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    Crypto Chain Post
    Home » Miner Extractable Value (MEV)

    Miner Extractable Value (MEV)

    News RoomBy News RoomDecember 30, 2022No Comments2 Mins Read

    Miner extractable value (MEV) is a measure of the profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. 

    Miner extractable value (MEV) is a measure of the profit a miner (or validator, sequencer, etc.) can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. 

    One of the first forms of MEV that users suffered from was front running done by bots that merely replicated users transactions with a higher gas price so that miners would pick their more expensive transactions over others. Although front running has evolved, and it’s no longer represented in that form, miners are now taking advantage of such attacks. Front running occurs when miners are making a profit by placing their specific transaction right before the users, making the later one fail while the miners transaction is successful and profitable. This occurs because the miners are able to reorganize transactions at their own will, using their position of privileged information to execute a trade first by taking advantage of the trading opportunities the users transactions signal. 

    Alongside front running, the most common MEV attacks also include back running, which refers to miners making a profit by taking advantage of how the execution of the users transactions will change the market conditions and placing their specific transaction right after the users. 

    A sandwich attack is the combination of the above two to specifically make a profit and take advantage of the users’ submitted transaction.

    All of these forms of MEV can only be executed by miners, as they are the only ones who have the power to organize transactions within a block. This type of value extraction can occur because of the Ethereum mempool design, since the only motivation for miners to include transactions into a block is the amount of rewards they will obtain. 

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