Ethereum's Maximal Extractable Value: How It Affects Decentralized Trading
Maximal Extractable Value (MEV) refers to the value captured from block production on Ethereum beyond standard block rewards and gas fees. This includes transactions that are included, excluded, or reordered to maximize profit.
The term 'miner extractable value' was once used because miners performed this role under proof-of-work. However, with Ethereum's transition to proof-of-stake via The Merge in September 2022, the broader term 'maximal extractable value' is now used.
For users, MEV means that transactions do not exist in isolation and their position relative to other transactions can change the final price, profit, or loss. This can be seen in decentralized trading where the order of transactions affects outcomes such as price, slippage, and execution quality.