MEV EXPLAINED

Summary from the TLDR Crypto newsletter

Maximal Extractable Value (MEV) is the profit block producers and searchers capture by strategically ordering, including, or excluding transactions beyond standard rewards, arising from information asymmetries in public mempools. Common forms include frontrunning lottery claims, backrunning AMM arbitrage, sandwich attacks on trades, and speculative transaction retries at low fees. Unchecked MEV can drive up gas costs through spam, incentivize consensus-layer forks, and centralize power among proficient extractors. Mitigation approaches range from offchain and order-flow auctions and single-slot finality to application-specific designs, fair-ordering protocols, and encrypted mempools, helping align incentives and reduce harmful externalities.