MEV — Maximal Extractable Value

01 · Concept — what problem does it solve?

Whoever orders transactions in a block can profit from that ordering. Pending transactions sit in a public mempool, fully readable; an AMM swap's price impact is deterministic. So a searcher can compute, to the wei, the profit from inserting their own transactions around yours. MEV is the institutionalization of this: an industrial supply chain extracting value from transaction ordering rights.

02 · Sandwich attack anatomy

// three transactions, one block, exact order
1. ATTACKER BUY   push price up to victim's limit
2. VICTIM SWAP    fills at the worst tolerated price
3. ATTACKER SELL  unwind into post-victim price

profit ≈ victim_slippage_tolerance
       − 2·gas − pool_fees − builder_tip

• Enabler: the victim's slippage tolerance setting — the attacker consumes exactly that budget.

03 · Salmonella — poisoning the bots

A honeypot ERC-20 whose transfer() silently delivers ~10% of the stated amount to any address not on the deployer's whitelist. Sandwich bots simulate the front-run, see a profitable fill, execute — and receive poisoned inventory they can't sell back. The predator's own automation becomes the attack surface. Lesson: simulation results on adversarial contracts are not promises.

04 · Flashbots & the MEV supply chain

• Private relay: bundles go straight to block builders via eth_sendBundle — never touching the public mempool, so they can't be front-run; failed bundles pay nothing.
• Supply chain: searchers (find opportunities, sign bundles) → builders (assemble optimal blocks) → validators (sell their ordering rights via MEV-Boost to the highest-bidding builder).
• Consequence: ordering rights are now a transparent auction market — MEV got formalized, not eliminated. Private order flow and PFOF dynamics are re-emerging on-chain.
• Encrypted mempools shift it, don't end it: hiding transactions from searchers (threshold encryption like Shutter, or MEV-Commit) stops naive front-running — but whoever decrypts or builds the block inherits the look-ahead. Like private relays before them, they reprice ordering rights rather than abolish them.