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Solv Protocol is accused of manipulating the TVL index
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- @airdropdecks
The Solv Protocol project, introduced by Binance on Binance Megadrop and scheduled to be listed on this exchange, was unexpectedly caught in a spiral of controversy when it was alleged to manipulate TVL.
Solv Protocol, the Bitcoin restaking platform, is embroiled in a swirl of controversy after allegations emerged of manipulating the total value of locked assets (TVL). These allegations, made by Lianchuang Hans, co-founder of Nubit (the layer 2 project on Data Availability on Bitcoin), have raised concerns about the transparency and reliability of the protocol.
Nubit co-founder's allegations
In particular, Hans accused Solv of not locking users' Bitcoin deposits as promised. He said SolvBTC, the wrapped Bitcoin version of the platform, relies on pre-signed transactions to appear simultaneously in multiple staking protocols. This mechanism allows a Bitcoin to be charged multiple times across different platforms, creating the illusion of a higher TVL.
To better understand the allegations of TVL manipulation that Solv Protocol is facing, let's look at a specific example given by Lianchuang Hans:
- When a user deposits 1 BTC into Solv: Recorded 1 TVL BTC (1st time).
- At this moment, the same amount of BTC is used in Bsquared:Receive 1 more TVL BTC (2nd time).
- That same amount of BTC is used in another protocol: Receive 1 more TVL BTC (3rd time).
Result: 1 real BTC is inflated to 3 BTC TVL, including 2 counterfeit BTC TVL.
Hans also pointed to evidence from transactions on the blockchain chain that showed Solv had recently moved an amount of Bitcoin that should have been staked on the Babylon protocol. He demanded that Solv Protocol be transparent about its operations by making public data on wallets, reserves and staked assets, rather than trying to settle things with private exchanges.
It's worth mentioning that this isn't the first time Solv Protocol has run into trouble. Earlier, a Bitcoin “whale” revealed its own deal with Solv, in which this person's 1,800 BTC is used as a reserve asset for SolvBTC without actually being locked on the platform.
In addition, Jacob Phillip, co-founder of Lombard Finance, also voiced concern that some liquidity staking protocols, including Solv, failed to stake assets during the Babylon Cap3 period, resulting in TVL losses.
Solv Protocol responds to allegations
In response to these accusations, Solv Protocol has spoken out in denial, claiming that this is false, unsubstantiated information, staged with the aim of undermining the project.
Ryan Chow, co-founder of Solv, posted an article on X explaining that Solv operates various Bitcoin liquidity staking tokens (LST), and that the mempool link Hans gives as evidence is misleading. The Bitcoin number in question is not for the SolvBTC.BBN product (staked on Babylon) but for SolvBTC.core.
Regarding the TVL drop, Chow said the acquisition of SolvBTC.bbn took place at the same time as Babylon Cap3 staking, and that the TVL update on Defillama is a bi-weekly process, so a change in TVL is completely normal. He stressed that this demonstrates the liquidity and flexibility of SolvBTC.BBN.
Solv Protocol insists it has been operating for four years, going through two market cycles without problems, and threatened to take legal action against Hans if the allegations are not withdrawn.
Community divided over allegations
These allegations have caused a wave of controversy in the cryptocurrency community. At the moment, the community is divided into two factions with opposing views.
A section supported Hans and the act of “flipping” Solv of co-founder Nubit. They argue that projects like Solv Protocol undermine the credibility of the entire cryptocurrency industry and that “inflating” TVL is a common form of fraud in the Bitcoin ecosystem. Many users of this faction have decided to withdraw money from the platform.
In contrast, another department expressed support for Solv Protocol, especially after the project's founder spoke out. They believe in the transparency of the protocol and argue that the allegations are baseless.
Solv Protocol supporters also argue that the project was thoroughly censored by Binance before being introduced on Binance Megadrop and preparing to be listed on the exchange. Therefore, manipulating TVL is unlikely.
Solv Protocol is a restaking protocol on the Bitcoin ecosystem. Users can stake Bitcoin LST assets such as tBTC, WBTC, BTC.b... and receive SolvBTC tokens. Holders of SolvBTC tokens can participate in DeFi activities on various networks, such as Lending/Borrowing, Farming...
In October 2024, Solv Protocol raised $11 million, bringing total funding to $25 million. Among the investors are Binance Labs, Laser Digital, Blockchain Capital, OKX Ventures, gumi Cryptos, CMT Digital...
Recently, Binance came out. Notice of listing SOLV, native token of Solv Protocol, at 17:00 on 17/01/2025 (Vietnam time). Along with the SOLV listing, Binance also launched the SOLV Megadrop program for the community.
The alleged incident of Solv Protocol manipulating TVL is sure to make many people question the future of the project, especially in light of SOLV's imminent listing on Binance. Will this be a stumbling block, or could Solv Protocol turn risk into an opportunity, demonstrate transparency and strengthen trust with the community?
