The "Invisible Harvester" on the Blockchain: In-depth Analysis of How MEV Changes the Transaction Ecosystem

In blockchain transactions, there is a group of people making a lot of money through operations you can't see. They are not hackers, nor are they breaking any rules—they simply understand better than you how blocks are packaged with transactions. Welcome to the world of Maximum Extractable Value (MEV).

What is MEV? Why has it suddenly become important?

Maximum Extractable Value (MEV) refers to the strategy of obtaining additional profits by selecting, excluding, or reordering transactions during the block production process. In simple terms: whoever controls the order of transactions can arbitrage from it.

This concept was originally called “Miner Extractable Value” because it was only related to Ethereum's Proof of Work (PoW) miners. However, after Ethereum completed the merge in September 2022, transitioning from PoW to Proof of Stake (PoS), mining disappeared, and block producers were replaced by validators—but MEV did not disappear; rather, it became more widespread. Now, anyone who can participate in block ordering can benefit from it, so the term has also changed to “Maximum Extractable Value”, encompassing all network participants.

How Block Producers Profit

To understand the operational logic of MEV, you first need to understand the power of block producers. Block producers are responsible for validating transactions, packaging them into blocks, and adding them to the blockchain. This sounds simple, but the key point is: they decide which transactions go into the block and the order of these transactions.

Typically, block producers prioritize transactions with the highest gas fees. However, when it comes to DeFi transactions (lending, exchanging, derivatives), things get complicated. Block producers can include or exclude certain transactions, or even change their order, creating arbitrage opportunities, initiating front-running, or prioritizing liquidations— all of which can generate additional profits beyond regular block rewards.

Searcher: Another MEV Profit Team

But block producers are not the only beneficiaries. A group of network participants known as “searchers” is also sharing in the MEV cake.

Searchers scan the pending transaction pool by running bots, looking for profitable opportunities. After discovering opportunities for arbitrage, front-running, or liquidation, they pay extremely high gas fees to ensure their transactions are prioritized. Interestingly, depending on the level of market competition, block producers may receive gas fees from searchers that amount to up to 99.99% of their potential profits — most of the searchers' profits ultimately flow to the block producers.

Taking decentralized exchange (DEX) arbitrage as an example, seekers often pay more than 90% of their profits as gas fees just to ensure that the transaction is executed before competitors.

Three Common Strategies of MEV

Arbitrage: The Hunter of Price Differences

When the same token has different prices on different DEXs, arbitrageurs come into play. For example, if a token is priced at 100 dollars on Uniswap and only 98 dollars on other DEXs, the arbitrageurs buy the cheaper one and sell the expensive one, making a profit from the price difference.

But MEV happens here: when the searcher's bot detects that someone is about to execute this arbitrage trade, it will insert its own transaction in advance, taking away the profit.

Early Trading: Ghost Orders That Are One Step Ahead of You

Imagine someone wants to place a large buy order on a DEX, which would drive up the asset price. A seeker or block producer inserts a similar buy order before this large order, and then sells after the large order drives the price up—this is front-running.

There is also a more cunning approach called “sandwich attack”: buying before a large transaction, selling after the transaction, and simultaneously profiting from the two-way pressure of price movement.

Liquidation Hunter: Risk Acquirer in DeFi Lending

In a lending agreement, if the value of the collateral falls below a certain threshold, the position will be automatically liquidated. Smart contracts typically reward those who execute forced liquidations. Seekers or block producers compete to be the first to execute a forced liquidation transaction to seize this reward.

The Dual Impact of MEV on the Blockchain Ecosystem

The advantageous side

Supporters believe that MEV actually improves market efficiency. Arbitrageurs compete to profit from opportunities, resulting in rapid price corrections across DEXs; the liquidation mechanism ensures that lending protocols do not accumulate bad debt risks. From this perspective, MEV is a mechanism for market self-repair.

The dark side

But the problem cannot be ignored. Front-running and sandwich attacks directly harm ordinary traders—they are forced to pay higher slippage and bear additional cost losses. Searchers submit high gas fee transactions to compete for MEV opportunities, leading to soaring gas fees across the entire network and causing network congestion.

More dangerously, if the profits that can be gained from reordering transactions in the previous Block exceed the rewards and costs of producing the next Block, the Block producer has an economic incentive to perform Blockchain reorganization. This directly threatens the consensus security and transaction finality of the network.

Future Direction: The Industry is Seeking Solutions

As the issue of MEV becomes increasingly prominent, the field is now positioning the resolution of MEV-related problems as a core direction for research and development. From protocol layer optimization to application layer design, the industry is exploring how to minimize the harm of MEV to ordinary users while maintaining the integrity of the Blockchain.

Key Points: MEV is an objectively existing phenomenon on the blockchain, and understanding how it operates is important for both traders and developers. Whether you are trading in DeFi or studying blockchain mechanisms, you should recognize how this invisible market force shapes transaction costs and network dynamics.