Tiered Reserve System

To manage the risks associated with different types of wrapped BTC assets, Solv employs a tiered reserve system. This system classifies reserve assets into two main categories:

• Core Reserve Assets: These are the most secure and liquid assets, forming the foundation of SolvBTC’s reserve. Examples include:

  • Bitcoin (BTC): The native Bitcoin asset.

  • BTCB (Binance’s wrapped Bitcoin): A custodial solution with high liquidity.

  • cbBTC (Base’s wrapped Bitcoin): A custodial solution with high liquidity.

  These core assets offer users a high level of security and liquidity, ensuring they can trust the backing of their SolvBTC holdings.

• Observed Reserve Assets: These include wrapped BTC assets with slightly higher risks, such as potential de-pegging, smart contract vulnerabilities, or liquidity constraints. Examples include:

  • WBTC (Wrapped Bitcoin): Centralized but widely used across Ethereum-based DeFi.

  • BTC.b (Avalanche): Integrated into Avalanche’s DeFi ecosystem but with specific limitations.

  • M-BTC (Merlin’s Bitcoin): A more experimental, ecosystem-specific wrapped BTC asset.

By limiting exposure to observed reserve assets and closely monitoring their usage, Solv ensures that SolvBTC maintains a secure and reliable value, while still providing access to additional liquidity sources.