What Is “Miner Extractable Value” (MEV) and How Does It Relate to Transaction Fees?
Miner Extractable Value (MEV) is the profit a miner can make by strategically including, excluding, or reordering transactions within the blocks they produce. This is a form of front-running or sandwich attacks, especially prevalent on smart contract platforms like Ethereum (pre-Merge).
MEV is a value captured in addition to the standard block reward and transaction fees. It incentivizes miners to optimize block composition for maximum profit, which can sometimes result in higher fees for regular users.
Glossar
Extractable Value
Definition ⎊ Extractable Value, commonly known as MEV, quantifies the profit a block producer can realize by including, excluding, or reordering transactions within a block beyond the standard block reward and explicit transaction fees.
Smart Contract Platforms
Infrastructure ⎊ The foundational blockchain environments, such as Ethereum or similar Layer-1s, that provide the execution layer, consensus mechanism, and decentralized state management necessary for hosting complex, stateful financial applications like derivatives protocols.
Block Composition
Composition ⎊ In cryptocurrency derivatives, options trading, and financial derivatives, block composition refers to the strategic aggregation of orders to execute a substantial trade volume without unduly influencing market prices.