OEV Data

Break down of OEV related data and the potential market size Oval can capture.

OEV related data is difficult. There are a number of great tools and dashboards that exist today (e.g. EigenPhi & LibMEV) that showcase the MEV associated with the liquidation landscape. These are great at viewing an overview of the landscape as it unfolds.


The UMA team has created two dashboards to showcase the theoretical historic OEV that could have been captured considering two main protocols, Aave and Compound. The methodology used considers the liquidation bonus associated with Aave and Compound as the theoretical upper bound that can be captured as OEV within these protocols.

A liquidation bonus is a discount applied to liquidated collateral that a liquidator is given for executing a liquidation. It acts as an incentive to execute the liquidation by letting the liquidator buy collateral at a discount in exchange for repaying the distressed debt. This concept is consistent between Aave and Compound (Aave calls it Liquidation bonus and Compound calls it Liquidation incentives). You can see the sizing of these values for each protocol here: Aave v2, Aave v3, Compound v2, and Compound v3.

The dashboards presented below use historic liquidations from January 2021 to now on these protocols and then apply the associated liquidation bonus for each collateral to work out the theoretical upper bound of OEV that could have been captured on these protocols, assuming that Oval was integrated at the time of the liquidation. The liquidation bonus can be considered the absolute maximum extractable value from a liquidation. Under a maximally competitive environment, one would expect that nearly all of the OEV that can be captured is paid to the builder (see Revenue Sharing). This is due to searchers effectively paying all profit they could capture as bids for block space, minus some small δ that they keep for themselves, which is the difference between the best and second best searcher. Put differently, the theoretical upper bound of all OEV that could be captured equals the liquidation bonus. This gives us an idea of how big the OEV market is, just considering Aave and Compound.


Last updated