What Is ‘Maximal Extractable Value’ (MEV) and How Does It Relate to Arbitrage on Blockchains like Ethereum?

Maximal Extractable Value (MEV), formerly known as Miner Extractable Value, refers to the maximum value that can be extracted from block production in excess of the standard block reward and gas fees. This is achieved by reordering, inserting, or censoring transactions within a block.

Arbitrage is a primary form of MEV. 'Searchers' identify arbitrage opportunities (e.g. on a DEX) and submit transactions to capture them.

Block builders can then order these transactions in a way that maximizes their own profit, often by front-running the original arbitrageur or executing the trade themselves.