Looks like Aave is gearing up to tackle MAXIMAL EXTRACTABLE VALUE (MEV) with a new approach. Aave has presented a proposal to integrate Chainlink's Smart Value Recapture (SVR) oracle into their system. This would allow them to redirect profits from MEV backrunning to benefit their users. It's a potentially important move in ensuring a more equitable and sustainable decentralized finance (DeFi) ecosystem.

What’s MEV?

MEV, if you aren’t aware of it, is when block builders maximize profits by reordering transactions to benefit themselves. Essentially, they can manipulate the order of transactions in a block to extract additional profits.

The discussion around MEV has garnered much attention in the crypto world, owing to the sometimes significant profits block builders can earn, often at the expense of ordinary users. There’s been a long-standing debate on the ethics and impact of this practice on the DeFi ecosystem.

How will SVR Help Aave

Aave's proposal comes on the heels of the Chainlink SVR oracle that was launched a couple of weeks ago. The SVR oracle is designed to capture MEV profits and return them to the protocols that contribute to its functioning.

Aave plans to use SVR to capture MEV from liquidation events and redirect that value to the Aave DAO. Basically, it could mean Aave is looking to reclaim about 40% of the MEV it thinks goes unclaimed currently, to be returned to the user's ecosystem. This is intended to level the playing field for the users who have effectively been subsidizing block builders.

Benefits of the Proposal

It seems that by recapturing MEV profits through Chainlink's SVR, Aave could experience numerous benefits. Fairness comes to mind, as well as sustainability and improved user experience.

You could argue that this would make Aave more attractive to users. It will also ensure Aave is better funded to operate and innovate.

Implications for DeFi

The successful integration of SVR could pave the way for other DeFi protocols to adopt similar MEV recapture mechanisms. This would be a welcome change.

However, with any innovation we must also be cautious of unforeseen risks. If the integration is not seamless, it might disrupt the existing dynamics in the way that they have been structured.

All in all, Aave's proposal to integrate Chainlink SVR is a bold move in the ongoing battle against MEV in the DeFi ecosystem. If successful, it could provide a framework for other protocols to follow, ultimately creating a more equitable decentralized finance landscape.