The concept of MEV originates from the structural design of blockchains where transaction ordering rights confer economic opportunities to block producers independent of protocol incentives such as gas fees or block rewards.
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MEV is sometimes referred to as an ‘invisible tax’ that miners can collect from users – essentially, the maximum value a miner can extract from moving around transactions when producing a block on a blockchain network
MEV first gained attention during the early years of Ethereum when miners could order transactions within blocks to extract additional profits. As decentralized finance grew, so did the opportunities for MEV, with increasingly sophisticated strategies deployed to capture arbitrage opportunities or exploit price movements in decentralized exchanges
The activity was first predicted in 2014 by an algorithmic trader under the pseudonym Pmcgoohan, who warned that miners could quietly rearrange transactions in a mempool for personal gain
Related topics
Maximal Extractable Value (MEV)
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Crypto
Data block
