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Conclusion - MEV Is a Structural Cost of Blockchains
MEV (Maximal Extractable Value) is the total profit that block producers (validators) can extract by manipulating the ordering of transactions within a block. DEX swaps, lending protocol liquidations, NFT mints, and virtually any on-chain transaction can be subject to MEV extraction. For ordinary users, MEV functions as an invisible transaction cost. According to Flashbots data, over USD 600 million in MEV was extracted on Ethereum cumulatively from January 2020 through the end of 2023.
Frontrunning
Frontrunning involves observing unconfirmed transactions in the mempool and inserting one's own transaction ahead of them. For example, if a user submits a transaction to buy a large amount of ETH on a DEX, an MEV bot purchases the same token before the user's transaction and sells after it executes, capturing the price difference. The user ends up with a worse execution price than they would have otherwise received, and that difference is extracted as MEV. Even after Ethereum's transition to PoS, the block proposer retains authority over transaction ordering, so the structural basis for frontrunning remains unchanged.
Sandwich Attacks
A sandwich attack is an evolution of frontrunning that brackets the target transaction. The attacker: (1) places a buy order before the target to push the price up, (2) the target executes at the inflated price, then (3) the attacker immediately sells to lock in profit. The target's slippage tolerance (e.g., 0.5%) sets the upper bound on the attacker's profit. According to EigenPhi data, cumulative extraction from sandwich attacks on Ethereum mainnet reached approximately USD 200 million in 2023. User countermeasures include: (1) setting slippage tolerance to the minimum necessary, (2) using private mempools (Flashbots Protect, etc.) to avoid exposing transactions to the public mempool, and (3) using DEX aggregators with MEV protection features.
Liquidation MEV
DeFi lending protocol liquidations are also a major source of MEV. The first entity to liquidate a position with Health Factor below 1 receives the liquidation bonus (5-10%), so MEV bots compete constantly. Liquidation MEV differs from frontrunning in that it contributes to protocol health by ensuring liquidations execute promptly, preventing bad debt. However, intensified liquidation competition drives up gas fees, crowding out ordinary user transactions. During the June 2022 stETH de-peg, liquidation MEV competition temporarily pushed gas fees above 1,000 Gwei.
Flashbots and PBS Mitigation
Flashbots is a research organization founded in 2021 aiming to democratize MEV and reduce its negative externalities. Flashbots Auction (now MEV-Boost) implements PBS (Proposer-Builder Separation), where block construction is delegated to specialized builders and validators simply select the highest-bidding block. This means: (1) validators no longer need complex infrastructure for MEV extraction, and (2) MEV revenue is distributed across all validators. As of 2025, approximately 90% of Ethereum blocks are built via MEV-Boost (per MEV-Boost Dashboard data). However, PBS does not eliminate MEV; it optimizes extraction efficiency and fairness of revenue distribution. The cost borne by users remains.
User Countermeasures
Practical measures for ordinary users to mitigate MEV exposure include: (1) using private RPCs such as Flashbots Protect or MEV Blocker to avoid exposing transactions to the public mempool, (2) setting slippage tolerance to the minimum necessary when swapping on DEXs, (3) splitting large trades to reduce per-transaction price impact, (4) using Layer 2 solutions (L2 sequencers currently restrict MEV extraction in many cases), and (5) using limit-order DEXs (CoW Swap, etc.). This article is intended to explain the technical mechanisms of MEV and does not recommend any specific investment decision.