What Is ‘Maximum Miner Extractable Value’ (MEV)?
MEV is the profit miners or validators can extract by arbitrarily including, excluding, or reordering transactions within the blocks they produce. This value is typically extracted through arbitrage opportunities, liquidations, or front-running trades.
It represents an unseen cost to users and a potential source of network centralization.
Glossar
Arbitrage
Exploitation ⎊ Arbitrage, within cryptocurrency, options, and derivatives, represents the simultaneous purchase and sale of an asset in different markets to capitalize on transient price discrepancies, effectively a risk-free profit opportunity.
Mev
Extraction ⎊ Maximal Extractable Value, or MEV, refers to the profit that can be extracted by block producers through their ability to reorder, insert, or censor transactions within a block.
Decentralized Finance
Architecture ⎊ Decentralized Finance, or DeFi, fundamentally reimagines traditional financial infrastructure through blockchain technology, specifically leveraging smart contracts to automate and execute financial agreements without intermediaries.
Validators
Role ⎊ Validators are the network participants, typically in Proof-of-Stake systems, responsible for verifying the correctness of new transactions and proposing new blocks to be added to the blockchain ledger.
Miners
Validation ⎊ The term "Miners," within cryptocurrency contexts, fundamentally denotes entities responsible for validating and adding new transaction records to a blockchain.