MEV

What Is Maximal Extractable Value (MEV)?

Maximal Extractable Value (MEV) refers to the additional profit opportunities created by the power to order transactions within a block.

On public blockchains, unconfirmed transactions are first placed into a “waiting area” (commonly called the mempool). The party with the authority to determine transaction ordering can rearrange, insert, or exclude transactions, profiting from price differences, liquidation rewards, or sandwich attacks. While not necessarily illegal, this process can impact execution prices and the overall experience for regular users.

Why Is MEV Important?

MEV directly affects your on-chain transaction outcomes and costs.

When using decentralized exchanges (DEXs), the price you see is only an expected quote. If someone else front-runs your transaction before block inclusion, your final execution price may worsen, and you could experience increased slippage from sandwich attacks. In lending protocols, liquidators compete for rewards when positions near liquidation; if you don’t act fast enough, your assets may be liquidated at a discount.

For developers and protocol designers, MEV influences how fair matching engines and protection mechanisms are built. For validators, MEV is a potential revenue source but may also introduce regulatory risks. Regular traders can save money by understanding MEV hotspots and avoiding high-risk situations.

How Does Maximal Extractable Value (MEV) Work?

MEV arises from the interplay of “ordering power” among different network participants.

1. Transaction Enters the Mempool: The mempool acts as a public waiting queue for unconfirmed transactions, with most nodes forwarding these transactions across the network.

2. Searchers Develop Strategies: Searchers—those writing automated strategies—scan the mempool for opportunities such as price discrepancies across pools, liquidatable positions, or large token swaps. They bundle related transactions into fixed-sequence “bundles” and submit them downstream.

3. Block Builders and Validators Decide Ordering: Block builders select and sequence transaction bundles to maximize block value, while validators are responsible for proposing and signing final blocks. Systems like “MEV-Boost” facilitate collaboration, allowing validators to choose the most valuable block from multiple builders.

4. Settlement On-Chain: The chosen ordering is executed on-chain, and profits from arbitrage, liquidation, or sandwiching are distributed to the relevant parties.

Proposer-Builder Separation (PBS) is an emerging architecture that splits block proposal from transaction ordering. PBS aims to reduce centralization and opaque practices in block construction and is being gradually adopted throughout the ecosystem.

Common Forms of MEV in Crypto

MEV most frequently appears in trading, lending, NFT drops, and cross-domain activities.

• DEX Arbitrage: When two pools (e.g., Uniswap and another DEX) have differing prices for an asset, searchers buy low on one and sell high on the other, earning the spread while restoring price balance. This benefits market efficiency but competes with users for blockspace.
• Sandwich Attacks: If you place a large market order with high slippage on a DEX, bots may buy just before your trade (pushing the price up), then sell right after you (pocketing the difference). The result: you get a worse execution price and increased price volatility.
• Lending Liquidations and Auctions: In protocols like Aave, when collateral value drops below a threshold, liquidators race to execute liquidations for a reward. This competitive “race” increases gas fees for winners and losers alike.
• NFT Minting and Whitelist Sniping: During popular mints or whitelist openings, strategies crowd out normal users by filling blockspace with priority transactions, leading to failed mints or higher costs for regular participants.
• Cross-Chain and Layer 2 Arbitrage: Price discrepancies between chains or L2s create new MEV opportunities related to cross-domain arbitrage and information latency.
• Relation to Centralized Exchanges: If you trade only within Gate’s spot market, order matching happens off-chain without exposure to on-chain MEV risks. However, when withdrawing assets from Gate to a blockchain for use on DEXs, those transactions become vulnerable to MEV phenomena described above.

How Can You Reduce MEV Risk?

The goal is to minimize your exposure to frontrunning and sandwich attacks while reducing potential profits for adversaries.

1. Use Protected Routing or Private Channels: Connect your wallet to services offering private transaction relays (“protected routing”) so trades avoid the public mempool—reducing sandwich attack risk.
2. Set Low Slippage and Use Limit Orders: When swapping on DEXs, lower your slippage tolerance or use tools that support on-chain limit orders. The larger your slippage setting, the more attractive your trade is for sandwich bots.
3. Use Batch Auction Aggregators: Some aggregators match buys and sells in batches during the same time window, reducing opportunities for individual users to be targeted.
4. Split Large Trades & Optimize Timing: Break large swaps into smaller transactions and execute during periods of lower congestion to decrease exposure to MEV competition.
5. Maintain a Safety Buffer When Borrowing: Set conservative collateral ratios and price alerts in lending protocols to avoid becoming an easy liquidation target.
6. Guidance for Gate-to-Chain Operations: If possible, complete spot trades directly on Gate to avoid MEV exposure; if you must go on-chain, withdraw funds and use protected routing services with tight slippage or limit orders.
7. Validator and Node Best Practices: When running MEV-Boost relays or similar infrastructure, choose reputable relay providers and prioritize transparent ordering mechanisms to mitigate censorship and centralization risks.

Recent MEV Trends and Data

MEV activity remains robust and continues to evolve in both structure and defense mechanisms.

Throughout 2024, public dashboards show that Ethereum mainnet blocks delivered via relays account for 80–95% of all blocks on most days—indicating that block builder–validator separation has become mainstream. This ratio remains elevated overall, with daily fluctuations tied to market volatility and network congestion.

On high-volatility days, peaks in sandwich attacks and liquidation races are more common. During these periods, fierce gas bidding occurs in relevant blocks. Public estimates reveal stepwise surges in arbitrage- and liquidation-driven “extra revenue” on volatile days, with significant drops during stable periods.

Over the past six months, Layer 2 networks have continued increasing their share of total volume. Cross-domain arbitrage and information latency-driven MEV are hot topics as combined daily L2 transactions often surpass mainnet activity. This trend fuels research into batch auctions, intent-based matching engines, and private relay technologies.

In terms of research and governance, protocol-level solutions centered on Proposer-Builder Separation (PBS), decentralized block building, and privacy-preserving routing are advancing throughout 2024. The aim is to reduce both censorship/centralization risk and negative externalities for everyday users. Refer to public dashboards in Q3–Q4 2025 for concrete data; note that cross-source reporting discrepancies may exist.

How Does MEV Differ From Gas Fees or Priority Fees?

These three concepts serve distinct functions.

• Gas fees are base charges paid for computation and storage resources needed to execute transactions on a blockchain.
• Priority fees (tips) are extra payments offered to block proposers in order to secure earlier inclusion.
• MEV is the additional profit captured by those with ordering power by rearranging transaction sequences within a block.

In a sandwich attack scenario, victims may pay both higher priority fees and receive worse execution prices; attackers profit through transaction ordering. In standard arbitrage situations, arbitrageurs may boost priority fees to ensure inclusion but earn most of their profit from price spreads. Understanding these distinctions helps you optimize fee settings and slippage limits according to your needs.

Key Terms

• Maximal Extractable Value (MEV): The extra profit miners or validators earn by altering transaction ordering—extracting value created by changes in execution sequence.
• Smart Contract: Self-executing code on a blockchain that settles according to preset conditions without intermediaries.
• Gas Fee: Payment required to execute transactions or contracts on a blockchain network; incentivizes validators.
• Block Confirmation: The process where transactions are included in a block and validated by the network; more confirmations mean higher security.
• Mempool: A temporary holding area for pending transactions from which miners or validators select transactions for block inclusion.

FAQ

Why Do My Transactions Often Execute at Worse Prices Than Expected?

This is frequently caused by Maximal Extractable Value (MEV). Miners or validators can profit from your trades by reordering transactions in a way that results in less favorable execution prices for you. This phenomenon is especially common in decentralized exchanges, particularly with large trades or during volatile market conditions. Understanding MEV can help you opt for safer trading methods such as privacy pools or batch auction services.

How Do MEV Extractors Profit From My Transactions?

Common MEV extraction methods include:

• Frontrunning: Inserting their own transaction before yours to gain profit.
• Sandwich Attacks: Placing transactions both before and after yours to manipulate prices.
• Liquidation Arbitrage: Triggering liquidations in lending protocols for rewards.

All these tactics exploit transaction ordering or price differences—your loss becomes the extractor’s gain.

How Can I Protect Myself From MEV as a Regular User?

You can take several practical steps:

• Set tight slippage limits to prevent excessive price swings.
• Trade during periods of high liquidity to minimize volatility.
• Consider MEV protection services like Gate’s privacy pools.
• Break large trades into smaller ones. Most importantly, trade on secure platforms like Gate that have user protection mechanisms against MEV threats.

How Do Zero-Knowledge Proofs or Privacy Technologies Help Address MEV?

Zero-Knowledge Proofs conceal transaction details so MEV extractors can’t see your intentions ahead of time. These privacy solutions create encrypted pools where miners and validators do not know transaction specifics—preventing frontrunning opportunities. Although still developing, such technologies are a promising avenue for future user protection.

Are MEV Risks More Severe in Cross-Chain Bridges Than Single Chains?

Yes—MEV issues are more complex and hazardous in cross-chain scenarios. Coordination across multiple chains gives attackers more opportunities to extract value by controlling various steps. Additionally, delays inherent to cross-chain bridging offer longer time windows for extractors to predict and exploit your transactions. Exercise extra caution when using cross-chain services; choose bridges and platforms with strong security records.

References & Further Reading

• https://a16zcrypto.com/posts/article/mev-explained/
• https://chain.link/education-hub/maximal-extractable-value-mev
• https://www.ledger.com/academy/glossary/maximal-extractable-value-mev