TL;DR
- Aave plans to use Chainlink’s Smart Value Recapture (SVR) oracle to redirect MEV profits back to its users.
- The SVR could capture up to 40% of the profits generated from liquidations and redistribute them within the DeFi ecosystem.
- Ethereum is adopting strategies like “dark pools” to reduce MEV costs, while MoonPay and Crypto.com continue to advance in the crypto market.
Aave, one of the leading decentralized finance (DeFi) protocols, is considering integrating Chainlink’s Smart Value Recapture (SVR) oracle to tackle the issue of maximum extractable value (MEV). MEV occurs when block builders reorder blockchain transactions to maximize profits, often at the expense of ordinary users and traders.
The proposal was introduced in Aave’s governance forum with the aim of redirecting MEV-generated profits back to the protocol’s users. Currently, during liquidation events on Aave, third parties liquidate debts and receive bonuses. However, this system has allowed block builders to gain disproportionate profits. With the SVR, Aave seeks to capture these gains through auctions for “backrunning” rights and redistribute them via its DAO, ensuring a more balanced system.
The SVR oracle, launched by Chainlink on December 23, promises to capture up to 40% of MEV profits. These funds would be returned to the ecosystem, benefiting users and improving fairness and transparency in DeFi operations.
A Global Solution to MEV’s Impact
Within the Ethereum ecosystem, other protocols are also taking steps to mitigate MEV, particularly through the use of private transactions or “dark pools”. These transactions, sent directly to validators instead of through the public pool, are gaining popularity and now dominate order flow on Ethereum, according to a report from Blocknative.
Meanwhile, the crypto sector continues to grow with notable initiatives. MoonPay is negotiating the acquisition of Helio Pay for $150 million, which would strengthen its e-commerce services and broaden its reach. Additionally, Crypto.com has launched an institutional custody service in the United States, marking a significant milestone in its North American expansion.
With these developments, Aave and Chainlink are leading a significant shift in DeFi, proving that the sector’s future lies in ensuring greater fairness, security, innovation, and benefits for all participants worldwide.
