SolvBTC's Reported Bitcoin Reserves Come Under Fire Over Double-Counting Claims

A dispute over how Solv Protocol tallies its Bitcoin reserves spilled into public view in early January 2025, with a rival project's co-founder alleging that SolvBTC's total value locked figures counted the same coins several times over.

The allegation

Hans, co-founder of Nubit, posted a detailed critique arguing that SolvBTC's model doesn't simply lock Bitcoin — it allegedly allows a single coin to be represented multiple times in reported TVL. The mechanism he pointed to involves pre-signed transactions: because the underlying Bitcoin never actually moves, he argued one BTC could effectively show up as three units of value locked. If accurate, a meaningful share of SolvBTC's reported reserves would rest on accounting artifacts rather than Bitcoin that had actually been staked.

Solv co-founder Ryan Chow pushed back sharply, declaring on X, "This. Is. War. But we will Solv it." Shortly afterward, Solv's official X account was reported as "briefly compromised," an awkward coincidence given the timing of the dispute.

Early warning signs

Before the public spat erupted, Lombard Finance's Jacob Phillips had already flagged unusual activity tied to Babylon's Cap3 staking window. He noted that one unnamed liquid staking token's stake appeared to fall from roughly 10.5k BTC to 8.5k BTC, even as other tokens saw minimal participation during the points-boost period — prompting early questions about LST key management and proof-of-reserves practices across the sector.

A wallet with a mind of its own

Those concerns escalated on New Year's Day. A user known as Godiex reported that 0.01 BTC vanished from their SolvBTC.BBN position without any transaction being signed on their end — despite the product being marketed as self-custodial. According to Godiex, the funds turned up in two separate wallets, still accruing points on Solv's platform but no longer under the original owner's control:

Wallet 1: 0x47b03049F4BD037856C08f6255caDf8bD252290e

Wallet 2: 0xe1e08B46fF9Cf97A8c2b41C106dE0E53D54D9AF9

The numbers get worse

On January 4th, Hans returned with a follow-up thread, contending that SolvBTC's advertised 25k BTC in reserves shrinks to roughly 10k BTC once double-counted positions are removed — leaving an unexplained gap of around 15k BTC in supposedly staked assets. In the middle of the controversy, Nubit also introduced a new "Proof of TVL" framework, positioning itself as a solution to exactly the kind of opacity being alleged against Solv.

A partial correction

Not every piece of evidence held up, however. A screenshot Hans had circulated as proof of assets being moved was later identified as a routine SolvBTC.CORE staking transaction, a reading confirmed by members of both the Core and Babylon teams. Separately, some of the TVL movement in question may be attributable to SolvBTC.BBN enabling unstaking a month earlier — meaning at least part of the apparent decline reflected users withdrawing rather than funds disappearing.

Two competing bets on Bitcoin DeFi

The dispute also doubles as a clash between two different visions for Bitcoin-based finance. Nubit, backed by Polychain Capital, is building around a BitVM-based "Trustless World Computer" intended to bring smart-contract functionality to Bitcoin while minimizing trust assumptions and preserving self-custody at the hardware level.

Solv, by contrast, has positioned itself as building "a Bitcoin reserve for everyone," with an ecosystem built around its core SolvBTC token and a family of liquid staking derivatives: SolvBTC.BBN (Babylon), SolvBTC.CORE (Core), SolvBTC.ENA (Ethena), and SolvBTC.JUP (Jupiter).

Where the numbers stand

By Solv's own dashboard, the protocol reports more than 25k BTC in total reserves. Critics argue only around 10k BTC — roughly 40% of the claimed figure — is genuinely staked, leaving about 15,000 BTC unaccounted for between "deployed" status and actual verifiable holdings.

An early backer turns critic

Mudita, described as an early SolvBTC supporter, has said she contributed approximately 1,800 BTC — around 10% of the project's initial TVL — only to see that stake represent roughly 0.5% of fully diluted value. She claims her attempts to get answers from the Solv team were ignored, and in response she launched a token called $ZAI, pitched as an advocate for smaller contributors.

The episode has drawn its own scrutiny, however, including questions over the unauthorized use of ZachXBT's likeness in connection with $ZAI's promotion. Whether Mudita's campaign is a genuine grievance or an opportunistic token launch riding the controversy remains unclear, and it should be treated as a separate, unverified side story rather than a confirmed part of the SolvBTC accounting dispute.

How the double-counting is said to work

At the center of the debate is Bitcoin's UTXO model, which in theory makes ownership and accounting straightforward: each coin carries clear rules about whose signature is required to spend it, and when. Critics argue that protocols like SolvBTC exploit a gray area within that model through "offline" or pre-signed transactions — users sign a commitment to stake their Bitcoin, but the coins themselves never leave their wallets.

As researcher Yu Feng described the mechanism, the protocol treats these signed commitments as TVL even though the underlying BTC hasn't moved — and because the coins are still sitting in the user's wallet, nothing stops the same coins from being pledged to other protocols as well, multiplying the reported total without any additional Bitcoin actually being deposited.

Independent data appears to back the core complaint. Analytics firm Define101, associated with DeFiLlama, reported finding that SolvBTC's verifiably staked Bitcoin totals just 10,552 BTC — far short of the roughly 25k BTC Solv advertises. Notably, DeFiLlama's own tracking categorizes core SolvBTC under "bridge" (which is excluded from headline TVL figures), while classifying its other products under "Restaked BTC" with an internal flag reading "doublecounted:true." Hans summarized the gap bluntly: "They overreported by 15k BTC."

The episode raises a broader question for the "wrapped Bitcoin" sector generally: when a protocol markets "1 SolvBTC = 1 BTC" based on signed pledges rather than custodied assets, who is actually in possession of the underlying Bitcoin? Nina Rong, Arbitrum's Head of Partnerships, posed exactly that question publicly, asking how a user's BTC can count toward protocol TVL while it remains in that user's own wallet.

Solv has not offered a detailed rebuttal to the underlying accounting claim. Asked in its own Discord about proof of reserves, the team responded only that documentation was "yet to be published."

The takeaway

Some elements of the accusations against Solv — notably the screenshot Hans initially cited as evidence — turned out to be mistaken or explainable by routine platform activity. But the core claim, that SolvBTC's headline reserve figures rely on pre-signed commitments rather than verifiably custodied Bitcoin, has not been refuted, and independent trackers appear to corroborate a shortfall in the tens of thousands of BTC between claimed and verified holdings. Without published proof of reserves, users of SolvBTC and comparable wrapped-Bitcoin products are left trusting each protocol's internal accounting — a trust assumption that compounds with every additional layer of staking, restaking, and derivative wrapping built on top of the original coin.