What is MEV? Why is MEV so relevant after the Ethereum merge?

MEV: “Maximal Extractable Value”. To understand MEV and its relevance post Merge, you must first grasp who will perform block confirmations on the network. While Proof-of-Work (PoW) $ETH relies on miners to secure the network, Proof-of-Stake (PoS) $ETH will rely on “validators”.

In both consensus processes, pending transactions are held in the network’s “visible waiting area” known as the “Mempool”. Transactions will sit until a miner or validator selects them, orders them and creates a block out of the information.

Image displaying a waiting room with chairs

Image displaying a waiting room with chairs

Once complete, that block is then validated by nodes in a network and added to the official chain. When the pending transactions sits in that mempool, miners and validators have found ways to profit from them by including, excluding or reordering transactions in a block.

This strategy is the maximal (formerly miner) extractable value (MEV). In other words, MEV can be viewed as an “invisible tax” that miners/validators can collect from users. Think of it as the maximum value a miner can extract from moving around transactions when producing a block on a blockchain network.

Over the next little while we will begin to see more and more activity. Competition between block building protocols, validators and former miners will all be present as they aim to take hold of this market

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