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Chainlink Introduces Value Recapture Solution for DeFi Protocols

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by Giorgi Kostiuk

a year ago

The oracle network Chainlink has announced the launch of a solution aimed at helping decentralized finance protocols reclaim maximal extractable value.

New Opportunity from Chainlink

Chainlink has introduced Smart Value Recapture (SVR), a solution for DeFi applications to recapture non-toxic maximal extractable value from Chainlink Price Feeds. Collaborators in the development of SVR include Aave DAO, BGD Labs, and Flashbots alongside Chainlink.

How Smart Value Recapture Works

SVR works by cutting unnecessary third-party dependencies. It also eliminates the need for intermediary smart contract integrations, leveraging Flashbots for enhanced efficiency and security. This functionality relies on Flashbots’ “Dual Aggregator” contract architecture.

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).Chainlink Team in the blog announcement

Prospects and Implementation

Currently live on testnet, Chainlink SVR is preparing for its mainnet launch on Ethereum. A proposal for integration into Aave is being discussed, potentially providing the protocol with an additional revenue stream and supporting the economic sustainability of Chainlink's oracles. Future improvements may include increased decentralization, cross-chain capabilities, and gas efficiency enhancements.

Chainlink SVR offers new opportunities for DeFi protocols to reclaim some value lost during liquidations and maintain economic sustainability by reducing dependency on intermediaries.

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