Chainlink Launches Oracle Solution to Recapture Maximal Extractable Value in DeFi
Chainlink, the oracle network known for bringing global finance on-chain, has introduced a new oracle solution aimed at helping decentralized finance protocols reclaim maximal extractable value. The Chainlink Smart Value Recapture (SVR) is designed to enable DeFi applications to recapture non-toxic MEV from Chainlink Price Feeds.
Collaborating with Aave DAO contributors BGD Labs and Flashbots, Chainlink has developed the initial version of the SVR, with a primary focus on DeFi lending protocols. By leveraging solutions like Chainlink SVR, DeFi projects can recapture millions of dollars worth of MEV, particularly from liquidations.
One of the key features of Chainlink SVR is its ability to reduce unnecessary third-party dependencies and streamline smart contract integrations. This is achieved through leveraging Flashbots’ MEV-Share and contract architecture, known as the “Dual Aggregator,” for enhanced efficiency and security.
“Based on real-world testing, we believe Chainlink SVR can expect to achieve a realistic value recapture rate of approximately 40% (i.e., for every $100 that would have been leaked via liquidation MEV, $40 was recaptured).”
Chainlink Team in the blog announcement
Furthermore, a governance proposal for integrating Chainlink SVR on Aave is currently underway. If approved by the Aave community, this integration will not only provide Aave with a new revenue stream but also contribute to the economic sustainability of Chainlink oracles.
The Chainlink SVR is currently live on testnet and is slated for launch on the Ethereum mainnet. Future enhancements to the SVR include improved decentralization, cross-chain capabilities, a DON-based auction system, and enhanced gas efficiency.