Why Net MEV Is the Only Metric That Matters for Sustainability

Net MEV is the tax. It measures the value permanently extracted from users after searchers and validators pay their costs. Gross MEV, tracked by Flashbots' mevboost.pics, is a misleading vanity metric that ignores this final settlement.

Sustainability requires a negative sum. A protocol where net MEV exceeds zero is a leaky bucket, bleeding value to extractors. Long-term adoption depends on minimizing this drain, as seen in the fee compression on Uniswap V3 pools.

The benchmark is zero. Protocols like CowSwap and UniswapX, which leverage batch auctions and intent-based architecture, demonstrate that negative net MEV is achievable, returning value to users through improved pricing.

Gross MEV is a tax on user transactions, creating a direct cost that drives users to competing chains or L2s like Arbitrum and Optimism.

Net MEV is the recaptured value that protocols like Uniswap (via v4 hooks) and CowSwap (via CoW Protocol) redirect to users and treasuries.

The protocol's role is extraction; it must architect its flow to minimize gross leakage and maximize net capture, turning a cost center into revenue.

Evidence: L2s with high gross MEV see user attrition; protocols with positive Net MEV, like those using MEV-share, demonstrate sustainable fee models.

Gross MEV is irrelevant. A protocol reporting $1B in extracted MEV sounds impressive but is meaningless if $950M is immediately leaked to searchers and builders via proposer-builder separation (PBS). The only figure that funds protocol security and user rewards is net MEV.

The MEV supply chain leaks value. Searchers on Flashbots' mev-boost and builders like Titan and Beaver construct blocks to maximize their own extractable value. Without credible commitment or encrypted mempools, protocols cannot capture the MEV their activity creates, creating a persistent value siphon.

Net MEV funds sustainability. Protocols like EigenLayer and Espresso Systems are building mechanisms to internalize MEV. Their success depends not on gross extraction, but on their ability to retain a significant portion of that value for stakers and the treasury, turning a leak into a revenue stream.

Evidence: In Q1 2024, Ethereum's gross MEV was ~$400M. The portion captured by the protocol via priority fees was less than 10%. The rest was captured by the builder market, demonstrating the scale of the siphon.

Gross MEV is irrelevant. The total extracted value is a vanity metric. Validators and stakers only capture a fraction via tips and block rewards, while the rest leaks to searchers and builders.

Net MEV drives security. The sustainable validator yield comes from the value they actually retain. High gross MEV with low capture, as seen in many Ethereum PBS flows, does not strengthen the chain's security budget.

Protocols leak value. MEV-aware applications like UniswapX and CowSwap internalize and redistribute value away from the base layer. This reduces the security subsidy available to L1 validators or L2 sequencers.

Evidence: Post-Merge Ethereum. Despite record MEV, validator rewards from priority fees remain a volatile and often minor component of total yield, demonstrating the decoupling of gross extraction and net security incentives.

Net MEV is the delta between value extracted from users and value returned. Gross MEV is a destructive vanity metric that measures extraction alone, which drives centralization and degrades user experience. Sustainable protocols measure the spread, the difference between what a searcher pays and a user receives, as captured by systems like CowSwap and UniswapX.

Neutrality is a technical outcome. A system with neutral net MEV returns extracted value to the users who created it, via direct refunds, protocol treasury, or improved execution. This aligns searcher incentives with long-term network health, moving beyond the extractive models of early MEV-Boost relays.

The engineering playbook is public. Protocols must integrate SUAVE, order flow auctions, or encrypted mempools to enforce neutrality. Failing to architect for this creates a tax on user trust that competitors like Across Protocol will exploit by offering better-executed intents.

Evidence: LVR arbitrage. On DEXs, the arbitrage gap between CEX and DEX prices is pure, extractive gross MEV. Protocols that capture and redistribute this via mechanisms like LP rebates or fee burn convert a leak into a sustainable yield source, as demonstrated in research from Chainscore Labs.