Chainlink acquires transaction ordering solution Atlas, accelerating rollout of its 'non-toxic MEV' tool

Major blockchain infrastructure firm Chainlink has acquired Atlas IP, a transaction ordering tool developed by R&D firm Fastlane. Terms of the deal were not disclosed, though Chainlink says it has "onboarded key Atlas personnel from FastLane."

Atlas will now exclusively support Chainlink and deprecate its deployment on RedStone, a rival oracle provider, according to a press release on Thursday.

In particular, Atlas will integrate into Chainlink SVR, the data technology project built to help DeFi applications recapture “Maximal Extractable Value” from Chainlink Price Feeds.

Both Chainlink SVR and Atlas were primarily designed for a highly specialized use case: preventing toxic MEV opportunities caused by liquidations. Atlas provides an order flow and value recapture solution used by dapps to keep money that would otherwise leak to MEV bots. 

"Uniting Atlas's proven order flow auction technology with Chainlink SVR creates the most effective value recapture system DeFi has ever had, increasing revenue for DeFi through SVR expansion to new ecosystems," Chief Business Officer at Chainlink Labs Johann Eid said in a statement.

How it works

In short, decentralized lending protocols allow anyone to liquidate a loan if it becomes undercollateralized. Fast-acting liquidators, typically bots, can repay part of the bad loan, buy some of the collateral at a discount, and sell those assets at market rate for a near-guaranteed profit. 

Atlas and Chainlink SVR run a fair auction system specifically for these events, giving DeFi protocols the ability to auction off the right to handle liquidations through a private channel. 

Bots can then pay protocols for the chance to “backrun” liquidations by including their transactions right after the oracle price update that makes the loan liquidatable — bringing in revenue for both the bot and protocol. 

According to Thursday's announcement, Chainlink SVR has already processed over $460 million in liquidations and “recaptured” $10 million in “non-toxic MEV" for leading lending protocols like Aave and Compound. These types of transaction ordering maneuvers are sometimes called Oracle Extractable Value in these particular instances.

Chainlink’s OEV tool is already live on Arbitrum, Base, BNB Chain, Ethereum, and HyperEVM, with the Atlas acquisition expected to accelerate its "multi-chain expansion." The oracle provider will also support Atlas' "ongoing development and future expansion under its stewardship."