Maximal extractable value (MEV) is the extra profit that can be captured by deciding which transactions are included in a block, which are left out and in what order they appear. Whoever controls block contents, or pays for influence over them, can for example place a trade just before or after someone else's large order, or be first to liquidate an under-collateralised loan. MEV is most studied on Ethereum but exists on any blockchain where transaction order affects outcomes.
The term was coined as "miner extractable value" in a 2019 research paper, "Flash Boys 2.0", when Ethereum blocks were produced by miners. After Ethereum moved to proof of stake in 2022, the word "maximal" replaced "miner", since validators and specialised builders now capture it. The research and software group Flashbots has been central to measuring and organising MEV.
Maximal extractable value in plain terms
Picture a queue at a busy ticket office where the clerk can decide who gets served first. If the clerk overhears that someone near the back is about to buy every remaining ticket for a popular show, the clerk's friend could step in first, buy a few cheaply and sell them straight back to that customer at a higher price. Nothing is stolen outright, but the customer pays more because someone used their power over the queue.
On a blockchain, pending transactions wait in a public queue, and the party building each block decides the order. Bots watch the queue for profitable opportunities and pay to be placed in the right spot. That extra profit is MEV.
Main types of MEV
- Arbitrage. Buying a token where it is cheap and selling where it is dear, across decentralized exchanges, in the same block. This is often considered benign because it aligns prices.
- Liquidations. Being first to repay a risky loan in a lending protocol and claim the collateral bonus.
- Sandwich attacks. Placing a buy just before a user's large swap and a sell just after it, profiting from the price move the user causes. The user receives a worse price, up to their slippage limit.
- Front-running and back-running. Copying or reacting to a pending transaction, for example a new token listing, as described under front-running.
- Long-tail opportunities. NFT mints, oracle updates and protocol quirks that reward whoever acts first.
How MEV is captured on Ethereum
A supply chain has formed around MEV. Searchers run bots that scan the mempool and on-chain state for opportunities and submit bundles of transactions with a bid. Builders assemble the most profitable blocks from public transactions and searcher bundles. Relays pass the best block bids to proposers, the validators chosen for each slot, who pick the highest-paying block. This arrangement, known as proposer-builder separation, runs through software called MEV-Boost and is used by a large majority of Ethereum validators. Much of the MEV ends up paid to validators, increasing staking rewards, rather than kept by searchers.
The total value extracted is hard to measure, because much MEV is hidden inside ordinary-looking trades and private deals. Research groups publish estimates based on known patterns, and these suggest that Ethereum MEV has amounted to hundreds of millions of dollars a year at times of heavy trading. The figures swing widely with market activity, rising sharply in volatile periods when liquidations and arbitrage opportunities multiply.
On Solana, a similar market operates through the Jito client.
Effects and concerns
- Costs to users. Sandwich attacks act as a hidden tax on traders, especially those using wide slippage settings.
- Congestion and fees. Bots competing for the same opportunity can flood the network and push up gas fees.
- Centralisation. A few sophisticated builders produce most Ethereum blocks, and relays are trusted intermediaries, raising concerns about censorship and resilience.
- Consensus risk. Very large MEV could tempt block producers to rewrite recent blocks to capture it, threatening chain stability.
Mitigation
Responses fall into several groups. Users can send transactions through private channels that hide them from public bots, a set of tools described under MEV protection. Exchanges and protocols can redesign trading, for example with batch auctions that settle many orders at one price, or with liquidity hooks that capture value for liquidity providers. Some systems return part of the MEV a user creates to that user. Researchers are also working on encrypted mempools and on building proposer-builder separation into the Ethereum protocol itself to reduce reliance on trusted relays. MEV cannot be removed entirely while transaction order matters, so most efforts aim to make it fairer, more transparent and less harmful.