The Debate Over MEV Definition and Classification: Who Gets to Decide?
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The Debate Over MEV Definition and Classification: Who Gets to Decide?
Can any system that extracts value from internal acquisition be considered MEV?
Navigating Web3 tides with focused insightsBy 0xNatalie
Tina, founder of Flashbots, tweeted that the term MEV has become overloaded. She noted that 99% of discussions around MEV casually use the term—either to describe problems their products aim to solve or to criticize aspects of Ethereum they dislike. So, should MEV include only potential extractable value, or actual extracted value? Does every extraction count as MEV, or only extractive behaviors considered harmful?
Differing Views: The Debate Over MEV's Definition
Going back to last week, Thognad, CEO of Fastlane, shared his perspective on Twitter regarding the definition of MEV. He argued that the MEV problem is fundamentally unsolvable because as research progresses, new ways of generating value are discovered and incorporated into the evolving definition of MEV, causing it to continuously expand. This sparked a broader discussion within the community.
In response, Nathan Worsley, an advisor at Flashbots, suggested that MEV should be narrowly defined as value observable and exploitable by block proposers before a block becomes part of the blockchain’s consensus. A broader definition, he warned, would lead to unnecessary complexity in governance and mitigation. However, Thognad countered that this narrow view overly focuses on the role of validators while ignoring other mechanisms through which value can be extracted.
An Ethereum research group, mteam, joined the conversation, proposing that MEV refers to any value that can be extracted from a privileged position within the system. Thognad further refined this idea: any actor who occupies a privileged internal position and actively exploits system vulnerabilities or design flaws to gain excess value beyond what ordinary participants can achieve should be considered part of MEV. He introduced the concept of a "zero-MEV" baseline—where a block builder constructs blocks solely by selecting transactions from the public mempool based on fee and timestamp order, without additional manipulation—which should be considered MEV-free. In response, mteam pointed out that due to network fragmentation, varying connection speeds, and node-level differences in transaction visibility, establishing a universal standard is extremely difficult. He concluded that the only useful definition might be “dinosaur MEV.”
Tina retweeted mteam’s point, highlighting the need to distinguish between MEV—theoretically extractable value from a blockchain system—and REV (Realized Extractable Value), which refers to the actual value extracted in practice. Tina emphasized that most Twitter discussions ignore the formal academic definition of MEV, instead using the term loosely based on personal convenience, leading to widespread confusion about what MEV actually means.
Tina also referenced a GitHub issue discussion on MEV classification (closed in December 2021), suggesting it could provide a systematic framework for clarifying MEV’s definition and taxonomy. She raised the possibility of reopening this discussion to help establish clearer definitions and classifications, thereby advancing deeper understanding of MEV.
The Classification Debate Around MEV
Although the GitHub discussion did not reach a final consensus, it proposed several directions for improving the definition and categorization of MEV. These can be summarized into the following key points:
How to distinguish between potential extractable value and actually realized value:
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Extractable Value: Refers to all possible value opportunities identifiable in the current state of the blockchain by analyzing transactions from the previous block. This includes theoretically maximizing value through reordering, insertion, or other manipulations.
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Extracted Value: Refers to the value actually captured in a specific block—i.e., the value obtained by miners or other actors through concrete actions like transaction reordering. This is measurable and factual.
How to differentiate between “good” and “bad” MEV:
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For example, arbitrage helps restore market equilibrium and may be seen as “good MEV,” whereas frontrunning or order manipulation that causes slippage or unfair outcomes is considered “bad MEV.” Such distinctions help assess the social impact of MEV and guide targeted mitigation strategies.
Redefining terminology:
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Some contributors have proposed introducing new terms—for instance, REV (Realized Extractable Value)—to clearly separate actual extracted value from theoretical extractable value. Others suggest terms like Dark MEV to describe hard-to-detect forms of centralized control, such as covert market interventions conducted via centralized builders.
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