New to MEV

MEV

The full name of MEV is Maximal Extractable Value, which means that during the production process of new blocks, the MEV robot will reorder the transactions in the mempool to maximize the overall value of the block while making profits from price fluctuations. In the MEV strategy, the sandwich attack is the most harmful to users. The robot will construct an attack transaction right before and after the target transaction (usually a DEX SWAP transaction), causing the user to receive a smaller amount of cryptocurrency than expected.

Searcher

Searchers refer to independent network participants who find and exploit MEV opportunities. They detect profitable MEV opportunities by running complex algorithms, construct bundles and submit them to MEV Protect RPC or block builders, with a view to including the bundle into the block to obtain profits. Among the MEV strategies executed by Searcher, sandwich and frontrunning are the most harmful to users, while the backrun strategy is harmless to users because it is executed after user transactions.

Sandwich

Sandwich is a malicious MEV strategy. This attack usually occurs on decentralized exchanges (DEX). When a user (such as Alice) wants to buy a token on the DEX, a malicious trader (such as Bob) can detect this transaction and insert two of his own transactions before and after Alice's transaction.

Bob first buys token A before Alice’s transaction(Bob will insert a transaction with high gas before Alice's transaction to ensure that it is processed with priority. This type of attack is also called frontrunning), which pushes up the price of token A. Then, after Alice's transaction, Bob sells token A. At this time, since the price has been pushed up, Bob can profit from it. This attack method not only affected the execution price of Alice's original transaction, but also allowed Bob to gain profits by manipulating the price.

Backrun

Backrun is a harmless MEV strategy. The executor of the backrun strategy will strategically execute a backrun transaction immediately after a high-value transaction, taking advantage of the arbitrage opportunities generated by the price fluctuation of the previous transaction to obtain profits. Since the backrun transaction is executed after the user's transaction, it will not affect the previous transaction.

Bundle

In MEV, Searcher captures arbitrage opportunities by putting user transactions and strategy transactions into a bundle in a certain order. Bundles are atomic. If any transaction simulation in the bundle fails, the entire bundle will not be executed, which means that all transactions in the bundle will either execute successfully or fail.

RPC

RPC (Remote Procedure Call) is a protocol that allows one program (client) to request services from another program (server) over a network without knowing the details of the underlying network. In the context of blockchain, RPC is usually used for node communication and client interaction. Blockchain clients (such as wallets or DApp front-ends) interact with blockchain nodes through RPC to send transactions, query account balances, and obtain blocks. Information etc.