UMA releases new tool Oval to reduce losses caused by oracle price feed windows

UMA announced the launch of an oracle-resistant extractable value (OEV) tool called Oval. Oval integrates Flashbots' MEV-Share auction market, providing a new way for protocols that need to use oracle price feeds to protect their own interests. This tool will help users better deal with the risks of potential market manipulation and ensure their transactions and assets are properly protected. By reasonably predicting and determining market prices, Oval provides users with a safer and more reliable trading environment.

What is the extractable value of the oracle machine?

In fact, there are additional costs for the price feed of the oracle machine.

At present, the blockchain industry has gradually improved the ability to extract the value of miners (MEV). ) protection mechanism. Many projects and teams are invested in this field, such as Flashbots and CoWSwap. Additionally, several projects attempt to address related privacy transactions and intent-directed design issues. The goal of these efforts is to ensure that miners can obtain reasonable value returns while protecting the interests of users.

In addition to the risks when waiting for nodes to order transactions, there are also similar problems when calling oracles and waiting for price information. This risk is called Oracle Extractable Value (OEV).

In DeFi protocols, especially during liquidation, protocols containing Compound or Aave may generate excessive valuation (OEV). When an oracle sends out an update (such as a price feed update), if the on-chain protocol relies on the latest price, there may be a short window of time before waiting for the price update. Traders can use this information to obtain excess valuations before the protocol reacts.

Chainlink price updates may cause a large amount of value to overflow outside the node. Especially when the price update triggers liquidation, a large part of the risk-free profits will be converted into the interests of other participants and may be occupied by third parties.

Lack of relevant OEV protection infrastructure

The industry currently lacks a common mechanism to capture OEV, so most of the value ultimately flows along the supply chain to block builders (builders) and validators ( validator) instead of going back to the protocol and the user.

Introduction to Oval

In response to the above problems, the UMA team of the blockchain infrastructure project created the anti-OEV tool Oval and provided the protocol to be integrated into the project structure.

Oval’s goal is to capture OEV and return it to the protocol where it belongs.

Oval Operational Architecture

Oval serves as the anti-OEV layer between Chainlink and the on-chain protocol, encapsulating the Chainlink data source (feed) and using the MEV-Share tool of the Flashbots project to liquidate power The auction allows the protocol to obtain 90% of the value of OEV that would otherwise be stolen.

Oval changes the OVE supply chain

Oval uses MEV-Share’s auction mechanism to allow searchers to compete to provide the latest oracle information. Compete to get the most accurate and fast prices. Because the price obtained is fast and accurate, the protocol can complete operations quickly, and the value will return to the protocol party rather than the block builder.

Oval Operational Architecture

The trust assumption of this architecture has three components:

• Ovalnode: This node is The server that receives searcher quotations and transmits information needs to ensure its normal operation. It is currently officially operated in the form of Uma whitelist.

• Flashbots MEV-Share: Oval relies on this system to function properly.

• builder follows MEV-Share rules: because MEV-Share is only a third-party market and is not binding, but usually builders will abide by the rules for long-term cooperation (unless there are very large interests ).

Why Oval chose MEV-Share

• No need to reinvent the wheel: because building a high-speed order flow auction system usually requires a centralized component to facilitate connections between participants. Oval can leverage existing Flashbots architecture to limit the need for trust assumptions, which have been tested and trusted by the community.

• Existing Ecosystem: Searcher has completed integration with the Flashbots ecosystem and can use the already familiar auction infrastructure and API instead of a new system or new API integration.

• Strategic cooperation: UMA will be able to become the core component of the Flashbots ecosystem and increase UMA's influence by placing Oval close to Flashbots. Oval will become part of Suave in the future.

How to deal with the risk of price delay

Additional layer of components may increase the risk of delay. To address this problem, Oval is designed to keep Chainlink’s price and auction as low as possible. Completed in the same block, the time for the protocol to obtain updated prices is no different from the past. (Of course the price is centralization)

However, when the network is congested, there may be delays in the completion of different blocks. When more than three blocks are exceeded, the protocol will be able to read data directly from Chainlink to ensure that the protocol can still operate normally.

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