Builder Extractable Value

Definition ∞ Builder Extractable Value, or BEV, represents the profit that block builders can obtain by reordering, including, or censoring transactions within a block. This value is distinct from traditional transaction fees and arises from opportunities like arbitrage, liquidations, and sandwich attacks in decentralized finance. BEV is a consequence of a builder’s privileged position in determining the final sequence of transactions on a blockchain. It influences network efficiency and fairness.
Context ∞ The discussion surrounding Builder Extractable Value is a prominent topic in blockchain research and development, particularly concerning its impact on transaction costs and network decentralization. A critical debate involves designing mechanisms to mitigate the negative effects of BEV, such as centralized block production and unfair user outcomes. Future developments include proposals for more equitable value distribution and transparent block construction processes, aiming to reduce opportunities for exploitative practices.