MEV: The Invisible Tax on Ethereum
Maximal Extractable Value (MEV) is the profit that validators can extract by including, excluding, or reordering transactions in a block.
The Searcher-Relayer Ecosystem
- Searchers: Bots that find MEV opportunities (arbitrage, liquidations).
- Bundlers: Searchers group their transactions into bundles.
- Relayers: Neutral parties that pass bundles to validators via MEV-Boost.
Toxic MEV: Sandwiching
Attacker detects a user trade, front-runs with a buy, user trades at a worse price, attacker back-runs with a sell. This is a direct theft from the user.
🛠 Tactical Activity: Sandwich Impact Analysis
Objective: Calculate the "Slippage Loss" of a $1M swap.
- Scenario: A user swaps 1M USDC for ETH with a 0.5% slippage limit.
- Task: Calculate the maximum profit an MEV bot can extract by "Sandwiching" this trade to the edge of the slippage limit.