Superumans #71 - UMA's Oval To Reclaim Millions Of Dollars From MEV

about 1 year ago

UMA is launching something that will elegantly reclaim over $100,000,000 of free money lost each year to MEV. The Huevos Rancheros spoilers and clues started since December, and now we finally know more about this project that was been secretly cooked at Risk Labs.

Huevos Rancheros is Oval, the protocol that will be able to claim the value lending protocols lose to MEV. If you are like me... you are googling "MEV" right now for an answer. Miners and validators have found ways to profit from pending transactions by including, excluding or reordering transactions in any block they mine. This process is called Maximal Extractable Value, aka MEV!

MEV is often referred to as an “invisible tax” that miners can collect from users, the maximum value a miner can extract from moving around transactions when producing a block on a blockchain network.

The Ethereum blockchain underwent a shift to PoS during the 2022 Merge, which made the value extraction methods to continue. The result made the term “maximal extractable value” be used more often. I am brutally honest and feel like a normie now... as I didn't dived into MEV intel until Huevos Rancheros hinted about it!

However, I am a fast learner and a faster meme creator. Added the eggs in my profile before it was cool to have eggs added to your profile. Are you curious about what Oval will do and how will change the crypto space? Let's dive into details!

Each year lending protocols lose tens of millions of dollars to MEV and now it's the time to reclaim that value. Let's start with ELI5 explanations:

You order $10 of pizza in an app. Everyone races to bring you a pizza. First one gets paid. The pizza is only $8 dollars, so one guy bribes the shop with $2 dollars to get the next one. He brings it to you and claims the $10. You open it and he's eaten half. That's MEV.

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Everyone will have big expectations from Oval, and maybe MEV capture is going to drive the next bull market! Until then the Oval teaser has gotten over 1 million views in under 48 hours!

Want more ELI5 explanations? Imagine there's a price update coming through from Chainlink, and when it gets on-chain it will open a big position in Aave open to liquidation. Whoever liquidates the position can make a huge risk free profit.

When the price update hits the mempool thousands of MEV searcher bots see it coming, and compete to be the one to make the liquidation. They compete by bribing block builders and validators to get their transaction added into the next block right after the oracle update. The winner gets the liquidation, but ends up paying like 90% of that profit in bribes.

So Aave creates this MEV, tens of millions of dollars a year, and doesn't get to keep any of it. So imagine a tool that could capture some of those millions of dollars. It could send them all back to Aave, or it would be pretty easy to add a fee to the tool and get a share of those millions.

There are $62,271,241 Aave all-time oracle extractable value... imagine what that could build!

The Oval launch is near, and this is all I can think about it! Maybe is Oval hysteria ... but this is all I care about! My wife knows this is groundbreaking and supports me 100% with MEV memes ideas!