Introduction

What Is Mev ?

Maximal Extractable Value (MEV) refers to the maximum value that block producers or validators can extract by reordering, including, or excluding transactions in a block. MEV plays a critical role in decentralized finance (DeFi), enabling strategies such as arbitrage, frontrunning, and liquidation. However, it introduces challenges like high gas costs, centralization risks, and inefficiencies.

Transaction Supply Chain

The Transaction Supply Chain in blockchain represents the lifecycle of a transaction, from creation to inclusion in a block. Each operator plays a critical role in this process:

Mev Supply Chain Diagram

• Transaction Originator: The user or smart contract initiating the transaction. They specify the action (e.g., swap, transfer) and attach gas fees to incentivize miners or validators.

• Mempool: A temporary storage for pending transactions. It serves as a queue where validators or block builders prioritize transactions based on gas fees and potential value.

• MEV Searchers: Specialized operators analyzing the mempool to identify profitable opportunities, such as arbitrage, frontrunning, or sandwich strategies.

• Block Builders: Entities responsible for assembling transactions into blocks, often selecting those with the highest gas fees or value extracted.

• Validators/Miners: Validate and add blocks to the blockchain, ensuring consensus and network security.

• Transaction Recipients: The end user or smart contract that receives the results of the transaction, completing the supply chain.