API3, a service that provides DeFi data feeds to blockchain-based smart contracts, has launched the oracle extractable value (OEV) network.
In an announcement made at EthCC 7, hosted in Brussels, the capital of Belgium, API3 said the OEV Network is a first-of-its-kind onchain solution that can recapture OEV. This refers to oracles making use of their position to capture value that would otherwise have gone to third parties.
API3, is a service that provides DeFi data feeds to blockchain-based smart contracts without relying on a third party.
The firm said “profit that can be extracted from oracle updates” and the OEV Network is a Layer 2 solution designed to allow dApps to reclaim value being leaked due to maximal extractable value (MEV).
OEV Network Returns Value to Builders
“Currently, our codes update blindly and often updates have a value attached to them,” Ugur Mersinlioglu, API3 product owner, told Cryptonews at EthCC 7.
“Right now, all this value is being lost to researchers and builders. With the OEV network, that value will be returned to the dApp where it originated, allowing them to generate sustainable revenue for their treasury, increase yield for their users, or lower fees,” said Mersinlioglu.
He went on to explain that most Oracle projects have ignored the issue that value is being lost. The OEV network is a Layer 2 solution designed to allow dApps to reclaim value being leaked due to maximal extractable value. Specifically in the case of liquidations which amounts to tens of millions of dollars a year, said the firm.
“What we did is build a layer where we don’t update blindly. We sell on the layer tool, and auction off the most valuable updates. People essentially compete for the most valuable updates and pay the dApps in the process to use that data on their platform,” explains Mersinlioglu.
API3 Raises $4M in Funding Round Led by DWF Labs
In May, API3 raised $4 million in a funding round led by DWF Labs. Other funding came from Spartan Group which contributed $1 million. Laser Digital, a digital asset business backed by Nomura, and Caladan formerly known as AlphaLab both contributed $500,000 each.
Market maker and multi-stage Web3 investment firm DWF Labs led the funding round and contributed $2 million.
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