MEV is no longer simple. The original concept of 'miner extractable value' described a single actor capturing arbitrage. Today, a specialized supply chain of searchers, builders, and relays has fragmented and financialized the extraction process.
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Why the MEV Supply Chain Makes Miner Extractable Value Look Simple
The PBS-era supply chain has birthed a specialized, financialized ecosystem of searchers, builders, and relays. This analysis argues it's more complex, opaque, and potentially extractive than the simple miner frontrunning it was meant to solve.
introduction
THE COMPLEXITY SPIKE
Introduction
The MEV supply chain has evolved from simple miner arbitrage into a multi-layered, institutionalized ecosystem that makes the original concept look trivial.
The supply chain creates systemic risk. This professionalization introduces new attack vectors and centralization pressures that simple block producer MEV never had. The complexity is the vulnerability, creating opaque dependencies between entities like Flashbots, bloXroute, and Jito.
Evidence: Over 90% of Ethereum blocks are now built by a handful of professional builders, not miners or validators directly. This centralization is a direct consequence of the MEV supply chain's efficiency.
thesis-statement
THE EVOLUTION
The Core Argument: From Simple Theft to Industrialized Extraction
MEV has evolved from a simple miner's side-hustle into a complex, multi-layered supply chain that systematically extracts value across the entire transaction lifecycle.
The MEV supply chain is a formalized, multi-party industry. Early MEV was a solo miner's opportunistic front-run. Today, searchers, builders, and validators operate specialized roles, creating a competitive market for block space and transaction ordering that centralizes around entities like Jito Labs and Flashbots.
Simple theft becomes systemic rent. Solo MEV was a sporadic tax. The modern supply chain, powered by SUAVE and mev-geth, is a continuous extraction engine. It monetizes every inefficiency, from DEX arbitrage on Uniswap to liquidations on Aave, turning volatility into a predictable revenue stream.
Evidence: Over 90% of Ethereum blocks are now built by professional builders using MEV-Boost. This centralization of block production is the direct result of industrializing what was once a niche exploit.
key-trends
FROM SEARCHERS TO SUPPLY CHAINS
Key Trends: The Modern MEV Industrial Complex
The naive model of miners capturing value has evolved into a fragmented, multi-billion dollar supply chain with specialized roles and complex economic games.
01
The Problem: The Searcher-Builder-Proposer Separation
The Ethereum merge and PBS (Proposer-Builder Separation) formalized a triopoly. Searchers find arbitrage, Builders construct optimal blocks, Proposers (validators) just sign. This creates a liquidity market for block space and outsources complexity, but centralizes power in a few dominant builder relays like Flashbots and bloXroute.
>90%
Blocks via PBS
3-5
Major Builders
02
The Solution: Intents and Solving as a Service
To bypass the competitive gas auction, users now express intents (desired outcome) instead of transactions. Protocols like UniswapX and CowSwap outsource execution to a network of solvers who compete on price. This abstracts MEV from users but creates a new solver market prone to centralization and collusion.
$10B+
Volume Processed
~500ms
Auction Latency
03
The Problem: Cross-Chain MEV is a Dark Forest
Arbitrage across chains like Ethereum, Arbitrum, and Solana is high-value but high-risk. Searchers face coordinated execution risk and sovereign consensus delays. This has spawned cross-chain searcher networks and specialized infra like LayerZero's Executor model, turning inter-chain bridges into new MEV extraction points.
$100M+
Extractable Value
2-12s
Risk Window
04
The Solution: Private Order Flows and RFQ Systems
To capture value and protect users, protocols are vertically integrating. DEX Aggregators (1inch) and Wallets (MetaMask) now route orders to private mempools or use Request-for-Quote (RFQ) systems. This creates walled gardens of liquidity and turns user flow into a monetizable asset, challenging public mempool neutrality.
30-40%
Slippage Improvement
Opaque
Auction Transparency
05
The Problem: MEV is Now a Protocol-Level Parameter
New chains design MEV distribution into their consensus. Solana's localized fee markets and Cosmos's interchain scheduler create native capture mechanisms. This shifts MEV from an emergent behavior to a governable economic primitive, forcing L1/L2 architects to explicitly decide who profits.
Protocol-Native
Design Shift
Validator Revenue
Key Metric
06
The Solution: SUAVE: A Universal MEV Chain
Flashbots' SUAVE aims to be a decentralized, chain-agnostic mempool and block builder. It attempts to re-decentralize the supply chain by creating a neutral marketplace for preference expression and execution. The bet is that specialization and competition at each layer (memory, computation, bidding) can beat vertically integrated incumbents.
All Chains
Target Scope
TBD
Economic Security
WHY THE MEV SUPPLY CHAIN MAKES MINER EXTRACTABLE VALUE LOOK SIMPLE
MEV Supply Chain: Actors, Incentives, and Risks
Comparison of the monolithic MEV model versus the modern, fragmented MEV supply chain, highlighting the proliferation of specialized actors and new systemic risks.
| Key Dimension | Classic MEV (Miner Era) | Modern MEV Supply Chain (Post-Merge) | Implication of Change |
|---|---|---|---|
Primary Actor & Control Point | Miner / Sequencer (Solo) | Builder (e.g., Flashbots, bloXroute) + Proposer (Validator) | Centralization shifts from hardware to capital and software; introduces relay dependency. |
Revenue Capture Model | Direct: 100% of block reward + MEV | Auction-Based: Builder bids, Proposer gets bid, Searchers pay builders | Creates a multi-layered fee market; value leaks to intermediaries. |
Key Technical Capability | Transaction Ordering | Bundle Construction, State Simulation, Censorship, OFAC Compliance | Sophistication barrier increases; builders act as centralized execution venues. |
Dominant Risk Profile | Time-Bandit Attacks, Reorgs | Validator-Builder Collusion, Censorship, Latency Arbitrage, Builder Monopoly | Risks become systemic and protocol-level, not just economic. |
User/App Exposure | Opaque, Indirect (slippage) | Direct via MEV-Boost Auctions, Sandwichable Liquidity Pools (Uniswap V2) | MEV is now a measurable, first-class design constraint for dApps. |
Extraction Latency Threshold | Block Time (12s Ethereum) | Slot Time (12s) + Relay Propagation (<1s) | Creates a sub-slot latency race, benefiting proprietary infrastructure. |
Mitigation Ecosystem | Flashbots (early), Fair Sequencing | SUAVE, MEV-Share, CowSwap, MEV Blocker, EigenLayer AVS | Solutions now must coordinate across a fragmented, adversarial supply chain. |
deep-dive
THE SUPPLY CHAIN
Deep Dive: The Opaque Engine of PBS
Proposer-Builder Separation (PBS) transforms MEV from a simple miner tax into a complex, multi-layered financial supply chain.
PBS formalizes MEV roles, creating a market where specialized builders compete to construct the most profitable block. This competition centralizes block production into a few professional entities like Flashbots and bloXroute, who possess superior data and execution infrastructure.
Builders operate as black boxes, submitting encrypted block bodies to proposers. This opacity prevents proposers from stealing profitable bundles but obfuscates the value flow, making the true cost of transaction inclusion impossible for users to audit.
The MEV supply chain fragments value capture. Searchers find opportunities, builders aggregate them, and proposers sell block space. This multi-layered extraction is more systemic and opaque than the simple, direct capture of Miner Extractable Value.
Evidence: Over 90% of Ethereum blocks post-Merge are built by entities like Flashbots, Builder0x69, and beaverbuild, demonstrating the extreme centralization of block construction power under PBS.
risk-analysis
WHY MEV WAS THE SIMPLE TIMES
Risk Analysis: The Bear Case for the Supply Chain
The MEV supply chain introduces systemic complexity and new centralization vectors that make traditional block producer MEV look like a contained, solvable problem.
01
The Centralization Black Hole
The supply chain concentrates power in a few critical choke points: the searcher/builder cartel and the dominant relay. This creates a single point of failure and censorship far more potent than miner/validator centralization.\n- ~90% of Ethereum blocks are built by a handful of entities.\n- Relays like BloXroute and Titan control the critical path to proposers.
~90%
Builder Share
2-3
Critical Relays
02
Intents: The Opaque Order Flow Monster
Intent-based architectures (e.g., UniswapX, CowSwap) abstract complexity to users but create massive, unobservable order flow. Solvers compete in a dark forest for this flow, where the winning strategy is often vertical integration with builders/relays, not better prices.\n- Creates information asymmetry between users and the network.\n- Obfuscates the true cost and execution path of transactions.
$10B+
Annualized Flow
0 Visibility
For Users
03
Cross-Chain MEV: The Final Boss
Bridging and cross-chain messaging (e.g., LayerZero, Axelar, Wormhole) explode the MEV problem across domains. Arbitrage and liquidation opportunities now have multi-chain dependencies, requiring coordination of capital and execution across heterogeneous systems. This creates: \n- Atomicity risk where failure on one chain causes cascading failures.\n- Regulatory arbitrage and jurisdictional fragmentation.
30+
Chains to Secure
Unquantified
Systemic Risk
04
The Economic Time Bomb of PBS
Proposer-Builder Separation (PBS) was designed to democratize MEV but has created a winner-take-most builder market. Builders operate on razor-thin or negative margins, subsidized by venture capital, to capture market share and data. This is an unsustainable economic model primed for collapse or extreme rent extraction.\n- Leads to predatory pricing to kill competition.\n- Incentivizes exclusive order flow agreements (EOF) that harm the open market.
Negative
Builder Margins
VC-Subsidized
Market Dynamics
05
Censorship as a Service
The supply chain formalizes and commercializes censorship. Entities like Flashbots have built a compliant infrastructure layer that can be toggled to exclude transactions based on OFAC sanctions or other criteria. This is more dangerous than a miner's individual choice because it's a standardized, protocol-level feature.\n- Turns political decisions into technical defaults.\n- Creates a clean/dirty chain bifurcation.
Protocol-Level
Censorship
Compliant by Default
Relay Policy
06
The LVR Metastasis
Loss-Versus-Rebalancing (LVR) is the AMM-specific leakage of value to MEV searchers. The supply chain doesn't solve LVR; it optimizes and institutionalizes its extraction. Sophisticated builders internalize this value capture, making it harder for protocols like Uniswap V3 to mitigate. The result is a permanent, structural tax on liquidity providers.\n- LVR is a fundamental cost, not a bug.\n- Supply chain efficiency increases the extraction rate.
$500M+
Annual LVR
Structural
LP Tax
counter-argument
THE COMPLEXITY TRAP
Counter-Argument: Isn't This Better Than the Dark Forest?
The MEV supply chain's formalization creates systemic risks that are more complex and opaque than the chaotic 'Dark Forest' it replaced.
Formalization creates systemic risk. The old Dark Forest was a chaotic, adversarial free-for-all. The new supply chain concentrates power in specialized roles like searchers and builders, creating single points of failure that protocols like Flashbots and bloXroute now represent.
Complexity obscures accountability. In the Dark Forest, the miner was the final arbiter. Now, value extraction is a multi-party process involving intent solvers (UniswapX), cross-chain relays (LayerZero, Axelar), and private RPCs, making the attack surface and profit attribution opaque.
Regulatory surface area explodes. The simple miner-to-user model is gone. The supply chain introduces licensed entities (Coinbase, Jump) as block builders and regulated OFAC-compliant relays, creating legal vectors that did not exist in the permissionless dark forest.
Evidence: The OFAC-compliant censorship of Tornado Cash transactions was executed not by miners, but by dominant block builders like Flashbots and Relays, demonstrating how formalized supply chains enable new forms of centralized control.
takeaways
MEV SUPPLY CHAIN DECONSTRUCTED
Key Takeaways for Protocol Architects
The MEV supply chain has evolved into a complex, multi-layered ecosystem where value is extracted, aggregated, and redistributed far beyond the miner/validator. Understanding its components is non-negotiable for designing resilient protocols.
01
The Problem: Your Users Are the Product
Searchers and builders don't just capture slippage; they systematically identify and exploit predictable user behavior across the entire transaction lifecycle.\n- Frontrunning and sandwich attacks are just the visible tip.\n- Latency arbitrage and DEX arbitrage create a ~$1B+ annual market.\n- User intent is commoditized before it hits the public mempool.
$1B+
Annual Market
>90%
Of Blocks
02
The Solution: Intent-Based Architectures
Shift from transaction execution to outcome declaration. Let specialized solvers (like those in UniswapX or CowSwap) compete to fulfill user intents off-chain.\n- Removes users from the public mempool, eliminating frontrunning surfaces.\n- Aggregates liquidity and execution across chains via intent-based bridges like Across.\n- Turns MEV from a threat into a discount for users via surplus extraction.
-99%
Mempool Exposure
Solver-Network
New Primitive
03
The New Power Broker: Block Builders
Entities like Flashbots and Titan have decoupled block proposal from block construction. They run private mempools and optimize bundles for maximum extractable value.\n- They control order flow and determine final transaction ordering.\n- Use sophisticated algorithms to build ~$50k+ value into a single Ethereum block.\n- Create a centralization risk at the builder layer, despite decentralized validators.
~$50k+
Block Value
PBS
Proposer-Builder Sep.
04
The Infrastructure: MEV-Boost & Beyond
MEV-Boost is the middleware that lets Ethereum validators auction block space to builders. It's a $500M+ annual revenue stream for stakers.\n- Relays (like BloxRoute) are trusted intermediaries that facilitate these auctions.\n- This creates a triangular market between users, searchers/builders, and validators.\n- Future-proofing requires designing for PBS enshrined at the protocol level.
$500M+
Staker Revenue
Middleware
Critical Layer
05
The Cross-Chain Complication
MEV doesn't respect chain boundaries. Cross-chain arbitrage between Ethereum, Arbitrum, and Solana is a growing frontier.\n- LayerZero and Wormhole messages create new arbitrage vectors.\n- Requires coordination of execution and settlement across heterogeneous environments.\n- Interchain sequencers will become the next critical battleground for MEV capture.
Multi-Chain
Arbitrage
New Vectors
From Bridges
06
The Architectural Imperative: MEV-Aware Design
Protocols must be built with MEV flows as a first-order constraint, not an afterthought.\n- Use private RPCs (e.g., Flashbots Protect) to shield transactions.\n- Design mechanisms for MEV redistribution back to users (e.g., CowSwap's CoW AMM).\n- Integrate with SUAVE-like decentralized block building networks to democratize access.
First-Order
Design Constraint
Redistribution
Key Mechanism
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