Blockchain balance: Cryptocurrency coin balanced with a diverse user group

Decoding MEV: How Dynamic Rates Can Level the Playing Field in Crypto

Avery Sinclair in Tech & Innovation December 2025 • 4 min read.

"Explore the groundbreaking research that proposes a dynamic approach to Maximal Extractable Value (MEV) sharing, balancing the interests of block producers and users in blockchain systems."

In the fast-evolving world of blockchain and decentralized finance (DeFi), a concept called Maximal Extractable Value (MEV) has emerged as a critical point of discussion. MEV refers to the maximum value that can be extracted from block production over the standard block reward and gas fees, primarily by including, excluding, or changing the order of transactions within a block. While MEV can be a lucrative strategy for block producers, it often comes at the expense of regular users, leading to concerns about fairness and transparency.

Imagine a scenario where those who validate transactions on a blockchain (like miners or validators) have the power to cherry-pick and reorder transactions to maximize their own profits. This could involve front-running (jumping ahead of a user's transaction), sandwiching (placing transactions before and after a user's transaction to exploit price slippage), or even censoring transactions altogether. These practices, while profitable for some, can lead to increased costs and a degraded experience for everyday users of DeFi platforms.

A new study proposes a dynamic approach to MEV sharing, aiming to strike a balance between compensating block producers and ensuring a positive experience for users. This innovative mechanism involves dynamically adjusting MEV extraction rates, influencing how much value block producers can extract, with the goal of stabilizing the ecosystem and promoting long-term participation. By exploring the properties of this dynamic mechanism, researchers hope to pave the way for a more equitable and sustainable future for blockchain systems.

What is MEV and Why Should You Care?

Blockchain balance: Cryptocurrency coin balanced with a diverse user group

MEV, short for Maximal Extractable Value, represents the additional profit that blockchain validators can earn by strategically manipulating the order and inclusion of transactions in a block. It’s like finding hidden money within the blockchain transaction flow, but often, this discovery comes at a cost to the average user.

Consider this: when you make a trade on a decentralized exchange (DEX), your transaction enters a pool of pending actions. Validators can see these pending transactions and have the power to re-arrange them. This power allows them to:

Front-run your trade: By placing their transaction right before yours, they profit from the price movement caused by your trade.
Sandwich your trade: Placing transactions both before and after yours to exploit slippage, effectively squeezing extra profit.
Censor your transaction: Excluding your transaction altogether if it doesn't benefit them.

While MEV can incentivize validators and secure the blockchain, unchecked MEV extraction leads to a negative user experience. It can result in higher transaction costs, increased network congestion, and a sense of unfairness, potentially driving users away from DeFi platforms.

Towards a Fairer Blockchain Future

The research into dynamic MEV extraction rates offers a promising path towards a more balanced and user-friendly blockchain ecosystem. By dynamically adjusting how MEV is extracted and shared, it's possible to create a system where both validators and users are incentivized to participate, fostering long-term growth and stability in the DeFi space. As the blockchain landscape continues to evolve, such innovative mechanisms will be crucial for ensuring a fair and transparent experience for all.

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This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2402.15849,

Title: Mev Sharing With Dynamic Extraction Rates

Subject: cs.gt econ.th math.ds

Authors: Pedro Braga, Georgios Chionas, Piotr Krysta, Stefanos Leonardos, Georgios Piliouras, Carmine Ventre

Published: 24-02-2024

Everything You Need To Know

What is Maximal Extractable Value (MEV) and how does it impact blockchain users?

Maximal Extractable Value (MEV) is the additional profit that block producers, such as miners or validators, can earn by strategically manipulating the order and inclusion of transactions within a block. This can involve practices like front-running, sandwiching, and censoring transactions. For users, MEV can lead to higher transaction costs, increased network congestion, and a feeling of unfairness, potentially driving them away from Decentralized Finance (DeFi) platforms. It essentially means that validators are able to extract value from user transactions before, during, and after a user initiates a transaction, which negatively impacts the user experience.

What are front-running and sandwiching in the context of MEV?

Front-running occurs when a validator sees a pending transaction (like a trade on a decentralized exchange - DEX) and places their own transaction directly before it, profiting from the price movement caused by the user's trade. Sandwiching involves a validator placing transactions both before and after a user's transaction to exploit price slippage, essentially squeezing extra profit. These practices are strategies used by validators to maximize their MEV at the expense of regular users.

How can dynamic MEV extraction rates create a fairer blockchain ecosystem?

The research proposes dynamically adjusting MEV extraction rates to balance the interests of block producers and users. This means influencing how much value block producers can extract from a block. By dynamically controlling MEV, the system aims to ensure that validators are compensated, but not at the expense of the user experience. This approach could lead to a more equitable and sustainable environment where both validators and users are incentivized to participate, promoting long-term growth and stability within the Decentralized Finance (DeFi) space.

What are the potential downsides of unchecked MEV extraction?

Unchecked Maximal Extractable Value (MEV) extraction leads to a negative user experience. It can result in higher transaction costs due to front-running and sandwiching, increased network congestion as validators compete to extract value, and a general sense of unfairness. These factors can erode user trust and participation in Decentralized Finance (DeFi) platforms, potentially driving users away from the ecosystem.

How does the concept of MEV relate to block production and the roles of miners/validators?

MEV is directly linked to the process of block production on a blockchain. Miners or validators, the entities responsible for validating transactions, have the power to decide which transactions to include in a block and in what order. Their ability to manipulate transaction ordering and inclusion is the basis for MEV. By strategically ordering transactions, validators can extract MEV, which represents the additional profit they can earn beyond standard block rewards and gas fees. This highlights the critical role validators play in both securing the blockchain and the potential for conflicts of interest between validators and users.