Original Author: RyanChow

“Bitcoin never disappoints.”

The 16-year history of the Crypto industry is a history of constantly reinterpreting the value of Bitcoin and driving the industry to new heights. In each of the four cycles so far, there have been people claiming that Bitcoin lacks innovation and cannot represent the cutting-edge trend of the industry, and in each cycle, there have been people predicting that some new force will replace or even surpass Bitcoin. However, after each cycle, it is Bitcoin that continues to inspire new products and models with its spirit of restraint, focus, and simplicity, shattering the ice of conservatism and skepticism, firmly and shockingly expanding the territory of crypto, leading the industry and market trends.

The reason Bitcoin has always stood tall is precisely because it carries the value proposition of “digital hard money,” possesses the strongest global consensus, and is actively participating in the global financial system in a more positive manner. Therefore, in an industry that pursues the ultimate innovation, Bitcoin is actually the most stable and long-lasting “mainstay.”

Today, the innovation wave of Bitcoin is ushering in a new phase of acceleration. The financialization revolution driven by Bitcoin is quietly taking shape, and the rise of Bitcoin Finance represents a new trend of Bitcoin evolving from a passive store of value asset to deeper financial applications. Solv is committed to standing at the forefront of this trend, driving Bitcoin Finance to grow into a trillion-dollar decentralized financial infrastructure, empowering a wider range of users and ecosystem development.

Retracing the Development of Bitcoin Finance: From Edge to Mainstream

The rise of BTCFi was not overnight, but rather underwent an evolution through three key stages, gradually moving from edge exploration to mainstream narrative.

The First Wave of TradFi Integrating Bitcoin in Early Exploration (2013 to present): In September 2013, DCG created the Grayscale Bitcoin Trust Fund (GBTC). Essentially, this is a Bitcoin custody and securitization service, with the main intent being to connect with traditional institutions' familiar operational systems, significantly lowering the barrier for investors to enter the BTC market. The premium/discount mechanism of GBTC and its arbitrage opportunities further stimulated institutional demand for BTC. From GBTC to BTC ETF, the long road reflects the ongoing game between regulation and innovation, also marking the gradual acceptance of Bitcoin by traditional finance. The practice of this wave turned BTCFi into a small narrative worth hundreds of millions of dollars in 2018, taking the first step to establish a foothold.

The Second Wave: Rise and Challenge of CeFi (2018 to Present): During the bull market of 2017-2018, centralized platforms such as exchanges quickly emerged, with the financial needs of early BTC holders (especially miners) playing a crucial role. Not only did major exchanges engage in diversified BTCFi businesses, but also specialized BTCFi service platforms such as PayPal, Matrixport, and Genesis appeared. These platforms offered services such as collateralized lending and hedging to meet the needs of miners and institutions, driving the financialization of BTC. Although the 2022 CeFi crisis dealt a heavy blow to the CeFi landscape, the crisis also prompted deep reflection within the industry, strengthening risk management and compliance operations, elevating BTCFi into a multi-billion-dollar mid-sized track.

The Third Wave: Innovation and Potential of DeFi (2020 to Present): The "DeFi Summer" of 2020 was the most profound event in the crypto industry after Bitcoin and Ethereum. DeFi offered a new paradigm for creating and operating financial services, providing significant room for imagination. Constrained by the functional limitations of Bitcoin's script language, most complex DeFi protocols were built on smart contract blockchains such as Ethereum. However, due to Bitcoin's massive volume, the DeFi community has been working to bring BTC value into the DeFi ecosystem, leading to the emergence of BTC wrapping services such as WBTC and renBTC. The higher transparency, ease of operation, and richer yield opportunities of DeFi attracted numerous users. DeFi's composability also brought new possibilities for BTCFi, such as innovative applications like decentralized lending and derivative trading based on BTC.

By 2024, the three waves of BTCFi practice will resonate with each other, driving BTCFi to explosive growth, growing into a multi-billion-dollar track amid significant favorable external changes.

So, can BTCFi continue to grow and develop into a trillion-dollar market? This requires us to understand the driving forces behind the 2024 BTCFi explosion.

The Explosive Growth of BTCFi: Overlapping Resonance of Three Forces

The explosive growth of BTCFi in 2024 is actually the result of the overlapping resonance of the TradFi, CeFi, and DeFi waves. This growth is not accidental but rather the result of long-term evolution and accumulation in multiple areas, with underlying driving forces including market demand, technological innovation, and ecosystem expansion.

First, the Driving Force Behind DeFi Expansion

In 2023, the crypto market rebounded from the lows of 2022, injecting new vitality into the entire industry. As the core force of crypto innovation, the DeFi community naturally hoped to quickly revive the growth momentum that was interrupted by the market crash. However, by this stage, the main resources and scenarios in the Ethereum ecosystem had been fully developed, and the DeFi community urgently needed to find new growth directions. Faced with greater liquidity demands and a richer asset base, the value of BTC began to be reassessed. As the cryptocurrency with the highest market capitalization, Bitcoin possesses an unparalleled asset scale and market foundation. Its transparent, censorship-resistant nature aligns closely with the core principles of DeFi, making it a key pivot for the next stage of DeFi expansion.

Financial innovation around BTC began to accelerate. From early Bitcoin-wrapped assets like WBTC, renBTC, to decentralized lending combined with Layer 2 scaling solutions, and to Staking and liquidity pools integrated with BTC, the application scenarios of BTC in DeFi gradually became more diverse. At the same time, the trend of BRC20, BRC420, and other on-chain innovations also attracted a large number of users' attention, as these users hoped to more efficiently integrate the value of Bitcoin into these emerging areas. It is this market demand that has driven the continuous expansion of BTC in the DeFi field, laying a solid foundation for its rapid growth.

Furthermore, the advantages of DeFi in transparency and efficiency further amplified the appeal of BTCFi. Users not only enjoy more convenient and flexible financial services but also can access high-yield opportunities related to BTC in a decentralized manner. The composability between DeFi protocols has also brought greater innovation space, allowing developers to create new derivative trading, lending protocols, and yield optimization tools based on BTC. These innovative developments resonate with each other, providing a continuous driving force for the explosion of BTCFi.

Second, the Demand for CeFi Asset Activation

CeFi platforms have played a vital role in the rise of BTCFi, with their unique user base and platform advantages providing strong momentum for the financialization of Bitcoin. Exchanges and professional financial service platforms have rapidly grown BTCFi in the CeFi field through activating platform-locked assets and innovative financial products.

Firstly, CeFi platforms have introduced Bitcoin to more use cases through the issuance of Wrapped BTC (such as Binance's BTCB and Coinbase's Wrapped BTC products). These Wrapped BTC assets have increased the liquidity and usability of Bitcoin in other blockchain ecosystems, thereby activating a large amount of locked assets on CeFi platforms. This mechanism not only increases the utilization of Bitcoin but also provides users with more investment options and yield opportunities, effectively enhancing user participation and platform stickiness.

Next, CeFi platforms are also constantly exploring new BTC financial products and services to meet the growing market demand. From early BTC collateralized lending services to more complex derivatives trading, yield optimization products, and structured financial planning solutions, CeFi platforms are constantly expanding their service offerings to provide personalized BTC financial solutions to individual and institutional investors. These products not only meet the diverse needs of miners, long-term holders, and institutional investors but also lower the entry barriers for ordinary users.

Additionally, the improvements in compliance and risk management by CeFi platforms have further enhanced their attractiveness to users. Especially after experiencing the market crisis of 2022, the industry's focus on transparency and security has significantly increased. CeFi platforms have regained user trust through stricter audits and robust operations. This trust has laid a solid foundation for the long-term development of the platform's BTCFi business.
Through asset activation and innovative products, CeFi platforms have successfully taken Bitcoin's financialization to new heights, contributing significantly to the explosive growth of BTCFi.

Third, TradFi's Soaring Advance.

TradFi has played a pioneering and leading role in driving the development of BTCFi. From the approval of BTC ETFs to MicroStrategy's large-scale Bitcoin holdings, the continued advancement of traditional financial institutions and companies has provided strong endorsement for Bitcoin's financialization, attracting more institutional investors to enter the market.

The successful approval of the 2024 BTC ETF was a milestone event. The launch of the ETF significantly lowered the barrier for traditional institutions and individual investors to access Bitcoin, allowing more investors to include Bitcoin in their portfolios in a compliant, secure, and convenient manner. This not only brought more liquidity to the market but also enhanced the acceptance of Bitcoin as an asset class, further consolidating BTC's position in the global financial system. The success of the ETF also laid the foundation for the development of BTCFi, such as driving the launch of more BTC-based financial products (such as options, futures, and fixed-income products).

MicroStrategy's demonstration effect sparked the corporate interest in Bitcoin asset allocation. Since 2020, MicroStrategy has held Bitcoin as its strategic reserve asset, not only enhancing the company's asset returns but also garnering widespread market attention through this decision. MicroStrategy's success story has inspired other traditional enterprises to follow suit, driving more funds into the BTC market. This corporate participation has injected new momentum into BTCFi's market expansion and innovation.
Looking ahead, the possibility of BTC being included in a nation's strategic reserve further expands the market's imagination. If major global economies like the United States officially incorporate Bitcoin into their strategic reserves, it will not only ignite market enthusiasm but also potentially reshape BTC's global positioning, shifting it from "digital gold" to a "global strategic asset." This transformation will open up a completely new development path for BTCFi, attracting a broader range of institutional investors and inspiring more complex and diverse financial services innovation.
In 2024, these three forces are converging to propel BTCFi towards a billion-dollar scale. So, what will be the next journey for BTCFi?

Rethinking Solv: The Key Bridge Connecting the Tri-Force of BTCFi

Founded in 2020, Solv Protocol initially focused on infrastructure innovation for digital bonds and on-chain funds. However, with the rapid rise of BTCFi, Solv has gradually grown into a key player in the BTCFi space, collaborating with numerous partners to build an open and increasingly mature decentralized Bitcoin financial network.

The core idea behind Solv is "connection".

We believe that the future of BTCFi relies not only on breakthroughs from individual projects but also on the deep integration and resonance of the three forces of TradFi, CeFi, and DeFi. Solv's vision is to be a core driving force of this trend, fostering collaboration and integration among various ecosystems through an open partnership model and continuous financial infrastructure innovation. Solv aims to provide users with a more secure, convenient, and transparent BTCFi infrastructure, enabling every user to easily participate in the BTCFi wave.

Solv Aims to Be a Bridge, Not an Island.

Solv recognizes that the rapid growth of BTCFi stems from the overlap and resonance of TradFi, DeFi, and CeFi. However, this overlap and resonance have not fully realized their potential due to significant barriers. These issues include:

· TradFi provides robust financial support and a global perspective but lacks smooth integration with the decentralized ecosystem;

· DeFi is highly innovative and open but presents technical and cognitive barriers to entry for the average user;

· CeFi excels in user experience but needs continuous improvement in transparency and trust mechanisms.

Therefore, the key to success lies in strengthening this resonance and allowing these three forces to complement each other. To achieve this, Solv's goal is to build a bridge between these three, eliminate barriers, and create a seamlessly connected ecosystem to unlock the full potential of BTCFi.
To achieve this goal, Solv has designed a clear "three-step" strategy aimed at consolidating DeFi foundations, integrating CeFi strengths, and ultimately connecting TradFi to create a comprehensive BTCFi ecosystem.

Step One: Build on DeFi as the Foundation, Consolidate Innovation, and Enhance User Experience

DeFi is the foundation of Solv's rise and the main battlefield of BTCFi innovation. In the DeFi Bitcoin financial field, with the emergence of Bitcoin Layer2 and the booming development of wrapped assets, the forms of yield have presented a diverse yet relatively disordered situation. Solv was the first to propose the concept of a staking abstraction layer, unifying and standardizing the complex and diverse on-chain Bitcoin asset yields, and creating a standardized staking and LSP (Liquidity Staking Token) asset model, providing users with a one-stop diversified yield channel and a simple and intuitive user experience. Currently, Solv has partnered with Babylon, Ethena, Core DAO, and Jupiter to launch four different LSP products. Not only has it tokenized staking and restaking rewards, but it has also successfully tokenized trading strategy returns and funding rate rewards, further enriching users' yield options.

The core attractiveness and greatest advantage of DeFi lie in its ecosystem's openness and protocol composability. Built around the core asset SolvBTC, Solv has established a broad ecosystem covering 15 mainstream blockchains and over 50 DeFi protocols, encompassing almost all high-quality on-chain yield sources. As of now, Solv's Bitcoin reserve exceeds 25,000 coins, making it one of the largest on-chain Bitcoin reserves.

Step Two: Integrating CeFi, Expanding User Base, Simplifying Processes

CeFi platforms play a significant role in the BTCFi ecosystem, especially in attracting mainstream users. Unlike many people's views, Solv believes that CeFi in crypto is not a "transitional" modality but a mainstream business model that will exist in the long term and continuously evolve. The reason for this is that the creation, management, and trading of crypto assets are increasingly complex and specialized, requiring professional division of labor. Therefore, as the industry scales, it inevitably needs professional intermediaries to help ordinary users simplify operations, share responsibilities, and risks. Specifically in the BTCFi field, many Bitcoin holders, in fact, prefer CeFi services. Therefore, Solv has a long-term strategic plan for connecting with CeFi.

Solv is partnering with top CEXs like Binance, OKX, and Bybit to simplify the Bitcoin staking and cross-chain liquidity process by integrating SolvBTC and its LSTs product line. Users can complete BTC wrapping, staking, and cross-chain asset management directly on a familiar interface without the need for a complex on-chain interaction experience.

In addition, Solv will collaborate with these platforms to launch exclusive products and services for BTCFi, such as BTC-based yield enhancement plans and staking reward programs, to help more users easily enjoy the benefits of DeFi while promoting a natural transition of CeFi users to DeFi users, expanding the adoption of the entire BTCFi ecosystem.

Step Three: Connecting TradFi to Unlock Bitcoin's Potential in the Real World Economy

Solv will further drive the tokenization of a BTC ETF and actively collaborate with more traditional financial institutions to bridge the gap between traditional finance and DeFi.

By introducing traditional assets such as a BTC ETF in a programmable digital form into the on-chain ecosystem, Bitcoin will no longer just be a "store of value" but will become a key conduit for cross-market liquidity. This step not only provides traditional investors with a more flexible asset allocation tool but also injects deeper liquidity and capital efficiency into the DeFi ecosystem, helping Bitcoin become a core asset in the global financial system.

Driving BTCFi to Become a Trillion-Dollar Industry

Our three-step strategy is not only Solv's own path to growth but also a long-term vision for the future. We always believe that only by connecting TradFi, DeFi, and CeFi, and focusing on continuous technological innovation and outstanding user experience, can we truly build an open, efficient, and sustainable BTCFi ecosystem.

Achieving this vision requires the collective effort of the entire industry and Solv's continuous self-improvement. In the future, we look forward to collaborating with more ecosystem partners to jointly drive the development of BTCFi, allowing the value of Bitcoin to benefit every user and enabling BTCFi to grow into a trillion-dollar industry.

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