The Book of MEV: Current Landscape, Future Solutions and Key Considerations | Messari

Modern markets require intermediaries (brokers or brokerages) to aggregate and execute transactions on behalf of market participants. While blockchains decentralize the security and ownership of these intermediaries, networks still require them to execute transactions. Consequently, a blockchain’s intermediaries, in the form of security providers (miners, validators, and sequencers), become first-class citizens of the network in the same way that brokers do in traditional markets. Such a power dynamic allows a blockchain’s security providers to tax users and generate additional profits during the block production process. They do so by selectively inserting, reordering, or censoring user transaction requests. This invisible, yet ubiquitous, phenomenon is what is known as Maximal (formerly Miner) Extractable Value (MEV). MEV creates both positive and negative externalities for blockchain networks. It creates efficient markets and incentivizes proper application functionality within dist

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• Tianyu Zhou