If you want to learn all about what MEV is and how it works, this is a good starting point.

MEV is one of the newer concepts in the crypto world that aims to help crypto miners and validators get rewards for their contributions to the blockchain. MEV also refers to the “invisible tax” that miners can collect from blockchain users.

If you want to find out what stands behind the abbreviation MEV, how this concept works, and what is its role in the crypto ecosystem, keep on reading. We’ll also list all the techniques through which MEV can be extracted.

Learn in This Article

  • MEV definition
  • How it works
  • Techniques for extraction of MEV
  • Role of MEV in the crypto market

What Is MEV?

MEV or Maximal Extractable Value is a term that refers to the maximum profit that validators and miners can get by changing the transaction order within a block.

Since the two largest blockchains, Bitcoin and Ethereum, previously relied on the PoW consensus mechanism, MEV was an abbreviation for Miner Extractable Value. However, after Ethereum moved to the PoS consensus, this abbreviation began to denote Maximal Extractable Value.

The MEV strategy can be applied to other networks besides BTC and ETH blockchain, such as Solana and Binance Smart Chain. MEV can have a positive and negative impact on the blockchain network, which is why it is often the subject of controversy. Namely, MEV can fix the inefficiency of dApps, but it can also increase gas fees.

MEV has several forms, of which the most common are sandwich attacks, arbitrage, and liquidation.

How Does MEV Work?

To explain how MEV works, we first have to talk about the way validators and miners perform functions on the blockchain. Both validators and miners produce blocks that are responsible for transactions. Every time someone makes a transaction within the blockchain, miners and validators receive a reward in the form of gas fees.

They usually give priority to transactions with higher fees to earn higher rewards.

MEV exploits the limitations of the blockchain ecosystem through the sequential execution of transactions within a block and the probability of block finitude. The former refers to the importance of the order of transactions.

For example, trader A and trader B want to buy 5 ETH from a crypto exchange. However, the exchange offers only 5 ETH at that price. This means that the trader who makes the transaction first will get 5 ETH at the initial price, while the other trader will have to pay a higher price.

The latter refers to the probability that blocks are not confirmed straight away — that they are subject to alteration. If trader A sends 5 ETH to trader B within block 1, and block 1 gets replaced by block 2, which doesn’t contain trader A’s transaction, trader B will receive nothing. The finality of transactions will affect the transfer of value.

These two traits allow validators and miners to manipulate block transactions to increase their profits.

Maximal Extractable Value vs Miner Extractable Value

There is no difference between the Maximal Extractable Value and the Miner Extractable Value. Namely, both terms represent the same thing.

MEV previously stood for Miner Extractable Value since it relied on the PoW mechanism. After ETH switched to the PoS mechanism, miners were replaced by validators, and MEV was renamed to Maximal Extractable Value.

Techniques Used to Extract MEV

MEV was created as a concept in 2014, but its extraction started in 2020. About 625,000 ETH have been extracted since May 2023. If we consider that the price of ETH at the time of writing is $2,594, this would mean that about $1.6 billion has been extracted through MEV.

The most common techniques for extracting MEV are liquidation, arbitrage, and sandwich attack.


Liquidation on DeFi platforms refers to the confiscation of collaterals. If the ratio of the collateral falls below a certain level, it will be taken away from the borrower. Liquidation is important because it allows the lender to get their money back.

MEV extractors keep the network solvent as they are willing to pay high fees to perform liquidations. Any person who performs the liquidation will be able to sell the collateral for a profit. Liquidations are most profitable when the market is volatile.


Arbitrage refers to taking advantage of price differences in multiple markets. Each decentralized exchange has different prices for the same cryptocurrencies, depending on their demand. This price difference can be very lucrative for MEV extractors. You can increase your profit by buying cryptocurrency at a lower price on one exchange and selling it for a higher price on another exchange.

Arbitrage is an important part of the crypto ecosystem. Why? Because it adjusts the prices of cryptocurrencies on crypto exchanges. This also makes the DeFi market more effective.

MEV extractors can profit from arbitrage by having MEV bots execute both sales and buy transactions on different exchanges at the same time.

Sandwich Attack

A sandwich attack is a technique used to manipulate cryptocurrency prices. This combination of front-running and back-running enables MEV extractors to extract profits at the expense of traders.

The front-run transactions will be deliberately altered before the trade is executed. After that, another order will sell that token back to the crypto market with a new price using a back-run transaction.

Lower liquidity equals higher transactions. However, if liquidity is high, sandwich attacks will have to use more capital to influence prices.

What Is the Role of MEV in Cryptocurrency?

MEV is important to the crypto ecosystem, especially to the Ethereum network. It allows validators and miners to manipulate the order of transactions. Its goal is to provide them an additional source of income, besides gas fees and block rewards.

However, MEV is controversial because miners can manipulate the order of transactions on behalf of a third party. Moreover, MEV can encourage miners to create forks, which would undermine the security of the consensus layer.

On a positive note, MEV strategies can be very effective when used correctly. For example, they can identify the ineffectiveness of DefI lending protocols. In addition to that, they can help balance cryptocurrency prices on different exchanges.


MEV in crypto is a new concept whose extraction started in 2020. This strategy is beneficial for miners and validators as it allows them to maximize their profits. You can extract MEV using different strategies, like liquidation, arbitrage, and sandwich attacks.

MEV can be very useful for the crypto ecosystem. Why? Well, now that you know what MEV is, you know it can identify network inefficiencies. Yet, MEV also comes with certain disadvantages. For example, miners can use it to create forks, which would violate the security of the consensus layer.


What is MEV used for?

What is MEV in Ethereum?

What are the risks of MEV?