In recent years, the Decentralized Financial (DEFI) boom has attracted not only investors and developers, but also a new class of professional actors. These participants are seeking the Maximum Extractable Value (MEV), which is the additional revenue that can be obtained by strategically controlling the order of blockchain transactions. This concept evolved from technical curiosity to a focus of research and regulation. Analysts warn that unconfirmed MEV practices can erode trust and fairness in the blockchain market, but advocates argue that efficient MEV extraction can improve market integrity. Recent reports and research reviews show why MEV is important and what it means for the future of digital finance.
MEV definition: trading orders and profit extraction
The maximum extractable value is the maximum profit that a blockchain miner or validator can obtain by including or exclude transactions within a block. Without the central authority to enforce the rules that exist in the first outcome, the block producer will have discretion in which transactions to include and in what order. This discretion, coupled with the visibility of pending transactions in public “Mempools,” will allow professional actors called “searchers” to identify profitable opportunities. These bots monitor their members and submit their own transactions at a higher fee to ensure that they are processed first.
The term was initially referred to as “miner extractable value,” and reflects an early connection to work mining. As calibration networks become more prominent, the definition has been expanded to include validators and block builders. This shift recognizes that profit-seeking block producers can insert, sort or censor transactions to capture arbitration, take advantage of price slips, and collect liquidation bonuses. Researchers at the European Securities and Markets Agency (ESMA) should note that MEVs are possible because decentralized systems do not have accurate, tampered transaction ordering mechanisms.
MEV has become an important phenomenon. For example, between Ethereum Merge (September 2022) and mid-2024, an estimated 526,000 ETH (over $1.1 billion) was realized on Ethereum, indicating how important these benefits opportunities are.
Related: What is crypto arbitrage? How does it work?
MEV Strategy and Related Terminology
MEV includes various transaction manipulation strategies for blockchain and Defi. These often reflect the concept of traditional markets (e.g., arbitrage or front-running), but with a cryptographic twist. they are:
- Arbitrage MEV: Take advantage of price contradictions across markets and exchanges. In defi, arbitrage bot scans scan for price differences between DEX (on-chain) or DEX and centralized exchange (off-chain), and run transactions to profit from the gap. For example, a bot may buy assets cheaply for one Dex and sell them at the same time at a higher price for another Dex. This activity is actually possible Improve Market efficiency (as in traditional financial arbitration) by adjusting prices across the exchange. Still, the benefits from the chain's arbitrage are the classic form of MEV.
- Front Running Blockchain involves observing pending transactions in public memory and inserting your own transactions to profit from the expected price movement. This is usually done by paying a higher gas fee, prioritizing Frontrunner transactions. If you purchase a token before purchasing a large amount and increase the price, you will experience a displacement attack. Suppress attacks flood the network with high-cost trading to slow down target trades. Frontrunning is illegal in traditional finance due to the exploitation of private information, but in Crypto, the public nature of Mempool allows insiders (validators or bots) to make profits at the expense of regular users, raising concerns about fairness.
- Backrunning This is the counterpart of Frontrunning. Place the transaction immediately after the target transaction to take advantage of the price movements caused by the target. In itself, the background may refer to chasing the remains of arbitrage opportunities after massive trade. In fact, it is most commonly seen as part of a sandwich attack. The attacker's second transaction appears to extract profits from price rebounds right after the victim's transaction.
- Sandwich attack It involves an attacker trading before and after the victim's transaction to profit from price fluctuations. The attacker purchases the assets before the victim purchases, raises the price, and the victim purchases at a higher price. The attacker then sells the assets and makes profits from the price difference. This brings the slip for victims who get worse prices. Sandwich attacks are common in distributed exchanges (DEXS) and represent the predatory form of MEV-driven front-running.
Liquidation MEV, JIT liquidity, and PGA
Liquidation MEV This occurs on the Defi Lending platform (eg, compounds, Aave) when borrower collateral falls below the required threshold. Searchers will repay the loan, compete to seize collateral, and earn liquidation bonuses. This process clears bad debts, but extracts value from the suffering borrower.
Just-in-time (JIT) liquidity It is a tactic used by bots, adding liquidity to the AMM pool just before a large transaction and then removing it. Bots capture some of the transaction fees and sometimes manipulate the impact of prices to your advantage.
Priority Gas Auction (PGA) They increased network costs after driving on-chain gas bidding wars. However, much of this competition has shifted to private MEV relay systems such as MeV boost, where searchers send transaction bundles directly to reduce public gas wars.
Other terms like time bandit attacks reorganize minor/validators to reorganize blocks to capture past MEV opportunities. Furthermore, the sequencer extractable value (SEV) is L2, which corresponds to MEV, and the rollup sequencer benefits from controlling transaction orders.
MEV Infrastructure and Actors: A Brief Overview
Over time, the MEV ecosystem has been developed with key actors and infrastructure elements designed to systematically extract or mitigate MEVs.
- MEV Searcher: Independent bots or traders scan blockchain Mempools for beneficial opportunities such as Arbitrage or sandwich attacks. They compete for MEV by submitting transaction bundles to minor/validators via private channels in sealed bids and reducing wasted gas wars.
- Minor/Validator: These block producers control the inclusion of transactions. In the POW network, Miners handled the MEVs, while in the POS network, the validators handled the MEVs. Validators benefit from incorporating MEV-Paying transactions through systems such as MEV boost, significantly increasing block rewards.
- Flashbot: Flashbots, the leading MEV infrastructure organization, has created the MEV boost system. There, searchers send bundles to miners bypassing public memory. This system helps reduce gas wars and standardizes MEV extraction.
- Block Builder: Professional entities build blocks that maximize MEV by ordering transactions in a profitable way. Builders are competing to provide the best bids for validators, which have led to concerns about centralization as several builders dominate the market.
- MEV Relay: The relay acts as an intermediary between the block builder and the validator. They forward the most profitable blocks to validators, prevent abuse and protect verifiers from DOS attacks while ensuring efficiency and trust.
- Order Flow Provider: Entities such as wallets and Dex aggregators can route transactions over private channels to capture MEVs on behalf of users, reducing the likelihood that they are targeted by public bots.
Separation of proponent builders and MEV mitigation technology
Proposer-Builder Separation (PBS) aims to reduce centralization by splitting the roles of block proposals (validators) and block builders. This allows everyone to build blocks and allows small validators to compete for MEV rewards by choosing the best bid block. Mev-Boost, an off-chain solution developed by Flashbots, promotes PBS by connecting the valtter to the builder marketplace. Since the Ethereum POS shift, validator rewards have increased significantly, but relying on trust in relays.
Private Mempur aims to protect transactions from flantrans rings by preventing public access until mined. But they introduce the risk of centralization and trust. Projects like Flashbots Protect and Eden Network are trying to reduce these risks by providing private transaction routing, but some people are developing encryption-based solutions.
MEV Redistribution focuses on sharing profits with users. MEV-Share, introduced by Flashbots in 2023, allows users to receive a portion of the MEV profits generated by transactions. Similarly, protected order flow auctions are designed to prevent bots from exploiting users by auctioning transaction order flows to ensure fairness.
When Flashbots relayed censored transactions related to Tornado Cash, censorship concerns have arisen. To combat this, baritters can avoid censored blocks using tools such as the –min-Bid flag in Mev-Boost. Future developments may include a commit Levier scheme for PBS encryption to prevent censorship.
In 2025, MEV Boost is the leading solution for MEV mitigation, and is adopted by approximately 90% of Ethereum Validators. Ongoing research is working to deepen integration of these technologies into blockchain protocols for more equitable outcomes.
Cross-Chain and Cross-Domain MEV
Cross-chain MEV involves extracting values across multiple blockchains. For example, a decision between Ethereum's Uniswap and BNB chain Pancakeswap. This can be done by transferring assets through the bridge or by maintaining capital in both chains. Bridge-based arbitrations are highly delayed, and inventory-based arbitrations involve price risk. A 2024 survey found 242,535 cross-chain transactions worth $868.6 million, with most transactions being carried out using liquidity in the target chain. However, cross-chain MEVs face risks such as non-atomic execution, where one leg of trade can fail, leading to losses. Cross-domain MEV extends beyond arbitrage, including scenarios such as Oracle updates and chain-wide governance exploits.
Layer-2 (L2) rollup also introduces MEVs, often referred to as sequencer extractable values (SEVs). Rollups like Arbitrum and Optimism have centralized sequencers that extract MEVs, but the decentralization of these sequencers can cause similar problems for L1 MEVs. Cross-domain MEVs are growing rapidly and aim to create a unified auction mechanism for multiple chains.
Related: What is crypto jacking? Hidden threats to devices
Economic and regulatory implications of MEVs
MEVs have both positive and negative economic impacts. Positive/neutral effects include market efficiency through arbitration and liquidation. However, harmful MEVs like sandwich attacks will exploit users and result in slipping and high fees without providing market value.
MEV redistribution projects such as MEV-Share aim to return value to users by sharing profits from transactions that extract MEVs. Furthermore, censorship resistance is a concern, as seen during tornado cash sanctions, if some relays censor a particular transaction. This has led to debate over whether MEV infrastructure should implement policies.
Regulatory concerns are rising, especially in Europe, where MEVs are seen as undermining market equity. Technical solutions like Flashbots aim to address inefficiency, but critics argue that they don't completely eliminate exploitative practices. Legal scholars are investigating whether MEV tactics such as Frontrunning can be classified as market manipulation or fraud.
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