Cryptocurrency project “UMA protocol” launches solution to deal with on-chain transaction MEV Prices soar

Released “Oval” to deal with MEV

Hart Lambur, co-founder of the Ethereum (ETH)-based oracle project UMA protocol, said on the 19th that UMA will launch a solution called Oval next week.

https://twitter.com/hal2001/status/1748036348605534255?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank

This will allow various lending protocols to recover the huge amount of value lost due to MEV (Maximum Extractable Value).

MEV refers to the additional income that miners (validators in PoS) earn by rearranging the order of transactions on the blockchain.

Lambur said an estimated tens of millions of dollars are lost each year to MEVs, and the Oval will address this issue. The details of how exactly lending protocols will be protected from MEV have not yet been disclosed.

UMA started out as an Ethereum-based DeFi (decentralized finance) protocol focused on synthetic assets. Currently, the company mainly provides Optimistic Oracle products.

An optimistic oracle is an oracle that accepts external data as true unless it is challenged within a certain period of time.

After this announcement, the price of the UMA token skyrocketed from $2, rising to as much as $6 at one point, and as of the time of writing, it is hovering around $4.65. The market capitalization has reached nearly $350 million.

connection: Postponement of judgment on Ethereum spot ETF, US SEC

Solution to MEV problem

Solutions to the MEV problem have been released in the past.

For example, crypto staking company Figment is introducing a solution called “Flashbots” in 2022 that aims to further democratize MEV opportunities and limit soaring fees.

The background is that in Ethereum, the transaction list before settlement on the memory pool is made public, so there is a rampant practice called “front run” in which those who view this list pay higher fees and slip in profitable transactions. There was something I was doing.

connection: Staking provider Figment will return Ethereum MEV profits to users

The act of gaining an unfair advantage by looking at other users’ orders, inserting your own large-scale buy orders, and then placing sell orders is also known as a “sandwich attack.”

One way to counter such attacks is for users to set “slippage limits” on decentralized exchanges. Balancer, ShapeShift, and ParaSwap have also jointly developed the MEV Blocker.

connection: Sandwich attack, MEV, and threats and countermeasures for the decentralized trading market explained

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