Chainlink, the Oracle network that brings global finance on-chain, has announced the launch of an Oracle solution that it says will help decentralized financial protocols capture maximum extractable value.
The Chainlink Smart Value Recapture is a MEV solution that DeFi applications can leverage to recover the maximum non-toxic extractable value from Chainlink price feeds.
According to an announcement from the Chainlink (LINK) team, the initial release of its SVR is an effort contributed to by Aave (AAVE) contributors DAO, BGD Labs, and Flashbots, among others.
According to Chainlink, the initial focus of Chainlink SVR is DeFi lending protocols.
This is one of the solutions aimed at helping protocols recover MEV from liquidations. Projects such as Chainlink, Pyth Network, and API3 are at the forefront of offering solutions that enable the efficiency of DeFi lending protocols. These initiatives help projects recover millions of dollars from non-toxic VPDs.
SVR, built on Chainlink’s infrastructure, works by allowing projects to reduce unnecessary dependencies with third parties. This also removes the need for intermediary smart contract integrations, while leveraging Flashbots for greater efficiency and security. This is the functionality of the MEV-Share and contractual architecture of Flashbots called “Dual Aggregator”.
“Based on real-world testing, we believe that Chainlink SVR can expect to achieve a realistic value recovery rate of around 40% (i.e. for every $100 that would have been disclosed via the MEV liquidation, $40 was recovered).”
Chainlink team in blog announcement
Also notably, a governance proposal for the integration of Chainlink SVR on Aave is underway.
If the Aave community approves BGD Labs’ proposal, the DeFi protocol will benefit from a new source of revenue. The value recovered by the MEV solution will thus provide Aave with additional revenue and support the economic sustainability of Chainlink oracles.
The Chainlink SVR is live on testnet ahead of its launch on the Ethereum mainnet. Chainlink developers are also considering a future implementation that will introduce improvements such as further decentralization, cross-chain capabilities, a DON-based auction system, and gas efficiency.
