Chainlink, the oracle network bringing global finance on-chain, has announced the launch of an oracle solution that it claims will help decentralized finance protocols regain maximum recoverable value.
The Chainlink Smart Value Recapture is a MEV solution that DeFi applications can leverage to recapture non-toxic, maximum achievable value from Chainlink Price Feeds.
According to an announcement from the Chainlink (LINK) team, the first version of the SVR is an effort that included Aave (AAVE) DAO contributors BGD Labs and Flashbots.
According to Chainlink, the initial focus of Chainlink SVR is on DeFi lending protocols.
It is one of the solutions that aims to help protocols recapture MEV from liquidations. Projects such as Chainlink, Pyth Network, and API3 are leading the way in offering solutions that enable efficiency for DeFi lending protocols. These initiatives help projects recover millions of dollars worth of non-toxic MEV.
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Built on Chainlink’s infrastructure, SVR works by enabling projects to reduce unnecessary third-party dependencies. It also eliminates the need for intermediary smart contract integrations, while deploying Flashbots for efficiency and security. This is the functionality of Flashbots’ MEV-Share and contract architecture, called “Dual Aggregator”.
“Based on real-world testing, we believe that Chainlink SVR can expect a realistic value recovery rate of approximately 40% (i.e., for every $100 allegedly leaked via liquidation MEV, $40 was recaptured).”
Chainlink Team in the blog announcement
Also notably, a governance proposal for Chainlink SVR integration on Aave is underway.
If the Aave community approves BGD Labs’ proposal, the DeFi protocol will benefit from a new revenue stream. The value captured by the MEV solution will therefore 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 looking at a future implementation that will introduce improvements such as further decentralization, cross-chain capabilities, a DON-based auction system and gas efficiency.
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