Introducing Solv V3
Today, we are thrilled to announce Solv V3: an industry-facing decentralized liquidity infrastructure providing a unified, secure, and transparency-driven platform for creating, issuing, managing, and settling on-chain funds.
Since Solv Protocol’s launch in October 2020, Team Solv has developed ERC-3525 Semi-Fungible Token, a recently approved Ethereum token standard that aims to onboard an all-new asset class to the industry, enabling everyone to tokenize future cash flows.
We’re beyond honored to have witnessed the beginning of a new ecosystem featuring over 30 entities building Semi-Fungible Tokens (SFTs) for future cash flow products thus far ranging from tokenized royalties and payrolls, to tokenized protocol revenues and community memberships.
At home, SFTs are building out an extraordinary track record. Vesting Voucher (Solv V1), a token vesting SFT, has enabled over 60 on-chain entities to leverage token allocations for liquidity. A year later, Bond Voucher (Solv V2), the world’s first on-chain bond, has seen a massive $100M in primary sales and trading volume combined.
In the process, over 20,000 SFTs were minted and 17,600 unique addresses have interacted with our protocol.
Our journey won’t stop here. Today, we are thrilled to announce Solv V3: an industry-facing decentralized liquidity infrastructure, providing a unified, secure, and transparency-driven platform for creating, issuing, managing, and settling on-chain funds. Let’s dive deeper.
What V3 is about:
On-chain fund creation, clearing, and settlement (the financial service frontend)
What does this mean?
With V3, anyone could mint and list an SFT representing a financial product. This is no more complex than minting a JPEG. Clearing and settling a product is easily achievable simply by sending assets to the SFT, claiming assets from it, or transferring (or trading) fractions of an SFT for liquidity.
Digital asset custody integrations (the infrastructural backend supporting the provision of the service frontend) with the best digital asset custody solution providers such as Gnosis Safe, Cobo, Enzyme, Ceffu, and Copper.
What does this mean?
Asset managers on V3 have a wide selection of custody solutions to customize for more open use of funds and raise capital even without collateral.
Further, V3 allows anyone to
- Build any type of on-chain fund product, issue it for liquidity, and manage it at a low cost. (Such a fund could be a fixed-income, money market fund, market- or index-linked fund, or even a tokenized REIT.)
- Participate in alpha and smart beta investing (become shareholders of previously unlocked strategies generating returns that beat the market).
- Track real-time PnL and NAV in a fully visualized dashboard.
- Simple exit by trading or borrowing against SFTs.
On-chain fund creation, clearing, and settlement
Broadly speaking, Solv V3 offers a one-stop platform for creating, managing, and settling SFTs for on-chain funds. To break it down further:
- Asset managers create an SFT featuring customizable subscription rules, fee structures, and investment strategies, all built into smart contacts.
- Investors become LPs when they purchase a fraction of an SFT.
- Exiting is easy as SFTs are completely marketable across secondary markets for NFTs.
- Automated and visualized PnL, with the fund settled and principal and interest distributions fully through smart contracts.
- Solv integrates centralized and decentralized custody solutions so asset managers can customize for open use of funds.
- Solv integrates APIs of leading crypto analytics and exchanges to offer thorough monitoring for NAV and fund transactions.
In a more detailed illustration, when a market maker raises liquidity on V3 for Uniswap, the fund gets sent to a multi-sig wallet by Safe co-managed by the market maker and a prime broker and authorized permissioned trading strategies with Cobo Argus. Investors of the fund receive SFTs representing their LPs and later burn them to redeem yields.
Smart yields for everyone
- Diverse assets sourcing yields across DeFi, CeFi, and even TradFi for varying personal goals, timeframe, and risk preferences.
- With eliminated single points of failure and permissioned fund operations, investors provide liquidity on V3 with confidence.
- Interoperability and flexibility of SFTs ensure simple exit by trading SFTs on open markets and using them as collateral.
Liquidity pool 2.0: SFT-based liquidity pools
When tokens are deposited into a crypto liquidity pool, the platform automatically generates an LP token that represents the share the depositor owns of that pool. Though ERC-20 has been the prevalent token standard for LP tokens, it requires the deployment of separate smart contracts for each token, which can cause gas fees to spike.
V3 features SFTs for LP tokens, allowing for better visualization, computability, and more diversity for the liquidity pools that could be built.
ERC-3525 enables asset managers to create an SFT which represents a liquidity pool. Users who purchase a fraction of the SFT get a new SFT in the wallet representing their share of the pool, hence becoming LPs.
The SFT is simultaneously a digital asset container and tokenized smart contract, making it an ideal vehicle for liquidity pools of more individualized terms as well as a more personalized LP experience.
With V3, asset managers or LPs accept or withdraw deposits on flexible dates. The SFT’s metadata visualizes the lock-up period on the token.
Digital asset custody integrations
V3 integrates leading digital asset custody solution providers, such as Gnosis Safe, Ceffu, Cobo, Enzyme, and Copper, to offer investors seeking to grow with leading asset managers a security-first framework currently not available anywhere.
At least one of the said custody solutions is required of every asset manager before they’re able to receive any deposits on V3.
Consider Alice’s workflow, the market maker on Uniswap, and how it shows how V3 makes liquidity secure and transparent for LPs.
Once approved for due diligence, Alice
- Goes on the V3 dashboard for asset managers
- Creates an SFT with a customizable name (Degen Alice 01, for instance), specifies trading strategies, custody API, timeframe, and expected APR; and
- Sets up a Cobo multi-signature wallet, operators, and permissioned transactions of the funds.
Once the SFT (representing the liquidity pool) is sold, the proceeds will be directed to the established multi-sig wallet, operated only by approved operators. On the settlement day, the funds stored in the multi-sig are withdrawn through Solv’s smart contract and repaid pro-rata to LPs. Bob, the investor, becomes Alice’s LP by buying a fraction of Degen Alice 01, and the fractional SFT allows Bob to visually access NAV from his dashboard in real-time, manage his share, and more.
Needless to say, multsig-based digital asset custody solutions have been around for a while. They are excellent at eliminating single points of failure and ensure that multiple key holders remain accountable to one another over the co-managed funds. But we believe that for DeFi, a liquidity matching engine with risk capabilities from a wide range of custody solutions might well be an even bigger game changer.
And that’s exactly what V3 is about to achieve.
- March 21, 2023: Mainnet and Rinkby launch, with beta testing completed in February.
- February to April 2023: Support for fixed-income products, structured products, and index-linked products.
- April-June 2023: Asset Managers Selection Campaign, aimed to onboard asset managers with proven track records onto V3.
- Q3 2023: V3.1 launch, incentive structures, and DAO governance.
- Solv V3 mainnet and testnet have already been deployed today.
- A portal has been made available in V3 Dapp allowing users to seamlessly manage assets on V2 markets.
- Documentation, guides, and tutorials are in progress.
Get Onboarded to V3
Reach out to us via this form if you’d like to explore options for raising liquidity in a transparent way on V3.
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