MEV
MEV is value that can be extracted by strategically including, excluding, or ordering transactions around normal blockchain activity.
✦ Key Insight
MEV affects trade execution, network congestion, validator economics, and protocol design. Users may experience higher slippage or failed transactions, while some MEV activities help align prices or execute necessary liquidations.
✕ Common Misconceptions
MEV is broader than attacks. Arbitrage and liquidations can support market efficiency, while sandwiching can directly harm users. Avoid using "MEV" as a synonym for hacking or theft.
Detailed Explanation
In Practice
Dig Deeper
Sandwich attack
A sandwich attack places one trade before and another after a user's DEX trade to profit from the price movement caused by that user's transaction.
Mempool
A mempool is a node's temporary pool of valid, unconfirmed transactions waiting to be included in a block.
Liquidation
Liquidation is the forced reduction or closure of a leveraged or collateralized position when required risk or collateral thresholds are breached.
Front-running
Front-running occurs when someone observes a pending action and gets a strategically related transaction executed before it to capture an advantage.