MEV Supply Chain

What Is the MEV Supply Chain?

The MEV supply chain describes the full ecosystem of specialized actors who discover, extract, and distribute value created by transaction ordering on blockchains. On Ethereum, every pending transaction in the mempool creates potential profit opportunities: arbitrage between decentralized exchanges, liquidations on lending protocols, and sandwich attacks on large swaps. The MEV supply chain is the industrialized system that captures this value.

Before this infrastructure existed, miners extracted MEV directly by reordering transactions in their own blocks. This was chaotic: it caused network congestion, gas price auctions (priority gas auctions, or PGAs), and unpredictable costs for ordinary users. The modern MEV supply chain emerged to formalize this process, separate roles, and reduce negative externalities.

The term "MEV" was originally coined as "miner extractable value" by Phil Daian and colleagues in their 2019 paper Flash Boys 2.0. After Ethereum's transition to proof of stake in September 2022, it was rebranded to "maximal extractable value" since validators replaced miners as block proposers.

How It Works

The MEV supply chain operates as a four-stage pipeline. Each stage has specialized actors competing to extract and redistribute value.

Searchers

Searchers are the intelligence layer of the MEV supply chain. They run sophisticated algorithms that monitor the mempool and on-chain state for profitable transaction ordering opportunities. Common strategies include:

• Arbitrage: exploiting price differences between AMM pools or between on-chain and off-chain markets
• Liquidations: racing to liquidate undercollateralized positions on lending protocols like Aave or Compound
• Sandwich attacks: inserting transactions before and after a large swap to profit from the price impact
• Frontrunning: detecting profitable pending transactions and placing identical trades ahead of them

Rather than broadcasting transactions to the public mempool, searchers package their strategies into "bundles": atomic groups of transactions that must execute together, in order. They submit these bundles privately to builders, along with a bid representing how much they are willing to pay for inclusion.

Builders

Builders aggregate searcher bundles alongside regular user transactions and construct complete blocks optimized for maximum revenue. They draw from multiple sources: public mempool transactions, private order flow from wallet providers, and competing searcher bundles.

Each builder submits a sealed bid to relays: the completed block header plus a payment they will pass to the block proposer. Competition between builders drives most of the extracted value toward proposers, since builders must offer higher bids to win block slots. Approximately 60% of a builder's block value comes from private (exclusive) order flow, creating significant advantages for dominant builders.

Relays

Relays sit between builders and proposers as trusted intermediaries. They validate builder blocks, hold the execution payload in escrow, and forward only the block header and bid amount to proposers. This prevents proposers from inspecting a builder's block and stealing the MEV by reconstructing it themselves.

Major relays include Ultrasound (approximately 34% market share by payloads delivered), Titan Relay (approximately 24%), BloXroute Max Profit (approximately 15%), and Aestus (approximately 10%). Seven unique relay operators control roughly 99% of the MEV-Boost network.

Validators (Proposers)

The final stage involves Ethereum validators whose slot it is to propose a block. Running MEV-Boost software, they query connected relays for the highest-bidding block header, sign it, and publish it to the network. The proposer never sees the full block contents until after committing, receiving the builder's bid as payment for their proposal slot.

The Flashbots Ecosystem

Flashbots, founded in 2020, is the research and development organization that built most of the MEV supply chain's core infrastructure. In 2023, the organization raised $60 million in a Series B round at a $1 billion valuation.

MEV-Boost

MEV-Boost is open-source middleware that implements proposer-builder separation for Ethereum validators. Published in 2021 and open-sourced ahead of The Merge in August 2022, it allows validators to outsource block construction to a competitive marketplace of builders via relays.

Over 90% of Ethereum blocks are now constructed through MEV-Boost. For validators, this adds roughly 10 to 30% to base staking rewards. Validators who do not run MEV-Boost forfeit this additional yield to competitors.

Flashbots Protect

Flashbots Protect is a free RPC endpoint that routes user transactions directly to Flashbots builders, bypassing the public mempool entirely. By never exposing transactions publicly, it prevents frontrunning and sandwich attacks. Users add it as a custom RPC in wallets like MetaMask:

Network Name: Flashbots Protect
RPC URL:      https://rpc.flashbots.net
Chain ID:     1

Transactions sent through Protect only become visible on block explorers after confirmation. An additional benefit: failed transactions do not cost gas, since reverts are filtered out before inclusion.

MEV-Share

Launched in April 2023, MEV-Share goes beyond protection by actively redistributing MEV value back to users. When a user submits a transaction through MEV-Share, the system selectively shares partial transaction information with searchers according to the user's privacy preferences. Searchers submit bundles attempting to capture MEV without seeing full transaction data.

The key mechanism: by default, 90% of the MEV value a user's transaction creates must be refunded back to the user. This turns MEV from a cost users bear into revenue they receive.

SUAVE and BuilderNet

SUAVE (Single Unifying Auction for Value Expression) is Flashbots' vision for a chain-agnostic coordination layer where transactions from multiple blockchains can be aggregated and MEV distributed fairly. As of 2026, SUAVE remains in alpha development.

In the meantime, Flashbots launched BuilderNet in November 2024: a decentralized block building network jointly operated with Beaverbuild and Nethermind. Running on trusted execution environments, BuilderNet produces approximately 25% of Ethereum blocks as of early 2026, making it the second-largest builder after Titan.

Revenue Distribution

The competitive auction dynamics of the MEV supply chain determine how value is split. Data from early 2023 provides a representative breakdown:

Validators capture the majority because competitive auctions between builders drive most value toward proposer payments. Searchers often pay more than 90% of their gross revenue to secure bundle inclusion. Cumulative MEV extracted on Ethereum has surpassed $1.8 billion, with sandwich attacks and arbitrage accounting for the largest share.

Centralization Concerns

The MEV supply chain has introduced significant centralization risks to Ethereum, particularly at the builder level.

Builder Market Concentration

By late 2024, two builders (Titan Builder and Beaverbuild) controlled approximately 88% of all Ethereum block production. Although BuilderNet's launch in late 2024 redistributed some market share, roughly 92% of MEV-Boost blocks still come from just three builder operations as of 2026.

The primary driver is exclusive order flow. Builders secure deals with wallet providers, Telegram trading bots, and DEX frontends that direct transaction flow exclusively to a single builder. This creates a self-reinforcing cycle: more order flow enables more profitable blocks, which attracts more order flow deals.

Censorship Risk

Concentrated block building means that if a small number of builders chose to (or were legally compelled to) exclude certain transactions, a majority of Ethereum blocks could censor them. After OFAC sanctions on Tornado Cash in 2022, up to 79% of relayed blocks briefly excluded sanctioned addresses. Non-censoring relays have since gained share, but the structural vulnerability remains.

Relay Trust Assumptions

Relays currently operate as trusted intermediaries without protocol-level enforcement. They could theoretically inspect payloads, front-run transactions, or selectively censor. This trust dependency is a core motivation for enshrining proposer-builder separation directly into Ethereum's consensus layer.

Protocol-Level Mitigations

Several proposals aim to address the centralization and trust issues in the current MEV supply chain:

• Enshrined PBS (EIP-7732): formally moves proposer-builder separation into Ethereum's consensus layer, eliminating the need for trusted relays. Selected for the Glamsterdam hard fork planned for late 2026.
• FOCIL (EIP-7805): fork-choice enforced inclusion lists that require builders to include specific transactions, preventing censorship. A committee of 16 validators per slot assembles mandatory inclusion lists from the public mempool.
• MEV Burn: a proposal to extend EIP-1559's fee burn mechanism to MEV, requiring builders to burn a base fee when their payload is selected. Estimated to burn 200,000 to 400,000 ETH per year.

Why Bitcoin Is Different

Bitcoin's architecture makes it largely resistant to the MEV dynamics that dominate Ethereum. The differences stem from fundamental design choices:

• The UTXO model requires each transaction to explicitly reference previous outputs. Reordering transactions does not change execution outcomes the way it does with Ethereum's account-based, sequential execution model.
• Bitcoin Script is intentionally limited and not Turing-complete. It cannot express complex DeFi interactions like AMM swaps, flash loans, or multi-step liquidation cascades: the primary sources of Ethereum MEV.
• Miners order transactions by fee rate (satoshis per virtual byte) via block templates. There is no complex state-dependent execution to manipulate, so fee market dynamics remain straightforward.
• Bitcoin lacks the DEX, AMM, and lending protocol ecosystem that generates the vast majority of Ethereum MEV.

That said, Bitcoin is not entirely immune. Ordinals, BRC-20 tokens, and Runes have introduced new fee dynamics, and mining pools increasingly consider MEV-like optimization for on-chain protocols. However, the economic incentives remain far smaller than on Ethereum due to the absence of composable smart contract interactions.

Layer 2 solutions like Spark inherit Bitcoin's structural simplicity. Because Spark operates on Bitcoin's UTXO model rather than an account-based system with complex state transitions, it avoids the ordering dependencies that create MEV extraction opportunities on Ethereum's layer 2 rollups.

Risks and Considerations

Systemic Centralization

The MEV supply chain concentrates significant economic power in a small number of builders and relays. If this concentration increases, it could undermine Ethereum's decentralization guarantees: the very property that justifies the cost and complexity of running a blockchain.

User Harm

Despite tools like Flashbots Protect and MEV-Share, most Ethereum users still submit transactions through the public mempool. These users bear the cost of sandwich attacks and frontrunning without receiving any MEV redistribution. In 2025, sandwich attacks alone extracted hundreds of millions of dollars from ordinary users.

Regulatory Uncertainty

In July 2025, the European Securities and Markets Authority (ESMA) published a report classifying certain MEV strategies as potential market abuse under MiCA regulation. Regulators are increasingly scrutinizing whether sandwich attacks and frontrunning violate market integrity rules that apply to traditional financial markets.

Evolving Landscape

The MEV supply chain is not static. Protocol upgrades (ePBS, FOCIL), new redistribution mechanisms (MEV-Share, MEV Burn), and shifts in builder market share continuously reshape how value flows. Anyone building on or using Ethereum needs to understand these dynamics, as they directly affect transaction costs, finality guarantees, and censorship resistance.

This glossary entry is for informational purposes only and does not constitute financial or investment advice. Always do your own research before using any protocol or technology.