The Mystery of MEV Definition: Why Is There Still Disagreement in the Industry Over the Understanding of Maximum Extractable Value

MEV（Maximum Extractable Value） has become a core topic in discussions around cryptocurrency and blockchain, but what is confusing is that despite this concept being popular for many years, the industry has yet to reach a consensus on its formal definition. From lively discussions on Twitter to in-depth academic research, voices about MEV are numerous, yet they reflect an awkward reality: we seem to lack a universal, widely accepted framework for defining MEV.

From Flashbots Paper to Today: The Evolution of the MEV Concept

In 2019, researchers including Phil Daian first introduced the concept of “Miner Extractable Value” in the paper “Flashboys 2.0,” marking an academic naming of the phenomenon of value extraction in blockchain. The initial definition was relatively straightforward: MEV refers to the value that miners can extract through transaction reordering, censorship, or insertion.

Subsequently, the launch of the Flashbots platform brought MEV from academic discussion into practical application, spawning an economic system spanning multiple blockchains and centralized exchanges, with a scale reaching billions of dollars. The hype around MEV soared, but it also exposed issues with unclear definitions—different researchers, projects, and traders have markedly different understandings of MEV. Some believe arbitrage is not part of MEV, others have entirely different boundaries for what constitutes MEV. These cognitive differences are hindering the development of theory in this field.

The Weaknesses of Existing MEV Definitions: Who Exactly Is the “Player”?

Recent studies like Clockwork Finance attempt to formalize MEV with more rigorous mathematical definitions, introducing concepts such as state and block sequences, seemingly solving some issues. However, a closer look reveals critical flaws.

First, current definitions tie MEV to specific “players”—for example, if a participant holds an airdrop to be claimed, their extractable value appears higher than others. This directly contradicts the original intention of “permissionless extraction,” since MEV’s value extraction should be independent of a player’s initial assets.

Second, the concept of “player” itself is ambiguous: it can refer to the transaction signer (with an account and balance), the protocol participant (with or without block proposal rights), or network-level node operators (affected by network latency, with a unique mempool view). These identities are conflated in existing definitions, leading to a logically inconsistent framework.

How to Improve the MEV Definition: From Player Dependency to True Permissionlessness

To develop a more rigorous definition of MEV, the first step is to separate the issues of “extractable value” and “player permissions.” An improved approach is to define MEV as the minimum value that different players can extract once they gain ordering rights—this may sound paradoxical, but this minimal value encodes the true meaning of “permissionless extraction.”

In other words, truly permissionless MEV should be equal to the value that even the least privileged participant, just by obtaining ordering rights, can extract. This shifts the definition from being dependent on specific player identities to a universal standard independent of initial player assets.

At the same time, capital dependency must be clarified. Many MEV opportunities indeed require initial capital to extract, which current definitions often overlook. A more comprehensive statement should be: Given an initial capital K, the maximum extractable value is the amount that any player holding at least K can extract. This acknowledges real-world capital disparities and avoids mistakenly attributing advantage to specific players as part of MEV itself.

Multi-Block, Cross-Domain, Cost Considerations—Remaining Challenges in Defining MEV

Current MEV definitions still face several urgent issues. First is multi-block MEV—how to calculate extraction opportunities across consecutive blocks? Second, cross-domain MEV—how to measure the value gained by ordering across multiple chains or layers connected through dependencies? Third, cost considerations—current definitions only account for profits, ignoring costs involved in gaining ordering rights and executing transactions, which are crucial for calculating true MEV.

Additionally, existing definitions exclude “retracted transactions” as a source of MEV—although such transactions incur fees, they do not change the on-chain state. This trade-off warrants consideration: including retracted transactions would limit the scope of the definition (especially since mempool designs vary by domain), but excluding them omits part of the revenue for miners or proposers.

Why a Consistent MEV Definition Is Crucial

Establishing a consistent and rigorous MEV definition is not only an academic necessity but also vital for ecosystem security. As research deepens into how MEV impacts the security of smart contract systems (e.g., automated auditing), without a unified standard, it becomes difficult to develop effective protections.

While current studies contribute to formalizing MEV, they also reveal many technical trade-offs: whether to include retracted transactions, how to handle multi-block scenarios, how to extend to cross-domain settings… These decisions often involve balancing generality and completeness.

In the future, a more systematic approach is needed to address MEV-related issues—building a unified academic framework while recognizing that different applications may require different MEV definitions. Only when the industry reaches a common understanding of MEV can we better comprehend and manage this increasingly important blockchain phenomenon.