MEV stands for Maximal Extractable Value, which is the maximum value that can be retrieved by block proposers. This is achieved by changing the order of transaction, inclusion and exclusion of transactions in a block pertaining to the gas fee provided. MEV transitioned from Miner Extractable Value, utilized in PoW consensus before The Merge, to Maximal Extractable Value due to the absence of miners ,which are now replaced by validators[1].

There are numerous real-world scenarios and examples of MEV:

Arbitrage

Arbitrages in a DEX (Decentralized Exchange) represents one of the simplest and most widely recognized instances of MEV. This arbitrage occurs when two DEXs offer the same token at distinct prices. It involves buying tokens at a lower price on the first DEX and selling them at a higher price on another DEX. The actor receives the price difference as their reward.

In Figure 1, transaction 0x5e16...b3ef4 in block 11912416 comprises three steps within a single transaction. The first step involves borrowing 1000 ethers from the AAVE V2 protocol. AAVE is a lending protocol that offers the flash loan service. A flash loan is an uncollateralized loan that enables users to borrow a significant amount of money and execute various operations, with the condition that the loan must be repaid within a single transaction, or it will be reverted [@FLASHLOAN]. Subsequently, the actor utilized the borrowed asset to acquire DAI on the UniSwap V2 platform, resulting in a total of 1,293,896.75 DAI. As a final step, the acquired DAIs were exchanged for ethers on another platform, SushiSwap, yielding 1,045.62 ethers. The MEV yields a benefit of 45.62 ethers in a single transaction at a minimal cost, which comprises only the gas fee and the flash loan charge.