Aave is taking bold steps to tackle the challenge of maximum extractable value (MEV), which has been a sticking point in the decentralized finance (DeFi) sector. The protocol has proposed integrating Chainlink’s newly launched Smart Value Recapture (SVR) oracle into its framework. This initiative aims to redirect the profits generated from MEV-related activities back to its users, setting a precedent for user benefits within the ecosystem.
The proposal surfaced in Aave’s governance forum and seeks to harness the SVR to reclaim MEV from liquidation events. By doing so, Aave plans to channel the captured value directly to the Aave DAO, which ultimately supports its diverse user base. Chainlink introduced the SVR oracle on December 23, with the distinct purpose of capturing MEV profits and redistributing them to DeFi protocols, making it a timely solution for Aave’s challenges.
So what is MEV? It refers to the phenomenon where block builders manipulate transaction order to maximize their earnings before finalizing blocks on the blockchain. Unfortunately, this practice can lead to hefty profits for these block builders while users bear the brunt of the impact. In Aave’s platform, users deposit collateral to borrow cryptocurrencies. Should the collateral’s value plummet, liquidations occur, with third-party liquidators stepping in to repay part of the debt. The downside? This mechanism creates ample opportunities for MEV, allowing builders to reap considerable rewards with minimal contribution to the ecosystem. Aave’s latest proposal is a response to this imbalance of benefits, striving to create a fairer playground for all.
Chainlink’s SVR offers a promising solution by auctioning the opportunity to profit from liquidations associated with the price-feed oracle. Aave projects that SVR could potentially capture about 40% of MEV profits, allowing for redistribution aimed at enhancing user experiences and outcomes.
As other protocols across the Ethereum network also grapple with the detrimental effects of MEV, many are considering creative strategies like private transactions. Known as “dark pools,” these private transactions allow users to send orders directly to validators, bypassing the public transaction pool. Given the popularity of this method, it’s no surprise that reports indicate private transactions are now dominating Ethereum’s order flow.
On another note, Aave isn’t the only player making headlines. MoonPay, a frontrunner in crypto payments, is reportedly in talks to acquire Helio Pay, a crypto e-commerce platform valued at approximately $150 million. If sealed, this acquisition would mark MoonPay’s largest to date. Often dubbed the “PayPal for crypto,” MoonPay provides a robust infrastructure for crypto payments and this move could significantly boost its offerings in the e-commerce realm.
Helio Pay’s self-service platform allows over 6,000 merchants to accept payments in popular cryptocurrencies like Bitcoin, Ethereum, and stablecoins such as USD Coin. With features like integration with Solana Pay on Shopify, which serves over 138 million monthly users, this acquisition stands to enhance MoonPay’s already impressive capabilities.
Meanwhile, Crypto.com made its mark by launching a new U.S. institutional custody service. Announced on December 23, this new service is set to operate under Crypto.com Custody Trust Company, which is a chartered trust authorized to hold digital assets for U.S. institutions and high-net-worth individuals. This move marks a significant step in Crypto.com’s strategy to penetrate the U.S. and Canadian markets, which are viewed as critical for the crypto landscape.
Given the competitive nature of the digital asset custody space in the U.S., where firms like BitGo, Coinbase Custody Trust, and Fidelity Digital Asset Services are vying for market share, Crypto.com’s new offering is timely. The service includes vital components such as advanced security measures and regulatory compliance—essential elements that institutional investors desire when managing their crypto holdings.
As Aave explores these innovative options and both MoonPay and Crypto.com carve out their paths in the industry, all eyes are on how these developments will shape the future of the decentralized and crypto finance sectors.
