The Evolution of MEV Landscape One Year After the ETH Merge

In the year following the Ethereum merge, the market share of MEV-Boost has remained stable at around 90%. The current MEV ecosystem has become extremely complex, involving non-user roles such as searchers, builders, relayers, validators, and proposers. They engage in multi-party games within the 12-second block time, vying for their respective maximum benefits.

This article will compare the changes in profit margins before and after MEV, outline the lifecycle of MEV after the merge, and share some personal insights on cutting-edge issues.

1. MEV profits dropped significantly after the merge

• In the year before the merge, from September 2021 to September 2022, the average MEV profit was approximately 22 MU/M.
• One year after the merge from December 2022 to the end of September 2023, the average MEV profit was about 8.3 MU/M.

After excluding hacker incidents that should not belong to MEV, the overall return rate decreased by about 62%. It is important to note that due to differences in statistical methods between platforms, this can only serve as a macro verification and is not absolutely precise.

( 2. Traditional MEV Model

MEV is mainly captured by DeFi traders through various arbitrage strategies, rather than being directly extracted by miners. There are clever hackers constantly exploiting contract vulnerabilities on-chain, but they face the dilemma of how to profit without being front-run.

Some hackers use the method of contract nesting to hide the logic of the final profit transaction. However, hunters not only analyze the on-chain parent transactions but also analyze each sub-transaction to simulate profit deductions.

In certain blockchain networks, some nodes may occupy P2P connections but do not share transaction pool data, allowing them to leverage resource scale to enhance MEV profit margins.

) 3. MEV model after the merge

After the ETH merge, the block interval became stable, miner incentives decreased, encouraging validators to be more willing to accept MEV transaction auctions.

The transaction lifecycle after the merge involves roles such as seekers, builders, relayers, proposers, and validators:

1. Builders create blocks
2. The builder submits the block to the relay.
3. Relay verifies the validity of the block and calculates the payment amount.
4. The relay sends the transaction sequence package and bid to the block producer.
5. The block producer evaluates all bids and selects the sequence package with the highest yield.
6. The block producer sends the signed header back to the relay.
7. After the block is published, rewards are distributed to builders and proposers.

4. Summary

1### MEV-Boost reshapes the transaction lifecycle, segments various stages, and intensifies the competition among participants.

2( Cutting-edge MEV exploration includes directions such as privacy trading, fair trading, and protocol-level PBS improvements.

3. Ethereum has a certain resistance to OFAC scrutiny, as long as not 100% of the validators comply with the scrutiny.

The lack of incentives for relays may lead to centralization; in the future, they may gain profits through new mechanisms.

The widespread adoption of ERC4337 may increase the difficulty of MEV in the short term, but it will not hinder the development of MEV in the long term.

6### DeFi and CeFi each have their advantages, targeting different user groups.

7. Layer-2 networks have adopted different solutions to reduce MEV, but certain sidechains still present MEV opportunities.