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

Key Insights

• Maximal (formerly miner) Extractable Value (MEV) is the ability for security providers to selectively insert, reorder, or censor user transaction requests during the block production process.
• While MEV can have many negative externalities, including higher costs for users, it's not all bad. MEV presents the opportunity for better liquidity, more efficient transaction routing, and higher yield for stakers.
• Today, MEV is viewed through the lens of Ethereum as this is where the majority of DeFi activity exists, but MEV also exists on other chains. MEV on Cosmos, Solana, and other popular chains is an area that is still ripe for exploration.
• MEV is a natural consequence of blockchain activity. It can be minimized, controlled, and redistributed, but it can never be fully removed from blockchains.
• MEV can be distributed as a public good if harnessed properly, but centralization concerns will have to be monitored to ensure networks retain the ethos of decentralization.

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.