Aave Adopts Chainlink SVR for MEV Recovery in Oracle Services

The Aave network has reached a consensus to adopt Chainlink's Smart Value Recapture (SVR) feature, with the objective of reclaiming millions in maximum extractable value (MEV) that has been lost to oracles.

Aave (AAVE), a leading decentralized finance protocol, has successfully integrated the Smart Value Recapture on the Ethereum (ETH) mainnet following a community vote. Chainlink (LINK) unveiled the MEV recapture solution in December 2024.

The integration of SVR aims to recover oracle extractable value that has previously leaked to blockchains. This partnership introduces a new standard for Aave and other participants in the DeFi ecosystem, offering a means to supplement network revenue and create a sustainable economic path by utilizing oracles.

The deployment is a collaborative effort involving Chainlink, BGD Labs, and Aave Chan Initiative, two developer groups focused on Aave, as well as Flashbots, a research and development platform working on solutions to mitigate the negative impacts of extractable value on Ethereum.

SVR will aid Aave in reclaiming oracle-related MEV via Chainlink’s oracle networks and Flashbots’ MEV-Share service.

"Optimizing liquidation algorithms on DeFi while maintaining the financial and technical security of the protocols is an immense challenge. However, the Aave-Chainlink partnership has once again succeeded in innovating responsibly on the edge with SVR and its OEV recapturing model," said Ernesto Boado, the co-founder of BGD Labs.

Initially, Aave will employ SVR to reclaim liquidation MEV from Threshold Bitcoin (tBTC)—the Bitcoin-backed token that enables holders to mint and utilize BTC on Ethereum to access DeFi opportunities. Initial support will also cover LBTC, AAVE, and LINK, with additional markets to be added in the future.

Revenue generated from the recaptured value will be divided, with 65% going to Aave and 35% to Chainlink communities for the first six months. Chainlink intends to convert its portion of SVR fees into LINK, which will be distributed to network service providers.