What is Maximal Extractable Value (MEV)?

Maximal Extractable Value (MEV) is one of those crypto terms that’s gained a lot of attention over the past few years, especially within Ethereum and the broader decentralized finance ecosystem. However, it’s not always easy for non-DeFi enthusiasts to understand.

In simple terms, MEV is the additional profit that block producers can potentially earn by deciding which transactions to include in a block and which to not include. This maneuver can lead to huge gains — but, in some cases, it can also spark controversy.

A 2019 Paper Changed Everything

Back in 2019, the paper Flash Boys 2.0 revealed that Ethereum miners were already manipulating DeFi trades for profit. That sparked public awareness, and the term “Miner Extractable Value” was coined.

When Ethereum switched to Proof-of-Stake in September 2022 with its major Merge upgrade, nothing changed significantly about MEV, except the name: it became Maximal Extractable Value, as validators, not miners, were now calling the shots. MEV remained, but the players evolved.

Here’s a snapshot of the scale:

• Pre-Merge (Dec 2019–Sep 2022): About $675 million was extracted in MEV.
• Post-Merge (Sep 2022–Jun 2024): Validators nabbed around 526,000 ETH, equivalent to nearly $686 million by mid‑2024.

How MEV Works

Every transaction waits in the mempool, a publicly visible queue, before it lands in a block. Normally, whoever pays the highest gas fee wins. But when MEV enters the mix, MEV bots dive into that queue hunting for profitable opportunities.

Example of how an MEV bot can profit from price discrepancies between trading pairs on different DEXs

They reorder transactions, add their own, or cause yours to be dropped. Maybe they spot a token priced at $100 on one DEX and $102 on another, run the trade, pocket the difference, and move on. They can do the same with under-collateralized loans, jumping in to profit from a liquidation just as it’s about to happen.

But then came the more murky plays: front-running—slipping ahead of your transaction; sandwich attacks, where they buy just before you and sell right after your trade goes through; even “generalized front-running,” where bots copy profitable patterns in your trades and beat you to execution.

These tactics hit users with stealthy price slippage, a kind of invisible fee. Bots win, traders lose.

When MEV Becomes a Problem

More MEV means bigger rewards, but also bigger risks. In 2024, an analysis of Ethereum’s MEV-Boost revealed that three builders produced over 80% of the blocks within a six-month period. Technically, that’s not decentralization, but control.

But it gets worse: when MEV money outweighs block rewards, validators can get tempted. Chain reorganizations, censorship, and delayed blocks — are all possible. The system’s consensus can get shaky.

Outside the on-chain landscape, global regulators also appear divided on how to treat the shadowy practice of MEV.

As The Defiant reported earlier, a consultation paper from the EU Securities and Markets Authority even hinted that MEV could be considered market manipulation. In the paper, the lawmakers explicitly described MEV as an example of “market abuse.”

“MEV whereby a miner/validator can take advantage of its ability to arbitrarily reorder transactions to front-run a specific transaction(s) and therefore make a profit… may suggest the existence of market abuse,” the paper noted.

Yet, the U.S. judicial system has taken a narrower stance. A 2024 indictment charging two brothers with stealing $25 million through MEV-related exploits focused on fraudulent manipulation — specifically, using invalid signatures to bypass MEV protocols — rather than on MEV activities themselves, such as transaction reordering or sandwich attacks.

Experts say this indicates that U.S. authorities view MEV as a tool, rather than a crime, unless it’s used in a clearly fraudulent manner.

Vitalik Proposes a Fix

Ethereum is working on a solution called “proposer-builder separation.” This separates the task of building blocks from the task of proposing them. Builders assemble blocks and send them to proposers, who then select the most profitable one without knowing the details contained within.

As Ethereum’s co-founder Vitalik Buterin explained, the idea of proposer-builder separation is to “separate the roles of producing a block and proposing a block, making it so that the block proposer does not have to see the contents of the block.”
He also warned that if builders are completely cut out, it might lead to censorship. That’s why he supports inclusion lists, which require proposers to include certain transactions and prevent them from leaving some out solely to increase profit.

What’s Next

MEV isn’t going anywhere, at least in the foreseeable future. As of press time, it’s baked into how DeFi and blockchain markets work. But the goal now is containment.

Ethereum Roadmap – Vitalik Buterin

Ethereum is set to integrate PBS directly into the protocol via ePBS, or enshrined Proposer-Builder Separation, using EIP‑7732, part of the upcoming Scourge upgrade in the broader “Splurge” roadmap phase. Yet, the exact timeframe remains unclear.

The goal is to transform MEV from an unfair tax into a managed incentive; one that is transparent, fair, and does not lead to censorship or centralization.

As Vitalik summed up in his Endgame blog post, the crypto community will eventually get a chain “where block production is centralized, block validation is trustless and highly decentralized, and specialized anti‑censorship magic prevents the block producers from censoring.”

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