Provide a Simple Example of a Miner Extractable Value (MEV) Opportunity.
A simple MEV example is a "sandwich attack" in decentralized finance (DeFi). A miner/validator sees a large pending swap transaction in the Mempool.
They execute a small buy order just before (front-running) and a sell order just after (back-running) the large transaction. The large transaction moves the price, and the miner profits from the price difference.
Glossar
Miner Extractable Value
Arbitrage ⎊ Miner Extractable Value, within cryptocurrency markets, represents the profit potential available to actors capable of identifying and exploiting temporary discrepancies in asset pricing across different exchanges or decentralized finance (DeFi) protocols.
Flashbots Relay
Architecture ⎊ Flashbots Relay represents a Private Transaction Pool (PTP) infrastructure designed to mitigate Miner Extractable Value (MEV) within blockchain networks, primarily Ethereum.
Decentralized Finance
Architecture ⎊ Decentralized Finance, within the cryptocurrency ecosystem, represents a paradigm shift in financial infrastructure, moving away from centralized intermediaries towards peer-to-peer systems leveraging blockchain technology.