Overview
Maximal Extractable Value (formerly Miner Extractable Value) refers to the profit that block producers (miners or validators) can make by choosing which transactions to include in a block and in what order.
How it's Extracted
- Front-running: Placing a trade before a large pending transaction.
- Back-running: Placing a trade immediately after a specific transaction.
- Sandwiching: Placing trades both before and after a victim's transaction.
Impact
MEV can lead to higher gas prices and a worse user experience, but it also helps keep markets efficient through arbitrage. Solutions like Flashbots aim to make MEV extraction more transparent and fair.