Chainlink Unveils MEV Recovery Solution for DeFi, LINK Jumps 9%

On December 23, Chainlink announced a new oracle solution designed to allow DeFi applications to “recapture non-toxic Maximum Mining Value (MEV)” called Smart Value Recapture (SVR).

Currently, when DeFi protocols use price oracles, such as during settlements, the value is captured by third parties, including finders and validators. None of this value is returned to the protocols or oracles that created these opportunities, however.

The solution is SVR, which allows DeFi lending protocol applications to recover some of that value from settlements. Chainlink expects to recover about 40% of the value that would normally be lost.

The MEV is the profit that can be obtained by strategically ordering, including or excluding transactions within a blockchain block.

Introducing Chainlink Smart Value Recapture (SVR) – a new non-toxic MEV recapture solution for users of Chainlink Price Feeds.

The initial version was created in collaboration with @bgdlabsFlashbots and other collaborators of the @aave DAO

https://t.co/EMtJHqRxaM

— Chainlink (@chainlink) December 23, 2024

Aave Partnership in SVR

The system creates a parallel set of Chainlink price feeds and uses MEV-share flashbots for auctions, according to the blog post. It also includes a reservation mechanism for security using standard price feeds and requires minimal changes for protocols already using Chainlink oracles.

The SVR will generally split the captured value 60% in DeFi protocols and 40% in Chainlink; however, under a special launch partner deal with Aave, it will split it 65:35 for the first six months.

Chainlink Community Ambassador Zach Rynes, aka “ChainLinkGod,” said it was a very bullish development, adding:

“MEV settlement in DeFi is measured in the tens of millions of dollars annually, which presents a significant economic opportunity for both communities.”

He went on to say that SVR is also planned to be one of the first Chainlink services to connect to the payment abstraction system, “allowing the division’s part of the Chainlink network to become LINK via existing DEXs.”

Very optimistic development for $LINK i $AAVE with the introduction of @Chainlinknew non-toxic MEV recovery solution

Chainlink SVR (Smart Value Recapture), designed to recover the MEV of settlement in DeFi, will feature a revenue distribution between the integration of DeFi protocols and the… pic.twitter.com/sSTabhrH8c

— Zach Rynes | CLG (@ChainLinkGod) December 23, 2024

LINK Price Reaction

Chainlink’s native token LINK surged about 9% on the announcement, rising from just over $22 to hit an intraday high of $24.78.

The asset had dipped slightly at the time of writing, but was still trading above $24. LINK remains down 54% from its May 2021 all-time high of $52.70.

AAVE prices further benefited from the partnership, rising more than 15% on the day to over $380 at the time of writing.

The DeFi asset has reached its highest price since September 2021, but remains about 43% from its May 2021 all-time high of $662.

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