Solv was originally the developer and promoter of a protocol that integrated semi-fungible tokens, but it also offers a product called SolvBTC, which represents bitcoin stored in Solv's decentralized bitcoin reserves.
The information below relates only to the Solv product and does not address SolvBTC.
Semi-Fungible Token ERC-3525
ERC-3525 is a universal and omnichannel standard that combines the quantitative attributes of the ERC-20 token with the descriptive characteristics of the ERC-721 token (NFT).
ERC-3525 rewrites the asset creation and trading process, creating efficiency and enhancing market integrity. With it, traditionally illiquid assets can become divisible, digitally represented and traded on the open market.
These assets can range from simple instruments such as gift cards, loyalty cards, checks or vouchers to more regulated assets such as bonds, futures and options contracts, ABS, and even real estate and renewable energy.
You can not only embed anything in SFT - text, images, links or files - but you can divide it into infinitely many parts. In addition, SFT breaks the usual token-to-address data transfer model with a token-to-address model, opening up a multitude of use cases beyond our imagination! Here are the top four benefits of ERC-3525:
- SLOT is a flagship feature of ERC-3525 that allows tokens with the same SLOT to be fungible, even if they have different identifiers. It establishes a common basis, so to speak, for every two SFTs and excludes the value by which the SFT can be compute. For a bond SFT, a SLOT may be the combination of the borrower’s ID, maturity date, and interest rate, but not the price since it is the only value by which the bond could be divvied up or merged into another.
- Token-to-token transfer. SFTs are digital containers that allow users to easily send, receive, or store digital assets or goods. A borrower can simply pay one SFT (the parent SFT) and the lenders' tokens (subsidiary SFTs) will automatically receive their payments on a pro-rata basis. ERC-3525 is practically tokenized bank accounts!
- Expressivity. To accommodate assets of all shapes and sizes, ERC-3525 inherits the vital visual attributes of NFT plus support for text descriptions, attachments, SVG chains and real-time data transfer.
- Computability. You can nest any digital asset in an SFT, but that's not all. The underlying SFT asset is fully liquid like ERC-20, so you can easily split it quantitatively into a new SFT that still follows the same rules governing the underlying asset (e.g. maturity date for SFT bonds).
Solv-Powered SFTs: Vouchers
Vesting Voucher
Vesting Voucher (Solv V1) is an SFT for managing and distributing token allocations. Vesting Voucher can lock and vest any cryptoasset according to a predefined schedule. Users can customize the vesting schedule (immediate, linear or individual) via a code-free front-end.
Bond voucher
A bond voucher (Solv V2) is an SFT debt that allows DAOs or institutions to raise capital by issuing convertible bonds that turn into net debt once the embedded convertibility is removed. It offers the lender ongoing additional funding to accelerate growth and cover operating expenses.
The bond voucher is issued at a discount to face value. At maturity, the lender burns the voucher and receives a profit equal to the full face value. If the market price of the underlying token exceeds a predetermined price (conversion price), the lender receives both the face value and the increase in value of the token.
Convertible voucher
A convertible voucher is a structured product with a conversion feature similar to a bond voucher, except that a convertible voucher has a flexible repayment mechanism based on the future market price of the underlying asset and a predetermined price range. It allows DAOs or institutions to borrow capital by backing the voucher with sufficient collateral and allows lenders to realize a return on a promising asset in a volatile market.
Solv V3
Solv V3 offers a versatile platform to create, manage and settle SFTs for funds on-chain. In more detail:
- Asset managers create SFTs with customizable subscription rules, fee structures and investment strategies, all embedded in smart contracts.
- Investors become LPs when they buy a portion of the SFT.
- Exiting the transaction is simple as SFTs are fully traded on NFT secondary markets.
- Automated and visualized PnL, with fund settlement and distribution of principal and interest entirely through smart contracts.
- Solv integrates centralized and decentralized custodial solutions, allowing asset managers to customize for open fund usage.
- Solv integrates APIs from leading cryptocurrency analysts and exchanges to ensure close monitoring of NAV and fund transactions.
Liquidity Pool 2.0: SFT-based liquidity pools
When tokens are deposited into a cryptocurrency liquidity pool, the platform automatically generates an LP token, which represents the stake held by the depositor in that pool. While ERC-20 has been a common standard for LP tokens, it requires the deployment of separate smart contracts for each token, which can lead to higher gas fees.
V3 implements SFTs for LP tokens to improve visualization, computability, and increase the diversity of liquidity pools created.
ERC-3525 allows asset managers to create an SFT that represents a liquidity pool. Users who purchase a fraction of the SFT receive a new SFT in their wallet, representing their share of the pool, and thus become an LP.
The SFT is both a container of digital assets and a tokenized smart contract, making it ideal for liquidity pools with more customized terms, as well as a more personalized LP experience.
With V3, asset managers or LPs accept or withdraw deposits in flexible timeframes. SFT metadata visualizes the lockup period of a token.
