Uma's Latest Innovation Ova Promises Fairer Profit Distribution in Defi – Blockchain Bitcoin News

Blockchain MARKET_WATCH

UMA has officially introduced Oval, a novel product designed to optimize the use of oracle data by defi protocols. This tool changes how protocols manage oracle-based MEV, enhancing efficiency and fairness in Ethereum’s blockchain profits.

Oval Launch by Uma Aims to Redistribute Profits Back to Defi Protocols

Ethereum-based oracle protocol Uma unveiled its latest product Oval today, which Uma claims “lets lending protocols capture Oracle Extractable Value by auctioning the right to liquidate positions.” The new tool is designed to enable defi protocols like lending protocols such as Aave and Compound, to more efficiently utilize oracle data.

Oval’s introduction addresses a particular subset of Maximal Extractable Value (MEV), that Uma calls Oracle Extractable Value (OEV). MEV refers to the profit that miners, validators, or searchers can make through manipulating the order of transactions in a blockchain block. MEV arises because the sequence of transactions can significantly impact the outcome of trades. Miners or validators, who have the authority to decide the order of transactions in a block, and searchers, who can find opportunities in the mempool, can profit by reordering, inserting, or censoring transactions.

For instance, they can “front-run” a large trade by placing their own transaction first to profit from the expected price movement. This manipulation can lead to higher transaction fees and potential network congestion, as users bid higher gas fees to prioritize their transactions.

This extracted value has been predominantly captured by external parties such as block builders, validators, and searchers. With Oval, Uma aims to reapportion much of this value back to the originating applications, thereby creating a more equitable distribution of profits within the blockchain ecosystem.

Major protocols like Aave have been overpaying to incentivize liquidators due to the current system, leading to a disproportionate accumulation of profits by validators. Oval seeks to rectify this imbalance by facilitating an auction mechanism where searchers can bid for the right to use Chainlink’s price data. The proceeds from these auctions will be shared among Aave, Uma, and Chainlink, with Aave receiving the majority share. On their website, Uma claims that Oval allows a protocol to, “capture as much as 90% of all the OEV [a] protocol creates.”

“Aave and Compound are losing ~$50m/year in MEV (in a bear market). DEX perps are losing boatloads too,” said Uma co-founder Hart Lambur.

The transition to Oval will necessitate changes in the operational dynamics for block builders and validators, who stand to lose a portion of their current revenue streams. However, participation in this new system will be mandatory once major protocols like Aave integrate Oval.

Source : Bitcoin.com News / Jan 26, 2024

rayn.finance logo

Automata FRANCE SAS

240 rue Evariste Galois,

06410 Biot,

Sophia Antipolis

Automata Pay

65-66 Warwick House 4th

Floor, Queen Street, London

England, EC4R 1EB

Automata Pay Europe Ltd

3rd Floor Ormond Building,

31-36 Ormond Quay Upper,

Dublin 7, D07 Ee37

Automata ICO Ltd

Italian Branch

Via Archimede, 161,

00197 Roma

Italy

The purchase of digital assets is subject to a high market risk and price volatility. Changes in value can be significant and occur rapidly and without warning. Past performance is not a reliable indicator of future performance. The value of an investment and returns can fluctuate both up and down, and you may not recover the amount you invested. RISK WARNING

Automata ICO Limited has a branch in Italy with its registered office at Via Archimede, 161, Roma, Italy, and registered in Italy under number 96550860587 with the Organismo Agenti e Mediatori (OAM) as a Virtual Asset Service Provider (VASP).

Automata France SAS is a company registered in France with the company number 902 498 617. Automata FRANCE SAS is registered with the french Financial Market Authority, l’Autorité des marchés financiers (“AMF”), as a provider of Virtual Asset Service Provider under number E2023-087.

Automata Pay Europe Limited is a partner of Modulr Finance B.V., a company registered in the Netherlands with company number 81852401, which is authorised and regulated by the Dutch Central Bank (DNB) as an Electronic Money Institution (Firm Reference Number: R182870) for the issuance of electronic money and payment services. Your account and related payment services are provided by Modulr Finance B.V. Your funds will be held in one or more segregated accounts and safeguarded in line with the Financial Supervision Act.