What is MEV?

Have you ever tried to buy a hot NFT or a trending token, only to see the price suddenly skyrocket right before your transaction goes through? That’s not bad luck, it’s often due to MEV (Maximal Extractable Value).

MEV is the extra profit that blockchain validators (miners and stakers) or bots can extract from transactions by reordering, inserting, or censoring them. Think of it as a VIP trader cutting in line to buy a stock before you and selling it back at a higher price.

How MEV Works in the Real World

Imagine Emma is trying to buy 100 ETH worth of a new token at $1 per token. As soon as she submits her transaction, a bot detects it and jumps ahead by:

1. Placing a buy order before Emma, increasing the token price to $1.10.

2. Emma’s transaction goes through, but now she’s buying at the higher price.

3. The bot instantly sells its tokens back, making a quick $1,000 profit.

This is called a “sandwich attack,” and it happens every day in DeFi trading.

Types of MEV Strategies

• Front-running: Bots detect profitable trades and copy them before the original trader.

• Arbitrage: MEV bots find and exploit price differences across different exchanges.

• Liquidation Sniping: MEV traders outbid others to profit from liquidations on lending platforms.

The Risks of MEV

While some MEV strategies are fair (like arbitrage), others create unfair trading environments, making it harder for regular users to profit. To protect yourself:

• Use private transactions on platforms like Flashbots.

• Trade on DEXs with MEV protection like CowSwap.

Final Thoughts

MEV is an invisible force that shapes crypto markets, with bots and validators making billions by rearranging transactions. Understanding MEV helps you avoid unnecessary losses and trade smarter.