Maximal Extractable Value (MEV) refers to the profit that block producers (miners or validators) can extract by reordering, inserting, or censoring transactions within a block they are building. MEV is a structural feature of transparent mempools – because all pending transactions are visible to anyone, sophisticated actors can exploit this information. Common MEV strategies include: Arbitrage – inserting transactions between price-divergent DEX trades; Sandwich attacks – placing a buy order before a large DEX trade (front-run) and a sell order after (back-run), profiting from the price impact; and Liquidation MEV – racing to trigger DeFi liquidations first for the liquidation bonus. MEV searchers use automated bots to find profitable opportunities and pay high gas tips to get included in the correct block position. MEV-Boost (used by most Ethereum validators) is a system where specialised block builders construct optimal blocks and validators simply sign them. Total MEV extracted on Ethereum has exceeded $1.5 billion cumulatively. MEV is controversial: it increases costs for regular users via sandwich attacks, but also improves market efficiency through arbitrage.
Example: Example: A user submits a large $200,000 USDC to ETH swap on Uniswap. A MEV bot detects this in the mempool, submits a buy-ETH transaction with higher gas (front-run), then after the large trade moves the price, submits a sell-ETH transaction (back-run). The bot profits ~$600 from the sandwich; the user receives ~$600 less ETH than expected.
Learn more: Ethereum.org – MEV
