Building an arbitrage bot: Introduction to MEV bots (article 0/n)

<p>This article serves as a primer for a series about MEV bot development. In this series we will develop a MEV bot with moderate complexity. Most of the information provided only applies to Ethereum and EVM-compatible blockchains (BSC, Polygon, etc&hellip;) Some tricks and techniques presented in the series might still provide some little competitive edge, but expect significant changes to the strategy to be necessary for generating any significant revenue. Before we start, let&rsquo;s define what MEV is.</p> <h1>Extractible value on a blockchain</h1> <p>MEV originally designated the value that could be extracted by a miner from a block. This value is the difference between the expected value of the block and the value of the block to the miner, as it is mined. The expected value of a block is the sum of the fees of all transactions included in the block. It was realized that by modifying the orders of the transactions or by inserting private transactions in the block right before mining it, the miner could increase the value of the block. This is called miner extractible value (MEV). Nowadays with the prevalence of PoS, miners have been replaced by validators (though the term MEV is still used). Although miners and validators have a prime position to extract value from a block, they might not have an optimal strategy to extract all the value. There are mechanisms in place that allow any agent with more refined strategies to share the profits with the validators. These agents universally make use of automated programs called MEV bots.</p> <p><a href="https://blog.blockmagnates.com/building-an-arbitrage-bot-introduction-to-mev-bots-article-0-n-cb439da58651"><strong>Learn More</strong></a></p>