Solv Protocol targets over $1T in idle Bitcoin with institutional yield vault

Bitcoin-focused staking platform Solv Protocol has launched a structured yield vault for institutional investors, targeting more than $1 trillion in BTC currently sitting idle and not collecting interest.

Solv’s new BTC+ is designed as a Bitcoin (BTC) yield vault aggregating and deploying capital across various yield strategies spanning decentralized finance (DeFi), centralized finance (CeFi) and traditional finance markets, Solv announced Thursday.

These strategies include protocol staking, basis arbitrage and yields from tokenized real-world assets, notably including BlackRock’s BUIDL fund.

The vault integrates Chainlink’s Proof-of-Reserves for onchain verification, according to the company. It also includes drawdown safeguards based on net asset value (NAV) — a risk management feature commonly used by limited partners in private equity investments.

Solv said BTC+ operates using a “dual-layer architecture,” which separates custody from the yield-generating strategies, adding another layer of security.

“Bitcoin is one of the world’s most powerful forms of collateral, but its yield potential has remained underutilized,” said Ryan Chow, Solv’s co-founder. The protocol has more than $2 billion in total value locked (TVL) onchain, according the DefiLlama data.

Solv Protocol TVL. Source: DefiLlama

Solv isn’t the only company targeting the growing Bitcoin yield market. In April, crypto exchange Coinbase launched a dedicated Bitcoin yield fund for institutional clients outside the US, offering returns of up to 8% through a cash-and-carry strategy. The company said the offering is intended to “address the growing institutional demand for Bitcoin yield.”

Meanwhile, crypto investment firm XBTO has partnered with Arab Bank Switzerland to offer a Bitcoin yield product that generates returns by selling BTC options to collect premiums. The fund is targeting annualized returns of approximately 5%.

Bitcoin financialization accelerates as it becomes a premier institutional asset

While early crypto adopters have long touted Bitcoin as a superior form of money — citing its scarcity, portability and bearer-asset qualities — its use as a financial asset remained limited until recently, when institutional interest began to surge.

Following the US Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded funds (ETFs) in January 2024, Bitcoin has rapidly become one of the most sought-after alternative investments among institutional investors.

Since the ETF approvals, Bitcoin’s price has climbed more than 156%, pushing its market capitalization to approximately $2.5 trillion. This dramatic appreciation, combined with growing institutional adoption, has compelled JPMorgan to consider accepting Bitcoiin ETFs as loan collateral.

The financialization trend has even reached federal regulators. As Cointelegraph reported, the US Federal Housing Finance Agency recently directed Fannie Mae and Freddie Mac to evaluate how Bitcoin and other crypto assets might be integrated into risk assessments for home loans.

This shift was anticipated late last year, when CoinShares analyst Satish Patel predicted that yield generation would become a priority as institutional Bitcoin holdings grew.

On the corporate front, business intelligence company and prolific Bitcoin holder Strategy has introduced a proprietary “BTC Yield” metric to estimate how its Bitcoin treasury strategy contributes to shareholder value.

Crypto mining company MARA Holdings, too, has prioritized Bitcoin yield, recently upping the amount of BTC allocated to investment adviser Two Prime.

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