Chainlink has introduced the Chainlink Smart Value Recapture, an oracle solution designed to help decentralized finance (DeFi) protocols recapture maximal extractable value (MEV). This innovative solution enables DeFi applications to tap into Chainlink Price Feeds and recover non-toxic MEV.

Recapturing Maximal Extractable Value

Chainlink’s Smart Value Recapture (SVR) is an MEV solution that focuses on DeFi lending protocols. The initial version of SVR is a collaborative effort between Aave DAO contributors BGD Labs and Flashbots, among others. By leveraging Chainlink’s infrastructure, SVR allows projects to eliminate unnecessary third-party dependencies and intermediary smart contract integrations, ensuring greater efficiency and security.

Key Features and Benefits

SVR’s functionality is based on Flashbots’ MEV-Share and contract architecture, known as “Dual Aggregator.” This design enables DeFi protocols to recapture millions of dollars worth of non-toxic MEV. According to Chainlink, the SVR can achieve a realistic value recapture rate of approximately 40%. This means that for every $100 that would have been leaked via liquidation MEV, $40 can be recaptured.

Some key benefits of Chainlink SVR include:

  • Eliminates unnecessary third-party dependencies
  • Removes the need for intermediary smart contract integrations
  • Leverages Flashbots for efficiency and security
  • Enables DeFi protocols to recapture non-toxic MEV

“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).”

Future Developments and Implementations

A governance proposal for Chainlink SVR integration on Aave is currently underway. If approved, the DeFi protocol will benefit from a new revenue stream, and the value recaptured by the MEV solution will support Chainlink oracles’ economic sustainability.

Chainlink SVR is currently live on testnet, with plans for a future launch on the Ethereum mainnet. Developers are also exploring improvements, including further decentralization, cross-chain capabilities, a DON-based auction system, and gas efficiency.

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