Maximal Extractable Value

The practice of placing a transaction immediately before a known pending transaction to profit from its anticipated market impact. This is a core arbitrage strategy, often targeting large DEX trades. For example, a searcher might detect a large buy order for a token on a decentralized exchange and place their own buy order with a higher gas fee to execute first, then sell into the inflated price.

• Types: Includes sandwich attacks (frontrun + backrun).
• Impact: Increases slippage and cost for end users.

Submitting a transaction immediately after a known pending transaction to capture value from state changes it creates. This is common after liquidations or large oracle price updates. For instance, when a loan is liquidated on a lending protocol, a backrunner can quickly purchase the collateral at a discount and resell it.

• Distinction: Less harmful than frontrunning, as it doesn't preempt the target tx.
• Use Case: Often combined with arbitrage to correct prices across markets after a large trade settles.

Exploiting price differences for the same asset across different decentralized exchanges (DEXs) or liquidity pools within a single block. This is considered "good" MEV as it helps unify prices across the ecosystem. A classic example is buying ETH on Uniswap where it's cheaper and simultaneously selling it on SushiSwap where it's more expensive.

• Primary Tool: Uses flash loans for zero-capital efficiency.
• Outcome: Profits from the spread while improving market efficiency.

The process of seizing undercollateralized positions in lending protocols (like Aave, Compound) for a profit. Keepers or searchers compete to be the first to submit a liquidation transaction, earning a liquidation bonus (e.g., 5-10%).

• Incentive: Essential for protocol solvency; MEV provides the economic incentive for rapid execution.
• Race: Often involves private transaction pools (like Flashbots) to avoid failed transactions and wasted gas.

A theoretical, long-range attack where a miner or validator reorganizes (reorgs) the blockchain to extract MEV from past blocks. This involves mining a competing chain in secret and publishing it to replace a section of the canonical chain, effectively rewriting history to capture missed MEV opportunities.

• Risk: Undermines blockchain finality and is considered highly destabilizing.
• Prevention: Mitigated by proposer-builder separation (PBS) and consensus-layer security.

A design paradigm, central to Ethereum's roadmap, that separates the roles of block builder (who assembles transactions and MEV) and block proposer (who simply chooses the highest-paying block). This aims to democratize MEV access and reduce its negative externalities.

• Builder: Competes in an open market to create the most valuable block.
• Proposer: Selects the block with the highest bid via a commit-reveal scheme.
• Goal: Reduces centralization pressure and mitigates time-bandit attacks.

The most common MEV strategy, where a searcher profits from price discrepancies of the same asset across different decentralized exchanges (DEXs) or liquidity pools. By sandwiching a large swap between two of their own transactions, they buy low on one venue and sell high on another in the same block.

• Example: Buying ETH on Uniswap where it's $1,900 and simultaneously selling it on SushiSwap where it's $1,905.
• Tools: Searchers use bots to monitor the mempool and specialized software like Flashbots to bundle transactions.

A strategy to profit from undercollateralized loans in lending protocols like Aave or Compound. When a loan's collateral value falls below a required threshold, it becomes eligible for liquidation. Searchers compete to be the first to supply the transaction that repays the borrower's debt in exchange for the collateral at a discount.

• Mechanism: The searcher's bot repays the debt and receives the collateral, typically at a 5-10% bonus.
• Impact: While profitable for searchers, this activity is critical for protocol solvency, ensuring bad debt is cleared.

A predatory strategy that targets large, visible DEX swap orders in the mempool. The searcher places two transactions around the victim's transaction: one to buy the asset before the victim (driving the price up), and one to sell it after (profiting from the inflated price).

• Result: The victim's swap executes at a worse price (slippage), and the searcher captures the difference.
• Mitigation: Users can set lower slippage tolerances or use private transaction relays to hide their intent.

An advanced and disruptive strategy where a miner or validator reorganizes the blockchain (reorg) to extract MEV from past blocks. Instead of competing for future transactions, they attempt to rewrite history by mining an alternative chain that places their own profitable transactions into a prior block.

• Requirement: Requires significant hashing power (Proof of Work) or staking power (Proof of Stake) to overtake the canonical chain.
• Risk: This undermines blockchain finality and is considered a malicious attack on network consensus.

Extracting value from non-fungible token markets by frontrunning profitable trades or minting opportunities. This includes sniping underpriced NFTs on marketplaces, frontrunning purchases of NFTs from trending collections, or being the first to mint from a high-demand generative art project.

• Tactics: Bots monitor minting events and marketplace listings, submitting transactions with higher gas fees to win the race.
• Platforms: Common on Ethereum and Solana NFT ecosystems like OpenSea, Magic Eden, and Blur.

Encompasses niche or emerging strategies beyond the major categories. This includes Oracle Manipulation (exploiting price feed updates), Bridge Arbitrage (across different blockchain bridges), and Governance Attacks (accumulating voting power to pass profitable proposals).

• Characteristic: Often targets newer, less-audited protocols or complex DeFi composability.
• Evolution: As base-layer strategies become more competitive, searchers innovate at the application layer to find new revenue streams.

Frontrunning occurs when a searcher observes a pending transaction (e.g., a large DEX trade) and pays higher gas fees to place their own transaction first to profit from the anticipated price movement. A sandwich attack is a specific form where the attacker places one transaction before and one after the target transaction, profiting from the price slippage they create. These are the most common MEV strategies, directly extracting value from regular users.

A time-bandit attack is a severe risk where a miner or validator, upon discovering a highly profitable MEV opportunity in a recently mined block, intentionally reorganizes the blockchain (a reorg) to replace that block with a new one that captures the value for themselves. This undermines the finality of the blockchain, as transactions thought to be confirmed can be reversed, breaking a core security assumption for users and applications.

Validators can censor transactions by refusing to include them in blocks. This can be for profit (e.g., excluding arbitrage transactions that compete with their own) or for regulatory/political reasons. Transaction exclusion prevents users from accessing the network fairly. In Proof-of-Stake systems, this can lead to centralization risks if large staking entities collude to censor specific addresses or applications, threatening network neutrality.

Searchers competing for MEV engage in gas price auctions, repeatedly outbidding each other to have their bundles included in the next block. This creates gas price wars that drive up network fees for all users, making the blockchain expensive and unpredictable to use. The congestion is a direct negative externality of MEV extraction, degrading the user experience and economic accessibility of the network.

MEV revenue creates a strong economic incentive for validators to join MEV-boost relays or specialized pools that maximize their extractable value. This can lead to validator centralization, as smaller operators cannot compete with the sophisticated infrastructure of large players. A highly centralized validator set increases systemic risk, making the network more vulnerable to collusion, censorship, and coordinated attacks.

Several protocols aim to mitigate MEV risks:

• Fair Sequencing Services (FSS): Use a decentralized sequencer to order transactions fairly.
• Commit-Reveal Schemes: Hide transaction content until after it is included in a block.
• Encrypted Mempools: Use threshold encryption to obscure transaction details from searchers.
• Proposer-Builder Separation (PBS): Separates the roles of block building and proposing to democratize access and reduce validator centralization risks, as implemented in Ethereum's PBS roadmap.

The most common forms of MEV extraction involve exploiting price discrepancies across decentralized exchanges (DEXs) and triggering undercollateralized loan liquidations.

• Arbitrage: Bots scan for price differences (e.g., ETH priced lower on Uniswap than on SushiSwap) and execute a series of transactions to buy low and sell high in the same block.
• Liquidations: In lending protocols like Aave or Compound, bots compete to be the first to supply the transaction that repays a borrower's undercollateralized debt, earning a liquidation fee as a reward. These activities can provide liquidity benefits but also increase network congestion and gas costs for regular users.

A predatory form of MEV where a searcher exploits a visible pending transaction in the mempool.

The attacker executes a three-transaction bundle:

1. Front-run the victim's large DEX trade by buying the same asset, driving its price up.
2. Let the victim's trade execute at the worse, inflated price.
3. Back-run the victim by selling the asset, profiting from the price impact caused by the victim's own trade. This results in slippage loss for the victim and is a direct wealth transfer with no network benefit.

These are more severe, consensus-level MEV threats that undermine blockchain finality.

• Time-Bandit Attacks: A validator considers rewriting blockchain history to extract MEV from past blocks, potentially making previously settled transactions invalid. This attacks the immutability guarantee.
• Chain Reorganizations (Reorgs): Validators may intentionally orphan canonical blocks to replace them with new blocks that capture lucrative MEV opportunities. This creates uncertainty and can disrupt applications like bridges and oracles that assume block finality. These attacks represent a fundamental security risk to the protocol layer.

A protocol-level design, central to Ethereum's roadmap, that formally separates the roles of block building and block proposing (validating).

• Builders: Specialized nodes compete to create the most profitable block (including MEV bundles) and submit a bid to proposers.
• Proposers (Validators): Simply choose the highest-paying block header without seeing its contents, following a commit-reveal scheme. PBS prevents validators from exploiting their position for MEV, democratizes block building, and reduces the incentive for powerful validator centralization.

These are economic and cryptographic mechanisms designed to neutralize or redistribute extracted MEV.

• MEV Burn: A mechanism (e.g., EIP-1559 base fee) that destroys a portion of the value that would otherwise be extractable as MEV, turning it into a protocol subsidy. This reduces the net profit from extraction.
• Threshold Encryption: Protocols like Shutter Network use distributed key generation to encrypt transaction contents while in the mempool, preventing frontrunning and sandwich attacks by hiding intent until the block is proposed.
• Fair Sequencing Services: Using a trusted execution environment (TEE) or consensus mechanism to order transactions fairly before they are executed, removing the miner's ability to reorder.