Aave Partners with Chainlink to Recapture Oracle-Related MEV

Aave, the largest lending protocol by total value locked (TVL) per DeFiLlama data, has integrated Chainlink’s Smart Value Recapture (SVR) on Ethereum mainnet to recapture maximal extractable value (MEV) lost to oracle interaction, according to a Mar. 28 press release.

The move comes after an onchain vote within the Aave DAO to enable SVR V1 on Aave V3 Ethereum that ended on Mar. 28 with 100% in favor. The proposal is currently in the execution stage and will be completed by Mar. 29, according to the voting page.

The integration allows Aave to regain the MEV lost when interacting with Chainlink’s price feeds. This type of MEV, also known as Oracle Extractable Value (OEV), is the value that can be extracted due to the timing and ordering of oracle updates. It’s the profit someone can make from acting on or manipulating the delay between real-world events and when that data is reflected on-chain via oracles.

Chainlink’s SVR was built in collaboration with Aave DAO contributors, such as web3 development initiative BGD Labs, and MEV research and development organization Flashbots. It combines Chainlink’s oracle networks and Flashbot’s MEV-share service to capture oracle-related MEV.

Furthermore, SVR is built specifically for back-running liquidations, so it cannot be used for sandwich attacks.

“This is a big win for MEV minimization on Ethereum, as Chainlink SVR (powered by mev-share) allows Aave and other apps to reclaim the MEV value of their Oracle updates. This means more revenue for apps and lower fees for Defi users,” said a Flashbots associate in a Mar. 28 X post.

“We're excited to have been collaborating on this, and expect more updates to follow.”