Maximal Extractable Value (MEV) has become an essential aspect of the Ethereum ecosystem and various other blockchain platforms. MEV allows users to extract value from transactions by rearranging them differently into a block. One tool that has made it easy to explore this fascinating world is EigenPhi, a user-friendly dashboard that provides insights into what’s happening on the MEV side of Ethereum and Binance Smart Chain.
The simplest example of MEV is a sandwich transaction. When you want to swap a token on one exchange, you send the transaction, and another person comes in and buys the token before you and sells it directly after you, profiting from the small change in price. MEV also includes other strategies like liquidations and arbitrage between different decentralized exchanges (DEXs).
MEV, or Miner Extractable Value, has become an increasingly important concept in the Ethereum ecosystem. MEV refers to the amount of value that miners can extract from the Ethereum network by manipulating transactions in the mempool. This manipulation can take many forms, including liquidations, flash loans, and sandwich attacks. In this blog post, we’ll explore what MEV is, how it works, and how you can get started.
What is MEV?
MEV is the amount of profit that miners can extract from the Ethereum network by reordering transactions in the mempool. Miners have the ability to choose which transactions to include in the next block and in what order. This means that they can prioritize transactions that offer the most profit, even if it means manipulating the order of transactions to do so.
MEV is not a new concept, but it has become more prominent in recent years as the popularity of DeFi (Decentralized Finance) has grown. DeFi protocols often rely on complex interactions between smart contracts, which can create opportunities for MEV extraction.
Examples of MEV
There are several ways that miners can extract MEV from the Ethereum network. Here are a few examples:
- Liquidations: In decentralized lending protocols like MakerDAO, users can borrow stablecoins like DAI by putting up collateral in the form of another cryptocurrency, such as Ethereum. If the value of the collateral drops too much, the position is liquidated, and the collateral is sold to repay the loan. Miners can manipulate the order of transactions to take advantage of these liquidations and profit from them.
- Flash Loans: Flash loans are loans that are taken out and repaid within a single transaction. They are often used in arbitrage opportunities, where traders take advantage of price differences between different exchanges. Miners can manipulate the order of transactions to intercept these flash loans and profit from them.
- Sandwich Attacks: A sandwich attack is a type of front-running, where a miner places their own transaction in between two other transactions to take advantage of a price change. For example, a miner could see that someone is about to buy a large amount of a token on an exchange, so they place their own buy order just before the other transaction goes through. They can then sell the token back to the original buyer at a higher price, profiting from the price difference.
Sandwich Examples with Jared from Subway
JaredfromSubway.eth is making 50 ETH every 2 hours with his MEV bot (or that’s his turn over; profits are lower). He uses sandwiching to buy before you and sell right after you profiting a small % every time. Memecoin season made Jared millions of dollars and in this video I analyze what he does.
Here’s a bunch of useful links about Jared:
You can use Eigenphi to find new MEV bots and arbitrages they are doing.
EigenPhi: A Dashboard for MEV Research
EigenPhi provides a clean and intuitive user interface to help users visualize and understand data related to MEV. With this tool, you can see how people are profiting from different MEV strategies, such as arbitrage and liquidations. MEV is highly competitive, and EigenPhi allows you to see the extent to which people are willing to go to make a small profit.
Competitiveness of MEV
While MEV can be profitable, it’s essential to note that it is incredibly competitive, especially on Ethereum. It can be challenging for newcomers to enter this space, but smaller chains may still offer opportunities. EigenFi makes it easier to understand and visualize the data, making it a valuable tool for anyone looking to explore MEV.
Flash loans are another exciting aspect of the DeFi world, where users can borrow money from a protocol and return it in the same block without any collateral. People often use flash loans to profit from liquidations or MEV strategies like arbitrage.
The MEV Community
There is a growing community of researchers and enthusiasts behind MEV, and many resources are available for those looking to dive deeper into the technical aspects of this emerging field.
If you’re interested in exploring MEV, there are several resources available to help you get started.
Flashbots is a research and development organization that is focused on MEV extraction. They offer a range of tools and resources for developers who want to explore MEV.
EigenPhi is a fantastic tool for anyone interested in exploring the world of MEV. It provides a clean and user-friendly dashboard to visualize and understand the data behind various MEV strategies. If you’re interested in learning more about MEV, EigenPhi is a great starting point.
How to run MEV bot?
There is no easy way to deploy an MEV bot on Ethereum. Don’t trust anyone that tries to convince you that you only have to run this code and it will bring you a lot of revenue. MEV is a hard game, where you have to constantly upgrade your code to stay competitive. You won’t make any money with MEV in short time. It’s a long and painful road.
As much as we can admire Jared from Subway and other MEV searchers, building and deploying your own MEV bot is a hard technical task. Approach only if you have technical prowess and you’re ready for some hard challenges.
If you really want to create your own MEV bot, check out my video about using ChatGPT to start with MEV: