Reimagining Asset Management: Solv’s Decentralized Approach

The rise of DeFi marks a new era in digital asset management, free from centralized intermediaries. Yet, existing DeFi and traditional exchanges face limitations hindering widespread adoption.

DeFi protocols, emulating traditional funds via smart contracts, aim to offer control, transparency, and efficiency. However, achieving a balance between DeFi’s core principles and vital aspects like liquidity and strategy flexibility is challenging.

Solv addresses the need for a trustless and robust asset management infrastructure in the crypto space. Our architecture stands out by enabling multi-chain, multi-strategy, and multi-asset management, prioritizing safety.

Growing Pains of CeFi Asset Management

Centralized finance (CeFi) platforms like FTX, Celsius and BlockFi have faced significant failures, exposing vulnerabilities in their structures. Commingling funds, rehypothecation practices, and inadequate risk management persist in CeFi. The industry’s failure to upgrade infrastructure highlights the need for transparent and secure investment management.

Evolution of DeFi Asset Management

DeFi introduces a transparent and predictable approach with smart contracts securely managing assets.

Two generations of DeFi asset management have emerged: the yield-focused DeFi 1.0 (Compound, Aave) and the strategy-centric DeFi 2.0 (Yearn). However, limitations in strategies led to the need for more dynamic solutions.

DeFi 1.0

During the initial phase of decentralized finance (DeFi), often referred to as DeFi 1.0, pioneering projects focused on laying the foundational infrastructure for a new era of financial services.

Aave and Compound operate similarly to traditional money markets, facilitating borrowing and lending. These protocols allowed users to lend their crypto assets and earn interest or borrow against their holdings without the need for traditional financial intermediaries.

DeFi 2.0

DeFi 2.0 focused on yield aggregation and optimization, with Yearn Finance emerging as a trailblazer in this regard.

Through innovative yield farming and aggregation techniques, Yearn empowered users to optimize returns by automatically reallocating funds among different DeFi protocols to capture the most lucrative yields.

Yearn’s approach marked a pivotal turning point in DeFi asset management, catalyzing a shift towards more efficient strategies. This led to the development of yield aggregators and advanced vaults that autonomously allocate assets to different protocols based on real-time market conditions.

However, despite its groundbreaking impact, Yearn also had limitations. Its strategies were mainly passive and limited in scope. For instance, users’ income sources were confined to liquidity mining, and the strategies struggled to adapt when liquidity mining returns declined and other income opportunities emerged. Consequently, while Yearn offered valuable functionality, it lacked dynamic and comprehensive strategies for maximizing returns and managing diverse portfolios.”

New Paradigm of Decentralized Asset Management

Understanding Active Asset Management

Active asset management, traditionally exclusive to institutional investors, requires professional strategies and significant time commitment. Solving challenges like creating diversified strategy products, integrating derivative assets with DeFi, and ensuring non-custodial security is crucial.

Solv addresses these challenges with a flexible architecture supporting asset lifecycle from creation to risk management. Key components include Trading Strategy Vaults, A Built-In Safe Guardian, Price Oracles and Liquid Strategy-based tokens.

1. Trading Strategy Vaults

Trading Strategy vaults will store funds and LP assets and execute fund allocation. Its core design philosophy is to eliminate counterparty risk while ensuring the efficiency of fund operations.

To achieve this goal, these vaults are built with a safe guardian mechanism, along with defined permissible transaction types in the smart contract code. Any transaction involving the misuse of funds is automatically excluded. This means that even if all members provide authorization for fund transfers, transactions will not proceed if they violate predetermined rules. By directly incorporating trust into the code, users are not dependent on trusting fund managers, Solv, or any singular entity such as the prime brokers. This design ensures the security and reliability of funds, offering higher transparency and trust.

2. Built-in Safe Guardian

The Safe guardian is custom-designed with unique operational mechanisms and tailored permission scopes for each vault, based on their individual trading strategies. It acts as a robust protector of user assets to guarantee fund safety. It defines the rules regarding transfer destinations and DeFi protocol operations, controlling security risks beyond the multi–signature.

The Safe Guardian only allows the Safe Wallet multi-signature to operate within specified limits. When the Safe Account is operated through multi–signature, it invokes the checkTransaction function of Guardian to perform a validity check. checkTransaction will then examine if the operation is allowed based on the configured rules.

By granting governance permissions on top of the usage rights of the Safe Wallet multi-signature, it achieves a separation of governance authority from the user authority. This separation enables parameter configurations and contract upgrades through change in governance structure in the future.

3. Price Oracle

The primary role of an Oracle is to retrieve and calculate the net asset value of a fund and set it as a price accessible to DeFi protocols.

As a crucial component for interoperability with DeFi protocols, price information is essential for various financial activities. The Oracle acts as a bridge between fund products and DeFi protocols, retrieving and calculating the net asset value of a fund and translating it into a price comprehensible and usable by DeFi protocols. This enables DeFi protocols to execute various operations, such as lending, trading, and derivatives trading, based on the actual value of the fund. The Oracle plays a crucial role in ensuring price accuracy and data reliability, providing foundational support for the seamless interoperability between funds and the DeFi ecosystem.

4. Liquid Strategy-Based Tokens

Our strategy-based vault tokens are tokenized into liquid, transferable assets, similar to the ERC-20 standard. This design guarantees maximum composability and utility within the DeFi ecosystem.

This allows our vault LP tokens (SolvUSD, SolvBTC) to natively integrate and interact with the diverse suite of protocols in the DeFi ecosystem.

They can be integrated to:

• Money Markets
• DEXs
• LPD-backed Stablecoin
• Diversified LPD
• Interest Rate Swap

Solv’s Architecture Unleashes Enormous Opportunities

Solv’s architecture enables competitive yields across multiple chains, employing diverse strategies and assets while ensuring security. Multi-chain ecosystem integration, cross-chain asset inclusion, and adaptability for multiple assets enhance opportunities.

Multi-chain ecosystem integration: Solv’s architecture eliminates barriers between different ecosystems, enabling cross-chain asset integration, shared income, and connection with CeFi. This maximizes the advantages of each ecosystem and enhances opportunities.

Multi-chain asset integration: Solv’s design allows for the inclusion of native and cross-chain assets, providing investors with a broader range of asset choices and trading opportunities to unlock the potential of multi-chain assets.

Adaptability and conversion support for multiple assets: Solv’s architecture accommodates multiple assets and supports asset conversion, allowing strategy nodes to execute multi-currency strategies and adjust asset allocation based on market trends to adapt to different environments.

Solv’s Historical Performance: $100M TVL and Impressive Yields

Since its launch in March 2023, Solv has experienced remarkable growth. The platform has achieved a Total Value Locked (TVL) surpassing $100 million, generating yields totaling $3.3 million. This success has attracted a substantial user base of 10,076 unique individuals. Solv currently provides a range of investment options through its vaults, including WBTC, WETH, and stablecoins, catering to diverse investor needs.

The vaults are supported by various delta-neutral trading strategies. For instance, the BTC vaults are backed by GMX V2 market-making strategies, offering an impressive APY of up to 20%. The ETH vaults, on the other hand, rely on METH leveraged staking strategies, providing users with an APY of up to 16%. Additionally, different stablecoin vaults employ strategies such as perp DEX market making, funding rate arbitrage, and RWA, offering attractive APYs of up to 127%.

Notably, Solv’s USDC vault has emerged as the largest single-exposure stablecoin vault on the Arbitrum network in terms of TVL. Furthermore, the MUX USDC Vault was previously the highest-yielding vault on Arbitrum. Lastly, Solv’s BTC vault stands out as one of the leading vaults in terms of BTC TVL and offers the highest yields among its counterparts.

Conclusion

Solv Finance is committed to delivering top-notch yield opportunities through active management and robust security.

Our upcoming product, SolvBTC, a BTC wealth management solution, offers a compelling yield and seamless integration across the DeFi ecosystem. Stay tuned for updates.

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