Original title: (AAVE hits its previous high again? With the help of Chainlink, it is expected to increase revenue by tens of millions of dollars each year)

Original author: Azuma, Odaily Planet Daily

The two leading DeFi projects Aave (AAVE) and Chainlink (LINK) both saw significant increases today, but the reason was not that Trump concept WLFI increased its holdings again (see (What assets may Trump project WLFI buy next?)), but that the two major projects have joined forces to promote a practical cooperation, which is expected to help both parties increase their annual revenue by tens of millions of dollars.

OKX market data shows that as of around 11:00 Beijing time, AAVE was temporarily reported at 377.69 USDT, with a 24-hour increase of 16.66%; LINK was temporarily reported at 23.9 USDT, with a 24-hour increase of 5.8%.

Chainlink SVR

In the early hours of today Beijing time, Chainlink officially announced the launch of a new service called "Smart Value Recapture (SVR)". This is a brand new oracle solution designed to enable DeFi applications to reclaim MEV value in a "non-toxic" way through Chainlink's quotes.

The so-called MEV, or "Maximal Extractable Value", refers to the value obtained by block proposers by including, excluding, or changing the order of transactions in a specific block. As a subset of MEV, OEV ("Oracle Extractable Value") refers to the MEV generated when oracle reports are transmitted on-chain and consumed by on-chain applications. The most common OEV opportunities arise in lending protocols, especially during liquidation processes.

· Note from Odaily: The term OEV is actually a common misunderstanding, as it does not refer to oracles actively extracting value from users, but rather to MEV associated with oracles.

In the current DeFi operating environment, the value of MEV (especially OEV) is captured by participants in the block building process, such as seekers, builders, and validators, without returning to the DeFi protocol, end users, and oracles that initially generated the MEV. If there is a way to reclaim these MEVs, it would help return the related value to its original creators.

This is the original intention of Chainlink to build SVR. From the application scenario, Chainlink SVR cannot be used for controversial MEV predatory scenarios such as front-running or sandwich attacks, but is specifically built for liquidation-related value recovery scenarios, aiming to solve the OEV problem that commonly plagues lending protocols.

Aave community proposal integration

As one of the partners in developing the initial version of SVR (specifically including BGD Labs, Flashbots, Aave DAO), Chainlink's announcement prompted BGD Labs to immediately initiate a preliminary proposal in the Aave community forum, suggesting that Aave integrate SVR as soon as possible.

BGD Labs pointed out that Aave's long-standing stable operation has proven the effectiveness of its liquidation mechanism, but there are also obvious MEV arbitrage opportunities — in actual liquidation scenarios, builders often earn substantial profits, while the proportion received by seekers, i.e., protocol users, is much smaller.

Chainlink's SVR is expected to properly address this issue and more precisely define who benefits the most from transaction ordering. For the sake of stability, BGD Labs suggests initially deploying SVR for only 1-3 types of assets in a controlled manner to advance integration work.

Potential value capture scale

According to data from Chainlink, after testing, Chainlink SVR is expected to achieve approximately 40% actual value recovery rate — for every $100 of MEV leakage through liquidation, $40 can be reclaimed.

Chainlink added that while some alternative solutions claim to achieve higher liquidation recovery efficiency, the team has yet to see conclusive real-world data to prove this point. For SVR, 40% is a conservative but realistic estimate, but actual performance is needed to gather real data.

BGD Labs added that a 40% recovery efficiency corresponds to the historical scale of MEV leakage, with the potential to recover tens of millions of dollars in value.

It is worth mentioning that BGD Labs also noted that for the sake of simplifying the system, the form of assets receiving the reclaimed value will be ETH.

Revenue sharing plan

Chainlink stated in the announcement regarding SVR that the value reclaimed by SVR will be distributed according to standard ratios between the integrated DeFi protocols and the Chainlink network, with 60% of the value flowing to DeFi protocols and 40% flowing to the Chainlink ecosystem — the ratio is not fixed and may be adjusted in the future.

For the first partner, in order to establish a long-term cooperation with Aave, Chainlink proposed a revenue share of 65% to Aave and 35% to Chainlink for the first six months, but the relevant data must be approved by Aave community governance.

As for the final flow of value after distribution, Chainlink did not explicitly mention it, only stating that "it can support the economic sustainability of Chainlink oracles through payment of transaction gas costs and other ongoing infrastructure expenses"; however, Aave, through BGD Labs, has explicitly proposed using reclaimed value to benefit users, such as providing incentives to stakers of the Umbrella module — this may also be one of the reasons why AAVE's increase is more pronounced than LINK's at present.

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