Oval’s mechanism recaptures up to 90% of lost revenue for lending protocols, contributing to the sustainability of decentralized finance.<\/p>\n
UMA, in collaboration with Flashbots, today announced<\/a> the launch of Oval, a mechanism that allows lending protocols to capture and monetize Oracle Extractable Value (OEV) in order to generate revenue and contribute to the sustainability of decentralized finance (DeFi). <\/p>\n Oval creates new income streams for lending protocols by leveraging Chainlink price updates and Flashbots’ MEV-Share, minimizing integration costs and trust assumptions. <\/p>\n UMA is an oracle and dispute arbitration system that allows for arbitrary types of data to be brought on-chain. Flashbots is a research and development organization which focuses on mitigating the negative externalities posed by Maximal Extractable Value (MEV)<\/a>.<\/p>\n Oval aims to address the issue of OEV, a type of MEV, that is lost by lending protocols when consuming Chainlink oracle data for price updates. <\/p>\n The system fights OEV by wrapping Chainlink price updates and utilizing Flashbots’ MEV-Share to auction off the OEV, redirecting up to 90% of the value back to the protocols that created it. This mechanism presents an opportunity for lending protocols to create sustainable revenue streams and improve the overall stability of DeFi.<\/p>\n Ethereum’s leading DeFi protocols, such as Aave and Compound, have generated over $100 million in OEV since their inception. Oval has the potential to recapture as much as 90% of this value for the protocols themselves, significantly impacting the revenue generated by lending activities.<\/p>\n \u201cMEV protection, particularly MEV capture, is the frontier of Ethereum research,\u201d Robert Leshner, CEO of Superstate and founder of Compound Finance, said in the announcement. \u201cPersonally I am very excited to see UMA working with Chainlink and Flashbots to attempt to capture the $100s of millions of MEV that lending protocols leak.”<\/p>\n The mechanism does not require code changes for integration, making it accessible for established protocols. Oval is currently live on the Ethereum mainnet.<\/p>\n Oval, which has been audited by Open Zeppelin, operates by attaching repayment instructions to a searcher’s bundles, ensuring that any excess value is repaid back to the protocol. In case of any delays with Oval or MEV-Share, the Chainlink price is automatically released to ensure prompt liquidations. <\/p>\n <\/p>\nOracle Extractable Value<\/h2>\n
Live on Ethereum Mainnet <\/h2>\n