Aave Integrates Chainlink SVR to Capture Oracle-Related MEV

Aave, one of the leading decentralized finance (DeFi) protocols, has integrated Chainlink’s Smart Value Recapture (SVR) feature on the Ethereum mainnet to address oracle-related maximum extractable value (MEV) loss. The adoption of this solution follows a community vote on-chain, signaling Aave’s commitment to enhancing its protocol’s economic sustainability by recapturing value that has previously leaked to oracles in the form of MEV.

SVR, which Chainlink introduced in December 2024, is a MEV recapture solution designed to optimize and reclaim value lost to oracles in DeFi systems. This integration is seen as a strategic move by Aave to increase its network revenue while leveraging Chainlink’s robust oracle networks and Flashbots’ MEV-Share service. Through SVR, Aave aims to recover the oracle extractable value that was previously unavailable, which is crucial for the protocol’s long-term growth and profitability.

The collaboration between Aave and Chainlink is supported by key developer groups like BGD Labs and Aave Chan Initiative, as well as research input from Flashbots, a platform focused on solving issues related to MEV in the Ethereum ecosystem. According to Ernesto Boado, co-founder of BGD Labs, this partnership exemplifies responsible innovation and is crucial for ensuring that DeFi protocols like Aave remain financially and technically secure while still capitalizing on MEV opportunities.

As an initial step, Aave will use SVR to recapture liquidation MEV associated with Threshold Bitcoin (tBTC), which is a Bitcoin-backed token enabling BTC holders to participate in DeFi on Ethereum. Other tokens that will be supported initially include LBTC, AAVE, and LINK, with plans to expand support to additional markets over time.

The revenue generated from the recaptured MEV will be split between the Aave and Chainlink communities, with 65% of the fees going to Aave and 35% allocated to Chainlink. This distribution will occur during the first six months of implementation. Additionally, Chainlink plans to convert its portion of SVR fees into LINK tokens, which will then be distributed to network service providers, further incentivizing the broader Chainlink ecosystem.

This development highlights how Aave and Chainlink are working together to create more financially sustainable and efficient decentralized ecosystems while addressing the challenges posed by MEV.