Blockchain & Cryptocurrency Glossary

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MEV (Maximal Extractable Value)

1 min read
Pronunciation
[M-E-V mak-si-muhl ek-strak-tuh-buhl val-yoo]
Analogy
Like a cashier seeing everyone’s orders in line and inserting their own orders at the most profitable moments before ringing up others.
Definition
The maximum profit that can be extracted by reordering, inserting, or censoring transactions within a block by a miner or validator, through techniques like front‑running, back‑running, and sandwich attacks.
Key Points Intro
MEV quantifies value capture opportunities from transaction ordering in block production.
Key Points

Extraction methods: Sandwich trades, arbitrage, liquidation ordering.

Actors: Miners, validators, and specialized MEV searchers.

Negative externalities: Increased gas fees, front‑running harm to users.

Mitigations: Private mempools, fair ordering, MEV auctions.

Example
A bot detects a large DeFi swap in the mempool and places buy‑sell orders around it to capture the price impact.
Technical Deep Dive
Searchers bundle transactions off‑chain, simulate on latest block state, and submit bundles via MEV-Boost or private relays. Validators choose bundles maximizing block revenue. Tools like Flashbots provide auction infrastructure.
Security Warning
Unchecked MEV can lead to user losses and network instability; adopt protection mechanisms like priority gas auctions or commit‑reveal.
Caveat
MEV mitigation often introduces centralization or additional latency.
Related Terms
Flashbots
Private Mempool
Sandwich Attack

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