Aave is considering integrating Chainlink’s Smart Value Recapture (SVR) oracle to redirect profits from transactions back running to its users. The proposal, currently under discussion in Aave’s governance forum, aims to optimize liquidation value extraction.
On Dec. 23, Chainlink introduced SVR, an oracle service designed to recapture non-toxic Maximal Extractable Value (MEV) from DeFi protocols.
This value accrues during on-chain, oracle-driven liquidation events, which are raced by searchers looking to speculate on transaction ordering. Conventionally, this profit accrues directly to the searcher, builder, and validators, leaving the protocols or users with very little economic returns.
SVR streamlines MEV recapture with Flashbots’ MEV-Share and its unique on-chain “Dual Aggregator” system that minimizes third-party dependencies while assuring highly efficient workflows without significant adjustment of the existing smart contract.
According to Chainlink, SVR could realistically recapture about 40% of the liquidation MEV. That is a strong revenue uplift for DeFi protocols. Currently live on testnet, SVR will launch on Ethereum mainnet soon.
Future versions will further optimize for decentralization, gas efficiency, and cross-chain functionality. According to Aave’s proposal, SVR can enhance economic sustainability by rerouting MEV profits back into the ecosystem.
In DeFi, MEV is the profit extracted through reordering transactions in a blockchain block. Oracle-related MEV arises when liquidation opportunities are created due to the updating of price feeds. Liquidators often race to capture such opportunities, with the profits usually not well-distributed. SVR aspires to solve this imbalance.
Aave governance proposal targets MEV value return to the ecosystem
With the integration of SVR, Aave hopes to capture value otherwise leaking to out-of-platform actors. This could strengthen the protocol during turbulent markets, too. Treading with Chainlink’s existing infrastructure, securing billions of value in DeFi adds a layer of reliability to the system.
The collaboration between Aave, Chainlink, BGD Labs, and Flashbots reflects a concerted effort to address MEV inefficiencies. The proposed system ensures seamless integration with existing Aave mechanisms and aligns with the protocol’s focus on protecting liquidity suppliers.
However, it will be left to the Aave community to decide whether to turn SVR on in Aave v3. If approved, this integration may be one of the key steps toward reclaiming MEV value for users and making DeFi more economically sustainable.
