DeFi

Value

Aave

Morpho

Chainlink

Every time a Chainlink oracle pushes a new price onchain, it can instantly render some collateralized loans eligible for liquidation. Automated bots race to capture that opportunity, pocketing the profit while the protocol that generated the price update walks away with nothing. The industry has a name for it: Oracle Extractable Value, or OEV.<a href="https://chain.link/" rel="noopener noreferrer nofollow">@chainlink</a> has built a mechanism to change that. <a href="https://docs.chain.link/data-feeds/svr-feeds" rel="noopener noreferrer nofollow">Smart Value Recapture (SVR)</a> extends standard Chainlink Price Feeds with an optional private transmission layer. <cite>By sending oracle updates through a dual aggregator architecture, SVR enables an auction for the opportunity to backrun liquidations.</cite> In practice, the price report travels two routes simultaneously: one through the public mempool as normal, and one through a private channel where searchers bid for the right to execute the resulting liquidation. <cite>Recaptured OEV revenue is split between integrating DeFi protocols and the Chainlink Network.</cite><h2 id="designed-to-be-non-toxic">Designed to Be Non-Toxic</h2>A key feature of the design is its deliberate scope. <cite>Chainlink SVR is built specifically for backrunning as it pertains to liquidations and cannot be used for frontrunning or sandwich attacks, which are toxic forms of MEV that harm the user experience.</cite> Protocols that worry about the private route failing also have a safety net: <cite>Chainlink SVR uses standard Price Feeds as a fallback, ensuring pricing data is continually made available to protocols via the public mempool in situations where the private route fails.</cite><cite>The initial version of Chainlink SVR was built in collaboration with BGD Labs, Flashbots, and other contributors to the Aave DAO.</cite><cite>Chainlink SVR recaptures oracle-related MEV using a combination of Chainlink oracle networks and Flashbots' MEV-Share service.</cite><h2 id="from-ethereum-to-multi-chain">From Ethereum to Multi-Chain</h2><cite><a href="https://x.com/aave" rel="noopener noreferrer nofollow">@aave</a>, the largest lending protocol by total value locked, integrated Chainlink SVR on Ethereum mainnet following an onchain Aave DAO vote that ended on March 28, 2025 with 100% in favour.</cite><cite>Aave began using SVR to recapture liquidation MEV across an initial set of markets including tBTC, LBTC, AAVE, and <a href="https://x.com/search?q=%24LINK&amp;src=cashtag_click" rel="noopener noreferrer nofollow">$LINK</a>, with recaptured OEV revenue shared at an initial discounted rate of 65% to the Aave ecosystem and 35% to the Chainlink ecosystem.</cite>Since that launch, adoption has broadened considerably. <cite>The system has been adopted by major DeFi lending platforms including Aave, Compound, Venus, and various Morpho markets.</cite><a href="https://x.com/chainlink" rel="noopener noreferrer nofollow">@chainlink</a> has also added a second auction venue and extended SVR to Base, Arbitrum, and BNB Chain, deepening the multi-chain reach of the product.<cite>Since launching, Smart Value Recapture has rapidly become the dominant solution for capturing oracle-related MEV, commanding an estimated 99% market share.</cite>Sources: <a href="https://docs.chain.link/data-feeds/svr-feeds" rel="noopener noreferrer nofollow">Chainlink SVR Documentation</a> <a href="https://www.prnewswire.com/news-releases/aave-integrates-chainlink-svr-on-ethereum-mainnet-to-recapture-liquidation-mev-and-increase-protocol-revenue-302414191.html" rel="noopener noreferrer nofollow">Aave Integrates Chainlink SVR on Ethereum Mainnet (PR Newswire)</a> <a href="https://governance.aave.com/t/arfc-aave-chainlink-svr-multi-network-expansion-base-arbitrum/24241" rel="noopener noreferrer nofollow">Aave Governance: SVR Multi-Network Expansion Proposal</a>

Chainlink auctions the right to liquidate loans that a price update just broke

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