%20Explained.jpg)
What Is Maximal Extractable Value (MEV)?
Maximal Extractable Value refers to the extra profit that can be gained by controlling how transactions are included, excluded, or ordered in a block. Originally known as Miner Extractable Value (during Ethereum’s Proof of Work era), the term was updated to Maximal after the network transitioned to Proof-of-Stake in 2022.
Today, validators and not miners, decide which transactions make it into blocks and in what order, which can create opportunities to profit beyond normal block rewards and gas fees.
In simple terms, MEV happens when someone can earn money by reordering transactions. For example, if a validator or bot can see a big trade before it’s processed, they might execute a quick buy or sell around it to take advantage of price movements.
How MEV Works: The Key Players
- Searchers – Independent bots or algorithms that scan public transaction pool (called the mempool) for profitable opportunities such as arbitrage or liquidation.
- Validators (or Block Builders) – The entities that decide which transactions go into a block and in what order. They can include their own transactions or choose bundles submitted by searchers.
- Users – Regular participants who submit transactions, often unaware that the order of execution can affect how much they pay or receive.
These three groups form a competitive ecosystem where milliseconds and gas prices can mean the difference between profit and loss.
Common Types of MEV
When Ethereum moved to Proof of Stake (PoS), miners were replaced by validators. But MEV didn’t disappear — it evolved. Now, validators have the power to include or reorder transactions within their proposed blocks. The Ethereum community quickly realized this could lead to centralization risks, since large staking operators with more resources might capture a disproportionate share of MEV profits.
To mitigate this, new systems were introduced to make MEV extraction more transparent and fair.
1. Arbitrage
Searchers exploit price differences between decentralized exchanges (DEXs).
For instance, if ETH trades for $3,000 on one DEX and $3,010 on another, an arbitrage bot can buy on the cheaper one and sell on the higher one — often within the same block.
2. Liquidations
On lending protocols like Aave or Maker, when a borrower’s collateral drops below a threshold, liquidators rush to repay the loan and claim a fee. MEV bots compete to perform this first.
3. Front Running
A bot spots a pending trade in the mempool and quickly places its own transaction ahead of it by paying a higher gas fee. The bot benefits from predictable price changes caused by the victim’s transaction.
4. Sandwich Attacks
A malicious form of front-running where a bot places one trade before and one after a large user trade, effectively “sandwiching” it, to profit from the price swing it causes.
5. NFT MEV
Even non fungible tokens (NFTs) are affected. Bots can detect profitable listings or minting events and quickly claim them before regular users.
Summary: The Double-Edged Sword of MEV
MEV is not inherently bad. It’s an emergent property of transparent, open networks where everyone can compete. The challenge is ensuring that this competition remains fair, transparent, and aligned with Ethereum’s decentralization goals.
Take Control of Your Crypto Journey with P100
Ethereum upgrades and innovations like MEV Boost show how fast Ethereum is evolving.
With P100, you can stay on top of these changes, manage your crypto securely, and move effortlessly between digital and traditional assets.
Whether you’re an investor or everyday user — P100 helps you stay one step ahead in a blockchain world.
👉 Download the P100 App and experience a simpler, smarter way to manage your crypto.
