2025-08-30
Under the seemingly fair and transparent trading system of decentralized finance (DeFi), there exists a phenomenon called Miner Extractable Value (MEV), which quietly affects the market order and the interests of participants. MEV is not the traditional transaction income, but the value of miners or block builders using control over the order of transaction packaging to manipulate transactions to obtain additional profits. So, what exactly is MEV? How does it work? And what impact will it bring to the DeFi ecosystem?
MEV refers to the additional value obtained by miners or block builders when packaging blockchain transactions by adjusting the transaction order, inserting or reorganizing transactions. In blockchain networks such as Ethereum that use Proof of Work (PoW) or Proof of Stake (PoS), miners or validators are responsible for packaging transactions to be confirmed into blocks. As DeFi protocols are mostly based on smart contracts for automatic execution, subtle changes in transaction order can lead to different economic outcomes. For example, in decentralized exchanges (DEXs), when there is a price difference in the market, the subject that executes a specific transaction first can use price fluctuations for arbitrage, and this additional profit is MEV. With the prosperity of the DeFi ecosystem, the forms of MEV are becoming more and more diverse, including arbitrage, clearing, sandwich attacks, etc., gradually becoming an important factor affecting market fairness.
The operation of MEV relies on the blockchain transaction packaging mechanism and the characteristics of the DeFi protocol. Firstly, blockchain adopts the "first come, first served" transaction confirmation principle, but there is a time window before the transaction is packaged. Arbitrageurs can discover potential profit opportunities by monitoring unconfirmed transactions in the network. For example, when observing a large buy order, arbitrageurs quickly purchase tokens at a low price on other platforms, and then sell the tokens to the original trader at a high price through preemptive trading, completing a sandwich attack. Secondly, miners or block builders can selectively prioritize packaging specific transactions, charge higher gas fees, and even cooperate with arbitrageurs to share profits. In addition, with the popularity of MEV search robots (Bot), automated tools can scan the entire network transactions in real time, quickly capture and execute MEV opportunities, further intensifying the competition of MEV. HashKey Exchange continuously pays attention to the operation mechanism of MEV when optimizing DeFi services, and reduces the negative impact of MEV on user transactions through technical means and strategic adjustments.
MEV has had a dual impact on the DeFi ecosystem. On the one hand, MEV incentivizes arbitrageurs to promote market price discovery and liquidity improvement. On the other hand, frequent MEV transactions may lead to skyrocketing Gas fees, increased user transaction costs, and even market manipulation risks. To alleviate these problems, the industry has proposed various response strategies. Technically, by building MEV-aware blockchain protocols, such as Ethereum's Proposer-Builder Separation (PBS) mechanism, block proposals and constructions are separated, reducing the power of miners to directly manipulate transactions. At the community level, it promotes the establishment of fair transaction sorting rules and fee allocation mechanisms to limit malicious MEV behavior. HashKey Exchange follows the progress of MEV research and explores how to balance market efficiency and security while ensuring the fairness of user transactions. When users participate in DeFi transactions, they also need to be vigilant about the latent risks brought by MEV, choose a safe and reliable trading platform, and set trading parameters reasonably.