The MEV Supply Chain describes the sequence of participants and processes involved in identifying, extracting, and distributing maximal extractable value from blockchain transactions. This chain typically includes searchers who identify profitable opportunities, builders who construct blocks containing these opportunities, and proposers who ultimately add the blocks to the blockchain. Each actor in this sequence seeks to gain from the reordering, insertion, or censorship of transactions. The supply chain illustrates the economic forces at play in transaction ordering.
Context
Discussions about the MEV Supply Chain are central to understanding the economic dynamics and potential centralization risks within proof-of-stake blockchains, particularly Ethereum. Efforts to democratize MEV or mitigate its negative externalities, such as proposer-builder separation, are frequently reported. News often covers the profitability of MEV extraction, its impact on network fairness, and proposed solutions to distribute its value more broadly among network participants.
A novel agent-based simulation models the two-sided PBS market, revealing a dynamic equilibrium between builders and searchers based on transaction conflict probability.
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