MEV

A MEV (Maximal Extractable Value) is the maximum profit that block producers extract by reordering, including, or excluding transactions in a block they produce. Block producers include miners in proof-of-work blockchains and validators in proof-of-stake systems. Previously called "Miner Extractable Value," the term now applies broadly.

MEV works through the mempool, a pool of pending transactions visible to block producers. They reorder transactions to capture value. For instance, in front-running, a block producer spots a large DEX trade, inserts their own buy order first, then sells after the price moves.

MEV matters because it raises user fees, as traders pay more to prioritize transactions and avoid extraction. It risks centralization, where specialized "searchers" and "builders" dominate. Harmful MEV can distort markets and reduce trust in decentralized networks.

Key types include:

• Arbitrage: Exploit price differences across DEXs.
• Sandwich attacks: Front-run and back-run a target trade.
• Liquidation MEV: Trigger undercollateralized loans first for fees.

Tools like Flashbots and MEV-Boost help mitigate negative effects by enabling private auctions for block construction.