As a seasoned researcher with a penchant for blockchain and finance, I find the recent developments surrounding Solv Protocol and MicroStrategy intriguing. Having closely followed MicroStrategy’s Bitcoin buying spree since its inception, it’s fascinating to see similar ambitions being pursued by another player in the market.
According to a recent announcement by Solv Protocol’s co-founder, Ryan Chow, the team is gearing up to introduce an “on-chain MicroStrategy” that aims to integrate yield-generating Bitcoin (BTC) reserves within the decentralized finance (DeFi) ecosystem. This revelation was made in a blog post dated November 29th.
Chow stated that we are constructing the initial On-Chain MicroStrategy, which will be a clear, accessible platform that converts Bitcoin from a simple store of value to an influential financial force, empowered by transparency and without need for permission.
As stated by Chow, Solv is planning to construct a tactfully controlled “Bitcoin savings account” that not only secures assets but also produces income and boosts profits.
He didn’t specify precisely how Solv intended to achieve this goal.
Solv serves as a Bitcoin staking service, providing multiple earning opportunities spanning over more than six different blockchain systems.
It generates yield by staking BTC to Bitcoin layer-2s, including Babylon and CoreChain, as well as DeFi protocols, such as Jupiter and Ethena.
Solv currently oversees more than $3 billion in total value locked (TVL), according to DefiLlama.
MicroStrategy’s Bitcoin buying spree
In the year 2020, MicroStrategy transformed into a significant Bitcoin investment vehicle as its chairman, Michael Saylor, implemented an aggressive Bitcoin purchasing plan, making it effectively function like a Bitcoin hedge fund in the business world.
2024 saw MSTR stocks rank among the top performers. In just a year’s time, the value of these shares has skyrocketed by over 450%, as per statistics from Google Finance.
On their August 1st earnings conference call, MicroStrategy reinforced their dedication to Bitcoin investment by setting a distinctive benchmark: Bitcoin return rate.
The Bitcoin yield represents the proportion of Bitcoin holdings compared to the total number of issued shares, thereby making Bitcoin per share serve as a benchmark for a company’s performance.
MicroStrategy is planning to utilize its financial resources, primarily through loans or stock issuance, to acquire Bitcoin. This strategy aims to progressively boost the company’s Bitcoin holdings per share, which could potentially bring benefits to its shareholders.
On October 30th, MicroStrategy announced their intentions to increase capital by $21 billion through stock offerings and an additional $21 billion through debt, with the aim of executing a three-year, large-scale Bitcoin purchasing initiative known as the “21/21 Plan”.
According to benchmark analyst Mark Palmer, it’s anticipated that MicroStrategy will earn a return of approximately 12.7% from its Bitcoin holdings by the year 2025.
According to Chow, MicroStrategy has transformed Bitcoin from merely a reserve asset; it serves as a powerful driver for substantial expansion.
Its success has “redefined what’s possible for institutional Bitcoin reserves,” he added.
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2024-11-29 23:22