DeFi by Design EP125: Onchain MEV in DeFi Lending Markets Explained

A Deep Dive Into Onchain MEV


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High Rollers:

There is > $100M of value being extracted every single year from lending markets by MEV.

This value is shared with Ethereum validators, yet makes a small difference in the staking yield…

In todays pod, we’ll explore how UMA is planning to recapture this value and distribute it to a different set of users.

We discuss how integrating MEV modules, particularly Oval, into different protocols can recapture tons of value. Oval focuses solely on MEV capture, running auctions that allow users to bid to back run lending market Oracle updates and redirect a significant portion of the MEV back to the protocol and Chainlink itself.

UMA’s involvement takes center stage as we highlight its role in facilitating the integration of Oval into existing protocols, such as Aave, in a phased and conservative manner.

We also touch upon revenue distribution models and tokenholder incentives, emphasizing the potential benefits for the loyal holders of UMA, Aave, Compound, and Chainlink.

Finally, towards the end we talk about intents in the cross-chain landscape and where Hart sees this going in the future.

Enjoy!

Cheers,

The Rollup

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⚠️ DISCLAIMER: Investing in cryptocurrency and DeFi platforms comes with inherent risks including technical risk, human error, platform failure and more. At certain points throughout this post, we might get a commission for promoting certain projects, if this is the case we will always make sure it is clear. We are strictly an educational content platform, nothing we offer is financial advice. We are not professionals or licensed advisors.


 

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Avatar photo About the author: We help you explore DeFi onchain w/ foolproof education & relevant research to give you an edge. Focused on L2s. Scaling to mass adoption one block at a timeπŸ™

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