The competition for Bitcoin liquidity on various chains is heating up, driven by the growing layer-2 and DeFi ecosystems around Bitcoin. Solv Protocol has now entered the fray by introducing a Bitcoin staking token on the Solana network, aiming to attract BTC holders with enticing yield opportunities.
Named SolvBTC.JUP, this liquid staking derivative (LSD) is specifically crafted to generate Bitcoin-denominated yield through transaction fees on Jupiter Exchange, a prominent decentralized exchange (DEX) on Solana. While the token launch is currently in its pilot phase, it marks a significant step in the ongoing efforts to integrate Bitcoin into the decentralized finance landscape.
Solv’s Delta Neutral Strategy and Competitive APR
Solv is setting its sights on offering an annual percentage return (APR) of around 12% on BTC, a substantially higher yield compared to traditional BTC staking on layer-2 chains, which typically offer APRs in the low single digits. To counterbalance the increased yield, Solv employs a delta neutral strategy to hedge against the volatile price fluctuations inherent in Jupiter’s liquidity pool.
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One of Solana’s most active DEXs, Jupiter boasts a total value locked (TVL) of approximately $1.3 billion, as reported by DefiLlama. Concurrently, other Bitcoin-native layer-2 solutions like Core Chain, Babylon, and Spiderchain are also exploring Bitcoin staking mechanisms akin to proof-of-stake networks, where BTC holders lock up their coins as collateral to secure the network and earn rewards.
In a bid to attract more BTC holders, EigenLayer, a major Ethereum restaking protocol, has expanded its token acceptance to include wrapped Bitcoin for collateral. This strategy of restaking involves leveraging already staked tokens to secure multiple protocols simultaneously, diversifying and optimizing the staking rewards for users.
As the landscape of Bitcoin staking and DeFi opportunities continues to evolve, projects like Solv are at the forefront, offering innovative solutions to bridge Bitcoin liquidity with emerging blockchain ecosystems.
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