Technical Definition

MEV

MEV is value that can be extracted by strategically including, excluding, or ordering transactions around normal blockchain activity.

By Crypto University Editorial
Front-runningSandwich attackMempool

✦ 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

MEV originally referred to miner extractable value and is now commonly expanded as maximal extractable value. Searchers, builders, validators, and protocols can participate in transaction-ordering markets. MEV includes useful activities such as arbitrage and harmful experiences such as sandwiching.

In Practice

“A searcher notices a price difference between two DEXs, buys on the cheaper venue and sells on the more expensive one in an ordered bundle, earning arbitrage profit if the execution succeeds.”

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.