Ethereum miners are printing money, but not only in the traditional way of claiming block rewards. By reorganizing trades inside a given block, miners are able to take advantage of off-chain price movements. This process is called “Maximal” or “Miner” Extractable Value (MEV), and it’s very lucrative.
According to MEV research group Flashbots:
- Roughly $42 million in MEV was “extracted” across eight major decentralized finance (DeFi) applications in the last thirty days alone. (For reference, Ethereum miner revenue reached $1.38 billion in March.)
- Nearly 30% of Ethereum’s hashrate has been onboarded to Flashbots MEV tooling.
- Proprietary software used by other mining pools pushes that number north of 50%.
A great example of MEV is this Ethereum transaction from late March. It shows one part was the victim of an unsuspected “sandwich” trade where one transaction was front-run and another back-run to induce price slippage on the middle transaction.
The result? Netting 13 ETH, which were worth more than $22,000 at the time.
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These complex swaps are usually left to specialized traders. But ongoing Ethereum development – specifically EIP 1559 and the network’s transition to proof-of-stake – has pushed mining pools to join the game. They also have the most to gain as the final arbiter of most any trade.
Early data suggests that individual miners are also increasingly aware of MEV and want a cut of the action. Mining pool Flexpool’s hash power, for example, grew 358% last month alone as one of the most aggressive MEV-pools on the market.