MEV internalization is the practice where a block producer captures Maximal Extractable Value for themselves rather than allowing external actors to extract it. This occurs when validators or block proposers directly execute profitable transaction ordering strategies, such as arbitrage or liquidations, within the blocks they create. By internalizing these opportunities, they retain the value that would otherwise go to specialized MEV searchers. This practice can increase a validator’s revenue and reduce the visibility of MEV to external parties.
Context
MEV internalization is a critical discussion point in the ongoing evolution of blockchain transaction ordering and validator economics. News often highlights the implications for network decentralization and fairness, as it can concentrate MEV profits among a smaller group of sophisticated block producers, potentially affecting network security and user experience.
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