MEV (Maximal Extractable Value)
Maximal Extractable Value (MEV) is the maximum value that can be extracted from block production beyond standard block rewards and transaction fees, achieved by including, excluding, or reordering transactions within a block. Originally called Miner Extractable Value in the proof-of-work Ethereum era, MEV encompasses a range of strategies: arbitrage (exploiting price differences across venues), liquidations (closing undercollateralized lending positions for a bonus), sandwich attacks (front-running and back-running a victim trade), and time-bandit attacks (reorganizing past blocks to capture value). MEV is a structural consequence of the mempool — the public waiting area where transactions sit before inclusion — and the block builder's unilateral authority over transaction ordering. PBS (Proposer-Builder Separation) was designed to mitigate centralizing MEV dynamics by separating block building (specialized market) from block proposing (validator duty). MEV extraction is now a multi-billion dollar annual market dominated by sophisticated searchers and builders.