MEV
Maximal Extractable Value
Value extracted through transaction inclusion, exclusion or ordering
Definition
Maximal extractable value is value obtainable from including, excluding or reordering transactions beyond ordinary block rewards and fees. Arbitrage and liquidations can be useful MEV; sandwiches extract value from another user’s execution.
Example
A hypothetical searcher buys 1 ETH for $2,000 in one pool and sells it for $2,020 in another. With $8 in gas and builder payments, net MEV is $12, assuming those quotes execute.
How it works
Searchers simulate pending state changes and submit transactions or bundles. Builders assemble profitable blocks; proposers select blocks, so extraction and its payment are distributed across several actors.
Risks to Consider
- Sandwiches worsen victim execution within allowed limits
- Searcher competition can bid away all expected profit
- Ordering incentives can favor censorship or reorganizations
Common Questions
Is all MEV front-running?
No. Front-running is one ordering tactic. Arbitrage after a trade and liquidations are also MEV; a sandwich combines transactions before and after a victim.