Maximal extractable value, or MEV, is value obtainable through control of transaction inclusion and ordering beyond ordinary block rewards and transaction fees. The earlier term “miner extractable value” reflected proof-of-work block production; the broader name also applies when validators produce blocks.1

Where it comes fromReport an errorSuggest an improvement

Transactions can change the opportunity available to the next transaction. A searcher may buy a token on one exchange and sell it on another, or compete to liquidate an undercollateralised loan. Searchers identify these opportunities and submit transactions, sharing some proceeds with the parties that include them.1

These activities have different consequences. Arbitrage can bring prices into alignment and liquidations can help lending systems remain solvent. Other ordering strategies worsen execution for users. MEV therefore includes both useful market operations and extraction at someone else's expense.1

Research and consensus risksReport an errorSuggest an improvement

Philip Daian and co-authors documented trading bots and competitive fee bidding in their 2019 paper Flash Boys 2.0. They described priority gas auctions, in which participants compete for favourable ordering, and analysed how transaction-ordering revenue can create incentives to destabilise consensus.2

That research connects application-level trading to blockchain security. When the value available from changing a block's contents is sufficiently large, it may change the economic incentive to extend the existing chain. The paper's analysis is a warning about incentive structures, rather than a claim that every profitable trade causes a reorganisation.2

Builders, proposers, and private transactionsReport an errorSuggest an improvement

Flashbots' MEV-Boost software lets Ethereum validators obtain candidate blocks from a competitive builder market. Builders assemble transactions and offer a payment to the proposing validator. This separates the task of constructing a block from the validator's opportunity to propose it; MEV-Boost is middleware used by validators, rather than the definition of Ethereum consensus itself.3

Flashbots also operates Protect, a transaction-submission service. Its documentation says it sends transactions through a private mempool to hide them from public frontrunning and sandwich bots, and can return some MEV or excess fees to users. These are service features, not a guarantee that all possible ordering losses have been eliminated.4

Private submission introduces choices about who receives transaction information. Protect's settings allow different sharing arrangements with builders and searchers. Its documentation explains that broader sharing can improve inclusion speed or refund opportunities while requiring trust in additional recipients. A private route therefore needs to be assessed by its actual data-sharing rules.5

See alsoReport an errorSuggest an improvement

ReferencesReport an errorSuggest an improvement

  1. ^ a b c ethereum.org. Maximal extractable value (MEV). https://ethereum.org/developers/docs/mev/ 

  2. ^ a b c Daian, P. et al. (2019). Flash Boys 2.0: Frontrunning, Transaction Reordering, and Consensus Instability in Decentralized Exchanges. https://arxiv.org/abs/1904.05234 

  3. ^ a b Flashbots. MEV-Boost overview. https://docs.flashbots.net/flashbots-mev-boost/introduction 

  4. ^ Flashbots. MEV Protection Overview. https://docs.flashbots.net/flashbots-protect/overview 

  5. ^ Flashbots. Protect settings guide. https://docs.flashbots.net/flashbots-protect/settings-guide