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What is MEV?
MEV refers to value that block builders or block proposers can extract by including, excluding, or reordering transactions in a block.
Searchers monitor pending transactions, such as big swaps, and off-chain signals, like price changes, to find profitable, risk-free opportunities to extract value. Searchers then express preferences to builders through bundles and bribes.
Since blocks can only contain limited gas, block builders select the set of transactions from the mempool and privately submitted bundles that provide the greatest fees. Builders then use the searchers' bribes to win block auctions. And they can take profit from any bribes they don't need to pass on to validators to win the auction.
The mechanics of how MEV flows at the execution layer, while interesting, only cover what happens downstream of a proposed transaction.
Importantly, MEV is zero-sum: All extracted MEV is value lost by someone else, usually a user, and sometimes liquidity providers and protocol treasuries.