// GLOSSARY -- DEFI

What is Maximal Extractable Value?

1 min read Updated

Maximal Extractable Value (MEV) is the maximum value that can be extracted from block production beyond standard rewards — through transaction reordering, inclusion, or exclusion by block producers.

WHY IT MATTERS

MEV encompasses all profit available to block producers from their ordering power. Originally called 'Miner Extractable Value' (PoW era), it was renamed to 'Maximal' as it applies to any block producer.

The MEV supply chain: searchers identify opportunities → builders construct optimal blocks → proposers select the highest-value block. This separation (proposer-builder separation or PBS) is now standard on Ethereum through MEV-Boost.

MEV is a complex topic — some extraction (arbitrage) improves market efficiency, while other forms (sandwich attacks) purely extract value from users. The industry is actively developing mechanisms to minimize harmful MEV while preserving beneficial price correction.

FREQUENTLY ASKED QUESTIONS

Is MEV unique to Ethereum?
No — any blockchain with flexible transaction ordering has MEV. The mechanisms differ (Solana's MEV works differently due to its block production model) but the economic forces are universal.
What is MEV-Boost?
A protocol that separates block building from block proposing. Validators (proposers) select the most valuable block from specialized builders, creating a competitive marketplace for block construction.
Can MEV be eliminated?
Probably not entirely. MEV arises from information asymmetry and ordering power — fundamental to any transaction processing system. The goal is to minimize harmful extraction and redistribute value.

FURTHER READING

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