DeFi stops the liquidation leak: Protocols reclaim billions lost to MEV bots
DeFi protocols are addressing a major inefficiency by reclaiming billions in value that was previously extracted by MEV bots during liquidations. For years, these bots profited from liquidation events, draining value from users and weakening protocol sustainability. With over $2 billion in liquidatable positions on Ethereum alone, protocols like Aave are now implementing new mechanisms such as Smoothing Varying Rate (SVR) to internalize this value. Aave has already recaptured $16.7 million in MEV on Ethereum and is expanding SVR to Arbitrum and Base. This shift turns liquidations into controlled revenue channels, strengthening protocol economics and sustainability. While Aave’s revenue has increased—reaching a $76 million annual run rate—long-term growth remains dependent on sustained market activity and volatility.
ambcrypto03/30 01:02
