Maximal Extractable Value (MEV) is the potential profit that miners or validators can scoop up adding blocks to a blockchain. They can maximize the money they make from block creation by reordering transactions within blocks and even insert new ones. As someone has to pay for their profit, one can view MEV as a tax on users. The Ethereum community is working hard on a new and more fair system of MEV.
MEV is the basis of a small industry. Currently, around 100,000 dollars per day are squeezed from blockchain transactions by MEV bots. (see MEV-Explore). To date, over $650 million dollars of MEV has been captured. MEV is associated with Ethereum, as the MEV industry is the biggest on that blockchain.
The Dark Forest Called the Ethereum Mempool
Do terms like 'tax' and 're-ordering transactions' sound a bit boring? Make no mistake. Read the blog post Ethereum is a dark forest, the 'horror story' of a crypto enthusiast trying to rescue funds from a smart contract, hoping to escape 'monsters of the mempool'. The story of 2020 helped popularize some key concepts of MEV.
After reading the story, you will appreciate how unforgiving the Ethereum mempool (transaction queue) is: 'it's like 'a dark forest, an environment in which detection means certain death at the hands of advanced predators.'
These dark forest predators are pieces of software constructed by traders. They try to front-run profitable transactions or outright snatch funds