MEV WAS A BUG. THEN IT BECAME A BUSINESS. NOW IT'S A TAX

Summary from the TLDR Crypto newsletter

MEV evolved from an initial design flaw that allowed transaction ordering to affect blockchain state into a systematized value extraction mechanism. Over $1.1 billion has been siphoned from Ethereum users since the Merge through block builders and searchers. Rather than solving the problem, Layer 2 rollups created new centralized extraction points through sequencer control, with networks like Base generating an estimated $50-200 million annually and major L2s capturing tens of millions from transaction ordering privileges. The economic incentives have created a permanent "invisible VAT" on DeFi interactions, where centralized sequencers have no motivation to decentralize due to the massive revenue streams from controlling transaction flow. This represents the entrenchment of value extraction at the infrastructure layer, where owning transaction ordering mechanisms has become a highly profitable rent-seeking business model with little accountability or competition.