MEV and Frontrunning
MEV is value extracted from transaction ordering, inclusion, or exclusion.
MEV affects DEX users, validators, block builders, fairness, centralization pressure, and consensus incentives.
The Intuition
Pending transactions reveal intent. Searchers can simulate them and pay to place their own transactions before, after, or around them.
See it concretely
If you could see everyone's stock orders before execution and pay the clerk to move yours first, you could profit from ordering power.
Tempting — but wrong
The precise version
Maximal Extractable Value is the value obtainable by changing transaction ordering, inclusion, or exclusion. Strategies include DEX arbitrage, liquidations, sandwich attacks, NFT sniping, and oracle-related extraction. Mitigations include private orderflow, batch auctions, encrypted mempools, threshold encryption, MEV-share systems, and proposer-builder separation, each with tradeoffs.
MEV = value(bestOrdering) - value(defaultOrdering)Check your understanding
What is a sandwich attack?
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Why can MEV pressure decentralization?
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- Define ordering, inclusion, and exclusion power.
- Explain arbitrage, liquidations, and sandwiching.
- Explain why public mempools leak intent.
- Compare mitigation tradeoffs.
What is MEV based on?