MEV Theory

Definition ∞ MEV theory, or Maximal Extractable Value theory, describes the potential profit that block producers can gain by strategically including, excluding, or reordering transactions within a block. This extraction is possible due to the deterministic nature of blockchain transaction ordering and the transparency of the mempool. It represents a complex economic phenomenon within blockchain ecosystems.
Context ∞ MEV theory is a recurring topic in cryptocurrency news, particularly concerning its impact on network fairness and transaction costs. Discussions often focus on the emergence of MEV searchers, builders, and the potential for front-running or sandwich attacks. The development of solutions aimed at mitigating negative MEV externalities, such as MEV-Boost, is a critical area of ongoing research and implementation.