Solv Protocol Faces Accusations of Misrepresenting Bitcoin Staking Metrics

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As a seasoned researcher with years of experience delving into the complexities of blockchain and decentralized finance (DeFi), I find myself caught between two perspectives on the Solv Protocol controversy. On one hand, I appreciate the meticulous work Hanzhi Liu has done in scrutinizing the operations of Solv Protocol and raising valid concerns about potential irregularities. His expertise in the field and keen eye for detail have led him to some intriguing findings that merit further investigation.

On the other hand, I am also aware that the world of DeFi can be riddled with misunderstandings, misinformation, and sometimes even deliberate attempts to discredit competitors. In this case, Solv Protocol’s team has strongly denied the allegations, and it is essential to maintain an unbiased stance while awaiting more conclusive evidence.

In my experience, I have come across instances where a competitor’s claims were found to be exaggerated or even fabricated upon closer inspection. However, I also know that sometimes, the truth can be hard to swallow, especially when it implicates a prominent player in the industry.

As for the joke, let me share an anecdote from my past: Once upon a time, in the world of blockchain, I learned never to trust a smart contract more than I trust a lawyer’s promise—they both might let you down! But remember, this is just a light-hearted attempt at humor; the reality of DeFi can be far more serious and complex.

The well-known Bitcoin staking service, Solv Protocol, has been under scrutiny as it is being accused of artificially boosting its Total Value Locked (TVL) numbers. Professionals within the industry have voiced these concerns, casting doubt on Solv Protocol’s handling of assets and the reliability of their reported statistics.

On the contrary, the team behind this platform firmly refutes these claims, deeming them baseless and an attempt to stir up fear and disseminate false information.

Concerns Arise Over SolvBTC’s Asset Handling

On January 3rd, Hanzhi Liu, a co-founder of Nubit, highlighted possible inconsistencies in the way Solv Protocol manages its operations. Liu accused Solv of reusing the same Bitcoin across various protocols rather than securing unique deposits, which he claims could be misleading and artificially boost Solv’s total value locked (TVL) figures.

Liu outlined how the platform’s version of Bitcoin (SolvBTC) uses pre-signed transactions to show up concurrently in various staking systems, leading people to believe that a single Bitcoin can increase its presence on multiple platforms, thereby giving an inflated Total Value Locked (TVL) appearance.

As someone who has been following cryptocurrency markets for several years now, I’ve noticed a common practice among traders and investors: reporting one Bitcoin (BTC) as three BTC when it is held in SolvBTC or similar platforms due to the duplication of coins across various platforms. While this may seem confusing at first, it’s important to understand that this practice is simply an accounting method used to reflect the true value of one’s holdings. In my experience, keeping track of BTC holdings across different platforms can be challenging, but using this duplication technique helps simplify the process and provide a clearer picture of one’s portfolio.

Liu explained that Solv Protocol doesn’t lock up unique Bitcoins; instead, it employs pre-signed transactions to approve the same Bitcoin across various protocols. For instance, one Bitcoin in Solv generates an additional TVL Bitcoin, and the same Bitcoin in Bsquared produces another TVL Bitcoin, with this pattern repeating for other platforms like ???. In essence, a single Bitcoin is represented as three inflated TVL Bitcoins according to Liu’s statement.

Additionally, he implicated the platform for manipulating its Total Value Locked (TVL) figures on tracking platforms such as DeFiLlama, and transferring supposedly locked funds in staking contracts. As a result, Liu advised users to withdraw their funds from Solv and double-check if their assets are indeed secure or being used across various protocols.

Solv Protocol Responds to the Allegations

As a researcher reporting this event, I can share that Eva Binary, the Chief Marketing Officer at Solv Protocol, dismissed recent accusations as misleading and unfounded. To clarify, Solv’s TVL (Total Value Locked) metrics align with their regular 15-day restaking cycles and are correctly represented on DeFiLlama, providing a transparent view of the platform’s performance.

As an analyst, I’ve traced the variations in Total Value Locked (TVL) within particular pools like SolvBTC.BBN, and found that these fluctuations can be explained by regular redemption procedures rather than any deliberate manipulation or unjustified 3x BTC inflation.

Ryan Chow, one of Solv’s co-founders, expressed similar thoughts, suggesting that rival companies have been working together to harm Solv’s standing by spreading negative rumors. He further stated that these accusations are strategically designed to disrupt Solv’s business activities and weaken its relationships with partners.

For several months, our rivals have been secretly discrediting us to our associates, encouraging them to work with them instead and making false accusations against us. Up until now, we’ve opted not to respond, but we can no longer remain silent. Let it be clear: this is a calculated and well-organized smear campaign designed to undermine Solv. We won’t stand for it any longer.” – Chow declared.

The Solv Protocol focuses on managing Bitcoin staking and generating returns across various blockchain platforms. As per DeFiLlama’s latest data, the total value locked (TVL) by Solv is around $2.5 billion.

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2025-01-04 19:40