MEV is the value that block producers or transaction sequencers can extract by reordering, inserting, or censoring transactions.
MEV arises when transaction ordering affects outcomes. Actors exploit arbitrage, liquidation priority, or sandwiching by influencing inclusion and position within blocks.
"A sequencer reorders trades to insert its own buy before a large market order and a sell after it, capturing spread from price impact."
"Liquidation bots compete to capture fees by reacting fastest to collateral shortfalls, bidding for inclusion priority."
Mitigations include private orderflow, batch auctions, encrypted mempools, and protocol changes that reduce harmful ordering games while preserving useful arbitrage.
"Batching orders and clearing them at a single price removes incentives for sandwich attacks."
"Encrypted or private mempools limit visibility of pending transactions to reduce predatory reordering."
All terms and definitions may update as the Cryptionary improves.