What is a MEV?

A tremendous amount of onchain volume and gas fees are directly related to MEV bots.

What does MEV stand for? MEV originally means Miner Extractable Value, but is also known as Maximum Extractable Value.

MEV Market

So, you might wonder, are there any MEV bots making real money? Well, there are a handful out there, and they're raking in the $ETH, The market leader is generating over $2.4 million in revenue.

But here's the kicker: that money doesn't get spread around; it mostly ends up in the pockets of a select few.

How does MEV work?

With the success of Blockchain and DeFi there is a lot of onchain activity going on. From market participants swapping one token for another to engaging in highly complex DeFi strategies. All of these transactions need to be confirmed onchain and are propagated to 'the blockchain'.

In practice this means that a user communicates it's transaction to the Ethereum nodes, which store it temporarily in "The Mempool". This is a public pool of transactions which is publicly accessible by anyone that sets up the tools. The Blockbuilders compete for the most economically efficient or productive transaction ordering and communicate these to the Validators. After the Validator has validated the block, it is added to the blockchain and the transaction is confirmed. The Mempool section is important, as it's basically shouting on a public square what you are going to buy on the market and all relevant data. Imagine shouting you are buying 10 pounds of potatos at a price of 7 per pound, whilst the current price is 5 per pound... There will be people happy to facilitate you and buy the potatoes at 5 per pound and get you your price of 7 per pound. That is what happens with a MEV bot too, it scans the mempool for these opportunities and acts upon it.

While these MEV bot have a good use in market efficiency, we feel that the market would be better of if these tools are democratized and available for anyone.