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Lets see .. how can I try to explain MEV perhaps this picture will catch you attention by bitrocker2020

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· @bitrocker2020 ·
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Lets see .. how can I try to explain MEV perhaps this picture will catch you attention
![photo_20230118_220628.jpg](https://images.hive.blog/DQmayBSESvNPg5yRoHpDdn9AgiS1nxr7JfDkbiqJbm3pzPi/photo_2023-01-18_22-06-28.jpg)
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**MEV** or **Maximal Extractable Value** is a term that refers to the value that can be extracted by miners or other actors in the blockchain ecosystem. It means that some people can earn more money by reordering or censoring transactions within a block.

This is possible because some miners have the ability to see and control which transactions get processed first. For example, if someone wants to buy a stock, a miner can intercept the transaction and buy the stock first, then sell it to the original buyer at a higher price, earning a profit. This process is called front-running, and it's an example of MEV extraction.

##### These are just a few examples of how MEV extraction can occur in the blockchain ecosystem :-
**Arbitrage:** Suppose there are two decentralized exchanges (DEXs) A and B that have different prices for the same token. A trader can buy the token on DEX A, sell it on DEX B for a higher price, and make a profit. However, a miner can see the transaction and execute it before the trader, earning a profit themselves.

**Liquidations:** In decentralized lending platforms, users can borrow money by putting up collateral in the form of tokens. If the value of the collateral falls below a certain threshold, the platform automatically liquidates the collateral to repay the loan. A miner can front-run the liquidation and buy the collateral at a discounted price before it's sold on the market, earning a profit.

**Reordering Transactions:** In a system where the order of transactions affects their execution, a miner can reorder the transactions to maximize their profits. For example, if there are multiple buy orders for the same token, a miner can put their own buy order first to ensure that they get the token at the lowest price, then execute the other buy orders at a higher price, earning a profit.

While MEV extraction can be profitable, it can also have negative consequences for the blockchain ecosystem. It can lead to increased centralization, reduced transparency, and other issues. It's like some people get to play the game with an unfair advantage, which can be frustrating for others who are playing by the rules.

To address this issue, there are efforts to find ways to mitigate MEV extraction. This includes the development of new consensus mechanisms, better transaction ordering techniques, and other approaches.

Overall, it's important to be aware of the concept of MEV because it affects the fairness and integrity of the blockchain ecosystem. It's important to work towards a system where everyone can play fairly and nobody gets an unfair advantage.

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@rezack ·
Very nice information,,, thanks for sharing this,,, 😊👍
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