Last December, Chainlink introduced Smart Value Recapture (SVR), a novel solution allowing DeFi applications that use Chainlink Price Feeds to recapture non-toxic oracle-related Maximal Extractable Value (MEV) from liquidations. The initial version of SVR was built in collaboration with contributors to the Aave DAO, whose onchain approval preceded Aave’s official SVR integration on Ethereum in March.
Today, the Aave DAO announced its unanimous vote to expand SVR’s market coverage on Aave from approximately 3% to 27% of the protocol’s TVL on Ethereum.
SVR leverages Chainlink’s industry-standard oracle infrastructure, which has enabled over $20 trillion in transaction value, as well as Flashbots MEV-Share and a novel onchain dual aggregator architecture that allows Price Feed users to access the benefits of recaptured oracle-related MEV or Oracle Extractable Value (OEV) with minimal code changes and without introducing new security risks.
Without a solution like SVR, the DeFi protocols, end users, and oracles that originally generated OEV receive none of the tens of millions of dollars worth of captured value. Chainlink’s real-world testing indicates SVR can recapture and return approximately 40% of non-toxic liquidation MEV related to activities, such as arbitrage and liquidations, that contribute to market efficiency and do not negatively impact users or network integrity.
SVR is also the first service connected to Chainlink’s cross-chain Payment Abstraction system designed to reduce billing and payment friction for users in the Chainlink ecosystem by automatically converting service fees to LINK.
Aave’s expanded integration follows a successful pilot period, during which SVR liquidated at-risk positions while ensuring zero bad debt accrual for the Aave protocol. Aave’s SVR-supported markets now include: Aave v3 Ethereum Core: AAVE, cbBTC, eBTC, LBTC, LINK, tBTC, and WBTC; Aave v3 Ethereum Prime: ezETH, rsETH, USDC, WETH, and wstETH. The ultimate goal is for SVR to support all Aave markets on Ethereum.
MEV recaptured by SVR is split at a standard rate, with 60% going toward the integrating DeFi protocol as an additional revenue stream and 40% supporting the long-term sustainability of the Chainlink Network. As an SVR launch partner and long-standing collaborator with Chainlink, Aave receives 65% of recaptured MEV while Chainlink receives 35% for the first six months of its in-production integration.