BlockchainMar 28, 2026

Deep EVM #13: What Is MEV — Extractable Value, Searchers, and Block Builders

Engineering Team

Defining MEV

Maximal Extractable Value (MEV) is the maximum profit a block producer can extract by including, excluding, or reordering transactions within a block. Originally called “Miner Extractable Value” in the proof-of-work era, the term was updated after Ethereum’s merge to proof-of-stake.

The concept is simple: whoever controls transaction ordering controls profit opportunities. If Alice submits a large DEX trade that will move a token price by 5%, anyone who sees that pending transaction can place their own trades before and after Alice’s to capture the price difference.

MEV is not a bug — it is an inherent property of any system where transaction ordering matters.

Types of MEV

Arbitrage

The purest form of MEV. When the same asset trades at different prices on two DEXes, a searcher buys cheap on one and sells expensive on the other, pocketing the difference.

Pool A: 1 ETH = 2000 USDC
Pool B: 1 ETH = 2050 USDC

Searcher:
1. Flash loan 10 ETH
2. Sell 10 ETH on Pool B → receive 20,500 USDC
3. Buy 10.25 ETH on Pool A with 20,500 USDC
4. Repay flash loan (10 ETH)
5. Profit: 0.25 ETH minus gas

Arbitrage is generally considered beneficial — it equalizes prices across venues, improving market efficiency. The profit comes from the price discrepancy, not from any user’s loss.

Sandwich Attacks

The most controversial form of MEV. A searcher detects a large pending swap and places two transactions around it:

Front-run: Buy the token before the victim’s trade, pushing the price up.
Victim’s trade: Executes at a worse price due to the front-run.
Back-run: Sell the token after the victim’s trade at the inflated price.

Mempool: Alice wants to buy 100 ETH (slippage tolerance: 2%)

Searcher:
1. Buy 50 ETH at $2000 → price moves to $2020
2. Alice's tx executes: buys 100 ETH at $2020 → price moves to $2060
3. Sell 50 ETH at $2060 → profit: $3000 minus gas

Alice paid $2020 instead of $2000 — lost $2000 in value.

Sandwich attacks extract value directly from users. They are the primary argument for MEV mitigation mechanisms.

Liquidations

Lending protocols (Aave, Compound) allow users to borrow against collateral. When the collateral value drops below the liquidation threshold, anyone can repay part of the debt and claim the collateral at a discount (typically 5-15%).

Searchers monitor on-chain positions and submit liquidation transactions the instant a position becomes eligible. Speed matters — the first liquidator gets the profit.

Just-In-Time (JIT) Liquidity

A more sophisticated strategy: a searcher detects a large swap about to hit a Uniswap V3 pool, mints a concentrated liquidity position in the exact tick range the swap will traverse, earns the swap fees, and immediately removes the liquidity — all in the same block.

This provides better execution for the swapper (deeper liquidity) while the JIT provider earns outsized fees from a single block.

NFT MEV

Rarer but growing: sniping underpriced NFT listings, front-running popular mints, or arbitraging across NFT marketplaces.

The MEV Supply Chain

Post-merge Ethereum has a structured MEV supply chain:

Searchers

Searchers are the entities that identify MEV opportunities. They run bots that:

Monitor the mempool for pending transactions.
Simulate execution against current state to identify profitable orderings.
Construct bundles of transactions that extract the MEV.
Submit bundles to block builders.

Searchers compete fiercely. The barrier to entry is technical skill (writing efficient bots, understanding protocol mechanics) and capital (flash loans, gas bidding).

Block Builders

Block builders receive bundles from multiple searchers and construct the most profitable block possible. They solve an optimization problem: which bundles to include, how to order them, and how to resolve conflicts (two bundles that touch the same pool).

Top builders include Flashbots Builder, BeaverBuild, Titan, and Rsync. They compete by offering the highest payment to proposers.

Proposers (Validators)

Proposers are Ethereum validators selected to propose the next block. Under Proposer-Builder Separation (PBS), proposers do not build blocks themselves — they receive pre-built blocks from builders via MEV-Boost and select the one with the highest bid.

This separation is crucial: it prevents validators from needing sophisticated MEV extraction software, keeping the validator set accessible.

Relays

Relays sit between builders and proposers. They verify that builders’ blocks are valid and that the promised payment will actually be delivered. Top relays: Flashbots Relay, bloXroute, Ultrasound, Agnostic Gnosis.

Searcher → Bundle → Builder → Block → Relay → Proposer → On-chain

MEV-Boost and Proposer-Builder Separation

MEV-Boost is the middleware that implements PBS on Ethereum. Over 90% of Ethereum blocks are now built through MEV-Boost.

The flow:

Builders construct blocks and submit them to relays with a bid (ETH payment to the proposer).
Relays validate the block and hold it in escrow.
When a proposer’s slot arrives, they query all connected relays for the highest bid.
The proposer signs the block header (committing to it without seeing the contents).
The relay reveals the full block body.
The block is propagated to the network.

This design prevents proposers from stealing MEV (they commit before seeing the block contents) and prevents builders from submitting invalid blocks (relays verify).

Flashbots: The MEV Ecosystem

Flashbots is an R&D organization that has shaped the MEV landscape:

Flashbots Auction (v0.1-0.5): The original private transaction pool. Searchers submit bundles to miners/validators privately, avoiding the public mempool. Payment is via coinbase transfer (direct payment to the block producer).
Flashbots Protect: An RPC endpoint for regular users that routes transactions through Flashbots’ private mempool, protecting them from sandwich attacks.
MEV-Share: A protocol where MEV is partially redistributed to the users whose transactions created the opportunity. Searchers still extract MEV, but users receive a kickback.
SUAVE (Single Unified Auction for Value Expression): An ambitious upcoming protocol for decentralized block building, aiming to remove the trust assumptions in current MEV infrastructure.

Ethical Considerations

MEV is a contentious topic:

Arguments for MEV extraction:

Arbitrage improves market efficiency and price discovery.
Liquidations maintain DeFi protocol solvency.
MEV payments to validators improve Ethereum’s economic security.
The MEV supply chain is meritocratic — anyone can become a searcher.

Arguments against:

Sandwich attacks are a direct tax on users.
MEV creates centralization pressure (sophisticated builders dominate).
The “dark forest” of the mempool creates an adversarial user experience.
Gas priority auctions waste blockspace and raise costs for all users.

Mitigation approaches:

MEV-Share: Redistribute profits to users.
Encrypted mempools: Hide transaction contents until ordering is committed (threshold encryption).
Batch auctions: Execute all trades at a single clearing price (CoW Protocol).
Application-level protection: Slippage limits, private RPCs, commit-reveal schemes.

MEV by the Numbers

As of early 2026:

Total MEV extracted on Ethereum: >$1.5 billion (cumulative since 2020)
Daily MEV: $2-10 million depending on market volatility
Over 90% of blocks built via MEV-Boost
Top searchers operate fleets of hundreds of bots
Average arbitrage profit: $50-500 per opportunity (before gas)
Sandwich attacks: declining due to Flashbots Protect and MEV-Share adoption

Summary

MEV is the economic engine hidden beneath Ethereum’s surface. Searchers find opportunities, builders construct optimal blocks, proposers select the highest-bidding block, and relays ensure honesty. Understanding this supply chain is prerequisite for anyone building MEV systems — or defending against them. In the next article, we will start building: constructing an arbitrage cycle finder using depth-first search on a pool graph.