How to Earn ~9% APY with MEV Rewards in Liquid Staked ETH

Before we get started, this is not a recommendation or endorsement to buy any token mentioned.

During another rough week in the crypto markets, we saw a surge of activity in DeFi and hence more demand to transact among DeFi users, raising gas prices on Ethereum Mainnet and other L1s and L2s. Normally during a market drawdown, traders will scramble to deleverage or make other moves to capitalize on the market volatility. As markets reacted to the fall of FTX and SBF’s criminal collapse, the gas price on Ethereum rose to the highest median price in the last 90 days.

Source: Dune Analytics

Since The Merge, there’s been a revamping of economics of how Ethereum transactions are settled. MEV (maximal extractable value) is still focused on the insertion of transactions (ordering, censorship, hijacking). However, there are new actors involved in the process. While miners secured the network under Proof-of-Work before The Merge, Proof-of-Stake Ethereum relies on validators.

To participate as an Ethereum validator, one needs 32 ETH to stake. Validators propose new blocks, submit attestations (votes), and monitor for any slashable offenses (penalties). Validators are who ensure the Ethereum network is secure and healthy.

Validators receive ~1700 ETH per day split between them, which varies based on the total amount staked by all validators and thanks to EIP-1559, they receive the Priority Fees that are “tipped” via transaction activity. While the majority of MEV used to accrue to miners under PoW, now with PoS, this MEV is captured by validators.