Today, the two leading projects in the DeFi field, Aave (AAVE) and Chainlink (LINK), both show a significant upward trend. However, this rise is not due to the increase in positions of Trump’s concept WLFI, but due to A substantial cooperation between the two projects has progressed, which is expected to bring tens of millions of dollars in additional revenue to both parties annually.
AAVE and LINK Market Overview
As of 11:00 Beijing time, OKX market data showed that AAVE was quoted at 377.69 USDT, with a 24-hour increase of 16.66%; while LINK was quoted at 23.9 USDT, with a 24-hour increase of 5.8%. The market responded enthusiastically to this cooperation, and investor confidence doubled.
Chainlink Launches Smart Value Recovery Service SVR
Early this morning, Chainlink officially announced a new service called "Smart Value Recapture (SVR)", which is an innovative oracle solution designed to help DeFi applications recover the value of the Maximum Extractable Value (MEV) in a "harmless" way through Chainlink's quotes.
MEV and OEV Analysis
MEV refers to the value obtained by the block proposer by manipulating the transaction order, while OEV (Oracle Extractable Value) is a subset of MEV, specifically referring to the MEV generated by on-chain applications when transmitting oracle reports on the chain. In the current DeFi ecosystem, this part of the value is often captured by participants in the block construction process, and is not returned to the DeFi protocol, end users, and oracles that originally generated MEV.
The innovative significance of SVR
Chainlink SVR was launched to solve this problem. It is not used for controversial MEV plundering scenarios such as front-running or mezzanine attacks, but is designed for liquidation-related value recovery, aiming to solve the OEV problem that is prevalent in lending protocols. Through SVR, Chainlink hopes to return the originally lost MEV value to its original creators and contribute to the healthy development of the DeFi ecosystem.
Aave community hot discussion: SVR integration proposal attracts attention
After Chainlink announced the progress of the initial version of SVR (Smart Value Recovery), BGD Labs quickly took action and put forward an eye-catching proposal in the Aave community forum. As a partner of Chainlink, teams including BGD Labs, Flashbots and Aave DAO are working together to promote the implementation of this innovative technology.
BGD Labs pushes Aave to integrate SVR
BGD Labs emphasized in the proposal that Aave has demonstrated excellent effectiveness in the clearing field with its robust operating mechanism. However, a problem that cannot be ignored is that there is significant MEV (maximum extractable value) arbitrage space in the current liquidation process. In practice, builders often make huge profits easily, but their actual contributions do not match them.
Uneven distribution of liquidation profits sparks heated debate
At the same time, the proposal also reveals another phenomenon worthy of attention: the proportion of profits obtained by searchers as protocol users is much lower than that of builders. This imbalance in profit distribution undoubtedly poses a challenge to the fairness and sustainability of the Aave community. Therefore, BGD Labs proposes that Aave should consider integrating SVR technology as soon as possible, in order to achieve a fairer and more reasonable profit distribution while ensuring liquidation efficiency.
With the proposal, the discussion within the Aave community has become more intense. All parties have both expectations and doubts about SVR technology, but there is no doubt that this innovative attempt will bring new changes and opportunities to the DeFi field.
Chainlink's SVR is expected to properly solve this problem and more finely define who is the entity that benefits most from transaction ordering. Inexpensive For stability reasons, BGD Labs recommends deploying SVR on only 1-3 assets in the initial pilot to advance the integration work in a controlled manner.
A value recovery solution with great potential
Chainlink recently released data showing that its Smart Value Recovery (SVR) technology is expected to achieve a value recovery rate of about 40% in practical applications. This means that every time $100 of Maximum Extractable Value (MEV) is leaked during the liquidation process, SVR can recover $40 of it.
Data Evidence and Conservative Estimates
Chainlink emphasized that although there are other solutions on the market that claim to have higher liquidation recovery efficiency, there is currently no solid actual data to support these claims. In contrast, Chainlink's 40% recovery rate assessment for SVR is conservative but more realistic, and it looks forward to further verification and data collection through actual performance.
Tens of millions of dollars in potential recovery value
BGD Labs added that based on SVR's 40% recycling efficiency and the scale of past MEV leakage, it is expected to achieve tens of millions of dollars in value recovery. In order to simplify the system, the recovered value will be distributed in the form of Ethereum (ETH).
Details of the revenue sharing plan
In Chainlink's announcement about SVR, a specific plan for revenue sharing was also revealed. The value recovered by SVR will be distributed between the integrated DeFi protocol and the Chainlink network in a certain ratio, initially set at 60% to the DeFi protocol and 40% to the Chainlink ecosystem. However, this ratio is not fixed and may be adjusted in the future depending on the situation.
Long-term collaboration with Aave
In order to establish a long-term partnership with its first partner Aave, Chainlink proposed to distribute 65% of the profits to Aave in the first six months, while Chainlink itself would receive 35%. However, this proposal needs to be approved by Aave community governance.
The final destination of recycled value
Chainlink did not give a specific explanation of where the recycled value will go after the split, but only mentioned that it will be used to support the economic sustainability of Chainlink oracles, such as paying for transaction gas costs and other infrastructure costs. As for Aave, BGD Labs has proposed to use the recycled value to benefit users, such as providing incentives to pledgers of the Umbrella module. This may be one of the reasons why AAVE has risen more significantly than LINK recently.
