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- Aave integrates Chainlink SVR to capture lost MEV.
- This move strengthens DeFi economics and increases protocol revenue.
- The integration starts with select markets and will expand over time.
Aave, the largest DeFi lending protocol, has integrated Chainlink Smart Value Recapture (SVR). This decision follows a near-unanimous vote by the Aave DAO community. The integration aims to reclaim oracle-related maximal extractable value (MEV) that previously leaked to blockchain participants.
The launch begins with a subset of markets, for example, tBTC, LBTC, AAVE, and LINK. Aave and Chainlink communities split the revenue that is reclaimed. Aave receives 65% during the initial six months, and Chainlink receives 35%. The plan offers an equal split of value while subsidizing the infrastructure of decentralized finance.
The integration was developed in partnership with BGD Labs, Flashbots, and other Aave DAO contributors. With the help of Chainlink oracle networks and Flashbots’ MEV-Share product, Aave is now able to reclaim value back in a frictionless way. This establishes a new standard for the way DeFi protocols deal with liquidation-related MEV.
Proven Reliability of Chainlink’s Ecosystem
model is useful to Aave as it renders it more economically sustainable. The capital recovered can be reinvested into protocol development, user incentives, and system improvement. The extra revenue also helps in maintaining Chainlink’s Oracle infrastructure operational, enabling long-term security and efficiency.
This model is advantageous to Aave in the sense that it makes it more economically sustainable. The recovered capital can be recycled into protocol development, user incentives, and improvement of the system. The added revenue also helps in the maintenance of Chainlink’s Oracle infrastructure to enable long-term security and efficiency.
The Chainlink network is battle-tested already. Chainlink Price Feeds have already secured over $75 billion in DeFi total value locked (TVL) at their peak. Over $20 trillion in transactions have also been enabled by the network. By constructing on this battle-tested infrastructure, Aave is making its MEV recapture system efficient and secure.
Apart from economic incentives, this integration enhances the stability of Aave’s liquidation process. Through a more structured and organized approach to MEV, Aave can better manage risk. This reduces inefficiencies and results in more optimal outcomes for users and liquidity providers.
Setting a New Standard for DeFi Growth
The Chainlink SVR integration is only the first step. Aave is going to be bringing coverage to additional markets in the near term. As the protocol further optimizes the system, additional assets will be able to benefit from MEV recapture.
Aave is also future-proofing updates that include additional decentralization, gas efficiency, and enabling cross-chain functionality. This development will further empower the DeFi ecosystem and enable new opportunities for growth.
Chainlink SVR also has a relationship with payment abstraction. The feature makes it easier to pay service fees through the automatic conversion of fees into LINK tokens. The system reduces friction for transactions and enhances usability within the Chainlink Network. Further details about the mechanism will be published in due time.
Aave continues to be a leader in DeFi innovation. With the adoption of Chainlink SVR, it is leading by example in economic sustainability. The other DeFi protocols can follow suit, thus ensuring that the industry evolves with efficiency and security.
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