In Solv’s TVL, maybe 70% of the 19,000 BTC are actually from Babylon
I recently looked through the data for Solv Protocol, and the more I looked, the more something seemed off.
Solv’s total TVL has already exceeded 19,000 BTC—higher even than the TVL of chains like Arbitrum and Polygon. The numbers are very convincing, but think about it a bit more: where do Solv’s BTC staking yield returns come from? The answer is Babylon. The underlying layer of Solv’s BTC staking products is Babylon’s staking protocol. Solv’s TVL has surged so aggressively in essence because Babylon’s staking demand is driving it. @BabylonLabs_io
This leads to a subtle question: if Babylon’s yield drops, or a security incident occurs, will Solv’s TVL collapse along with it? The answer is yes. Solv’s TVL is highly dependent on Babylon, and Babylon’s TVL is highly dependent on BTC staking. If any link in this chain has a problem, the whole system will be hit.
Solv has also done some diversification, including exploring BTC L2. But to be honest, Solv’s main growth engine is still Babylon for now. I checked the structure of Solv’s staking products, and most of the high-yield offerings are tied to Babylon’s co-staking. If anything happens on Babylon’s side, Solv users may withdraw in large numbers.
What’s even more subtle is that the relationship between Solv and Babylon is a bit of a “mutual lock-in.” Solv brings Babylon a large amount of BTC staking volume, and Babylon brings Solv the source of its yields. But if one of them has issues, the other will be dragged down too. In a bull market, this kind of bundling relationship looks great; in a bear market, it could be like dominoes. #baby $BABY
I’m not saying Solv or Babylon will definitely have problems, but a large portion of Solv’s TVL data is provided by Babylon. When looking at Solv’s numbers, it’s best to break them apart—what’s growth from its own business, and what’s Babylon’s traffic spillover. If Babylon runs into trouble, can Solv’s TVL hold up? No one can answer that question right now, but it’s worth thinking through.
#baby $BABY
I recently looked through the data for Solv Protocol, and the more I looked, the more something seemed off.
Solv’s total TVL has already exceeded 19,000 BTC—higher even than the TVL of chains like Arbitrum and Polygon. The numbers are very convincing, but think about it a bit more: where do Solv’s BTC staking yield returns come from? The answer is Babylon. The underlying layer of Solv’s BTC staking products is Babylon’s staking protocol. Solv’s TVL has surged so aggressively in essence because Babylon’s staking demand is driving it. @BabylonLabs_io
This leads to a subtle question: if Babylon’s yield drops, or a security incident occurs, will Solv’s TVL collapse along with it? The answer is yes. Solv’s TVL is highly dependent on Babylon, and Babylon’s TVL is highly dependent on BTC staking. If any link in this chain has a problem, the whole system will be hit.
Solv has also done some diversification, including exploring BTC L2. But to be honest, Solv’s main growth engine is still Babylon for now. I checked the structure of Solv’s staking products, and most of the high-yield offerings are tied to Babylon’s co-staking. If anything happens on Babylon’s side, Solv users may withdraw in large numbers.
What’s even more subtle is that the relationship between Solv and Babylon is a bit of a “mutual lock-in.” Solv brings Babylon a large amount of BTC staking volume, and Babylon brings Solv the source of its yields. But if one of them has issues, the other will be dragged down too. In a bull market, this kind of bundling relationship looks great; in a bear market, it could be like dominoes. #baby $BABY
I’m not saying Solv or Babylon will definitely have problems, but a large portion of Solv’s TVL data is provided by Babylon. When looking at Solv’s numbers, it’s best to break them apart—what’s growth from its own business, and what’s Babylon’s traffic spillover. If Babylon runs into trouble, can Solv’s TVL hold up? No one can answer that question right now, but it’s worth thinking through.
#baby $BABY