Explore → About our journey!Oracle Extractable Value (OEV)
Oracle Extractable Value (OEV) is a subset of Maximal Extractable Value (MEV) that occurs within on-chain liquidations. Currently, liquidations in lending markets are very inefficient with significant amounts of collateral being passed to block producers (validators). The OEV Network is a solution that makes liquidations more efficient by just using a dAPI price feed.
Understanding the problem
Traditional oracle solutions update data feeds blindly, which is wasteful and provides poor granularity. Introducing the ability for OEV auctions to contribute to oracle updates, alongside push-updates, results in maximally accurate data feeds alongside an opportunity to recapture MEV currently leaked around liquidation processes.
For an in-depth understanding of Oracle Extractable Value we suggest to read the OEV Litepaper.
The OEV Network
The OEV Network is a ZK-rollup to capture the OEV from all dApps that use API3 data feeds. The OEV Network is powered by Polygon CDK, a framework for creating custom ZK-rollups.
You can consider the OEV Network to be a specialized order flow auction platform that sells the rights to execute data feed updates for specific dApps to the highest bidder. The winner pays while executing the data feed update, allowing the dApp to immediately receive the proceeds on their native chain. This all runs as a sidecar to our regular data feeds, meaning that a dApp that uses API3 data feeds will be able to simply enable OEV Network and start earning.
Returning value to DeFi protocols
It’s common to see that it’s the block producer (and not the liquidator) capturing 99.9% of the liquidation revenue. These liquidation rewards are often in the 5-10% range of the users collateral, which is a relatively large fee to impose on users of lending protocols. These liquidations represent a small over % of the millions extracted within the MEV supply chain.
API3 believe this value should go back to those operating the protocol. As such 90% of recaptured OEV will be given to those consuming the price feed. 10% will be shared between API3, the searcher and the API Provider.
INFO
Recapturing OEV requires no technical implementation (if you're already using dAPIs)