Maximal Extractable ValueMEV
Maximal extractable value is the profit that can be made by choosing which transactions go into a block and in what order. Examples include arbitrage, liquidations and sandwich attacks, in which a trader’s swap is placed between the attacker’s buy and sell.
MEV is the profit someone can make by choosing which transactions go into a block and in what order. It funds arbitrage and liquidations, but it also powers sandwich attacks that quietly raise ordinary traders' costs.
- Category
- Cryptocurrency and Blockchain
- Reading time
- 4 min
- Also called
- Miner extractable value, MEV extraction, Transaction ordering profit
- Updated
MEV in plain words
MEV is the extra value a block producer can capture — beyond the normal block reward and fees — by choosing which transactions go in a block, which stay out and in what order.1
Block producers can therefore front-run and sandwich users' trades — practices that are banned in regulated markets.2
Whatever MEV extractors gain comes out of ordinary DeFi users' pockets.3
How MEV is extracted
Watch pending trades
A searcher scans the mempool for large pending DEX trades.1
Find an opportunity
Arbitrage, liquidations or sandwiches; searchers race to spot borrowers who can be liquidated.1
Bundle transactions
The searcher builds an ordered set of transactions.
Bid for inclusion
Searchers may pay 90% or more of MEV revenue in gas to the validator.1
Builders and proposers
On Ethereum, MEV-Boost split the job of proposing blocks from the job of building them.3
Profit is split
Searchers keep what is left; the user bears the cost.
Worked examples
Example 1 — Sandwich attack
−$160 for the userA hypothetical user buys $20,000 of a token with 1% slippage allowed. A bot buys first, lifting the price 0.8%, then sells right after.
| User extra cost | $20,000 × 0.8% = $160 |
| Bot gross | ≈ $160 |
A sandwich puts one trade just before the user's and another just after it.2
Example 2 — Arbitrage MEV and gas
+$100Hypothetically a searcher finds $1,000 of DEX arbitrage and bids 90% of it as priority fee.
| Paid to validator | $1,000 × 0.90 = $900 |
| Searcher keeps | $1,000 − $900 = $100 |
Competition is fierce: searchers may hand 90% or more of their MEV profit to the validator as fees.1
Example 3 — Tighter slippage
Up to $120 savedThe same user sets 0.2% slippage instead of 1%.
| Max bot room | $20,000 × 0.2% = $40 |
| Saving vs Example 1 | $160 − $40 = $120 |
A tighter limit narrows the gap a searcher watching the mempool for large DEX trades can exploit.1
Common MEV types
| Aspect | Arbitrage | Sandwich |
|---|---|---|
| What it does | Closes price gaps | Trades before and after a user |
| Who pays | Mostly no single user | The sandwiched trader |
| Market effect | Aligns prices | Raises user costs |
| Risk for searcher | Atomic, low | Not atomic, higher |
Where MEV touches traders
DEX swaps
Set slippage to limit Slippage loss.
Large orders
Split big Order sizes or route privately.
Liquidations
Bots compete to trigger Liquidation events.
Price alignment
Arbitrage narrows Bid-Ask Spread gaps across venues.
Advantages and disadvantages
Advantages
- Arbitrage keeps prices aligned across venues.
- Liquidations keep lending protocols solvent.
- Bids for inclusion pay validators.
Disadvantages
- Sandwiches raise users' costs.
- Often not disclosed to users.
- Concentrates power in builders.
- Rules on market abuse differ by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Ordering is valuable
Beginner
Whoever orders transactions can capture value beyond block rewards and gas fees.1
Searchers and validators
Intermediate
Much MEV is captured by independent “searchers”, who pass a large share on to validators through fees.1
Size and supply chain
Advanced
Estimates put MEV on the largest Ethereum protocols at roughly $550–650 million between 2020 and 2022; MEV-Boost later separated block proposers from builders.3
Common mistakes
Wide slippage settings
Gives bots room to sandwich.
Ignoring gas wars
Competing bids can wipe out arbitrage profit.
Thinking MEV is only theft
Arbitrage and liquidations also count.
Assuming private routing is perfect
It moves trust to the operator.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- MEV is profit from ordering transactions.
- Searchers find it; validators collect much of it.
- Sandwiches cost ordinary traders.
- Tight slippage limits exposure.
- Market-abuse rules differ by country.
Frequently asked questions
Is MEV the same as front-running?
How can I reduce MEV losses?
Does MEV exist on Bitcoin?
Further learning
- Slippage
Your main defence setting.
- Order Flow
Why visible flow is valuable.
- Liquidation
Liquidation MEV.
- Market Maker
How arbitrage aligns prices.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- ethereum.org. Maximal extractable value (MEV) (opens in a new tab) Checked .
- Bank for International Settlements. Miners as intermediaries: extractable value and market manipulation in crypto and DeFi (BIS Bulletin 58) (opens in a new tab) Checked .
- European Securities and Markets Authority (ESMA). Maximal Extractable Value: Implications for crypto markets (2025) (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.