MEV

MEV (Maximal Extractable Value) is profit you can earn by controlling the order, inclusion, or exclusion of transactions in a block. Because block producers choose what goes in and in what order, they (or searchers who pay them) can insert, reorder, or censor transactions for profit. The three main flavours: arbitrage — two DEXes have different prices, a bot closes the gap within a block and pockets the spread; sandwich — a bot sees your pending large swap, front-runs it to push the price up, lets yours execute at the worse price, then sells behind it; liquidations — in lending protocols, bots race to liquidate undercollateralised positions for a bounty. The economy is huge — billions extracted since 2020 — and much of DeFi's engineering now revolves around managing or reducing MEV (Flashbots, MEV-Boost, private mempools, batch auctions like CoW Protocol). See also arbitrage and flash loans.