In a significant step towards achieving greater economic sustainability and enhanced user experience in the world of decentralized finance, Aave Protocol has announced a partnership with Chainlink and BGD Labs. This partnership enables Aave Protocol to incorporate Chainlink Smart Value Recapture (SVR) on the Ethereum Mainnet, a development set to revolutionize the way decentralized finance apps recapture oracle-related Maximal Extractable Value (MEV).
As an open-source, decentralized, and non-custodial liquidity protocol, the Aave Protocol is constantly striving for advancements that benefit not only its platform but the broader decentralized finance ecosystem. This collaboration with Chainlink, a leading on-chain finance standard, and BGD Labs, a reputable web3 development venture, represents a significant stride in this direction.
The integration of Chainlink SVR on the Ethereum Mainnet allows Aave Protocol to recapture oracle-related MEV that was previously leaked to the blockchain ecosystem. This innovative solution not only boosts the revenue of decentralized finance apps but also creates a more balanced economic environment for oracle infrastructure and DeFi protocols.
Chainlink SVR is a pioneering oracle solution that allows decentralized finance apps to recapture the MEV derived from the use of Chainlink Price Feeds, also known as Oracle Extractable Value (OEV). This solution addresses a significant issue in the blockchain ecosystem, where substantial amounts of OEV have been leaked and retrieved by participants in the block building process. The development of Chainlink SVR is the result of collective efforts by the Aave DAO contributors, Flashbots, and BGD Labs. The system retrieves oracle-related MEV by leveraging the MEV-Share service of Flashbots and the oracle networks of Chainlink.
In a gesture of community-focused economics, the OEV revenue recaptured by Chainlink SVR will be split between the Chainlink and Aave communities. Aave Protocol has announced that the integration of Chainlink SVR will initially facilitate the efficient recapture of liquidation MEV in a select group of markets, including $LINK, $AAVE, $LBTC, and $tBTC. However, the plan is to expand this to more markets over time, signifying a long-term commitment to improving the economics and user experience of the DeFi ecosystem.
This partnership between Aave Protocol, Chainlink, and BGD Labs underscores the potential for innovative solutions to enhance the DeFi landscape. By recapturing previously leaked value and promoting more balanced economics, the integration of Chainlink SVR on the Ethereum Mainnet represents a significant advancement in the evolution of decentralized finance.
