UMA Implements MEV Solution for Oracles

UMA has announced the launch of Oval, a solution designed to help DeFi projects capture additional value from Oracle Extractable Value (OEV), a concept similar to MEV but specific to data updates from oracles like Chainlink.

MEV, or Miner Extractable Value, refers to the profit that miners or validators can potentially earn by reordering transactions within a block before they are submitted to the blockchain. MEV activities are most prominent on Ethereum, where participants often use bots to engage in front-running or sandwich attacks to maximize profits.

UMA states that MEV methods can also be applied to the oracle space, which provides price data inputs to many DeFi protocols. Whenever an oracle updates its data source, there is an opportunity to profit from MEV during a period when the market has not yet reacted to the new price level.

Hart Lambur, co-founder of UMA, commented:

"MEV remains a major issue unresolved by Ethereum, with millions of USD lost annually. OEV constitutes a significant portion of this, as many protocols must update oracle data. Oval will address this issue by helping projects retain value from OEV."

UMA's Oval is expected to enable DeFi projects to compete with MEV trading bots by retaining a share of the value from OEV. Participants in Oval will auction for access to price data feeds from various oracles, and proceeds from these auctions will be used to support protocol development.

Developed in collaboration with Flashbots, a leading MEV mitigation solution on Ethereum, Oval by UMA aims to mitigate the impact of MEV and enhance the efficiency of DeFi operations.

Founded in 2017, UMA initially focused on synthetic assets in DeFi on Ethereum but has since evolved to verify on-chain data through a reward and penalty model.

UMA's token price (UMA) has surged threefold in the past week following news of its upcoming MEV solution deployment for oracles on Ethereum.