users who are interested in Bitcoin DeFi but have not yet participated

Ryan: I suggest you participate in Solv BTC. As a liquidity layer for Bitcoin, Solv lowers the threshold for user participation, provides a convenient entry point and multiple ways to earn income, allowing users to easily participate in Bitcoin DeFi. Solv BTC Phase II is about to start, and I suggest you pay attention as soon as possible and seize the opportunity to participate.