Looks like a lot of people don't understand the concept of MEV, and incorrectly think that all arbitrage profits are due to MEV.
Let's try to bring some clarity. MEV was coined for ETH, a PoW coin, but I'll broaden the definition.
Let's try to bring some clarity. MEV was coined for ETH, a PoW coin, but I'll broaden the definition.
Miner Extractable Value refers to value that can be extracted by special nodes (i.e. miners, block producers, validators, bakers, etc) to which the underlying system has conferred special privileges.
Ethereum miners are such nodes and they can reorder your transactions to make money for themselves. Citadel runs such a node by virtue of having tapped the flow between Robinhood and the stock markets, which it uses to front-run our trades.
If trinkets sell for $10, and, by law, senators are able to purchase trinkets for $8 with a congressional discount, then a corrupt senator can buy them for $8 and sell for $10. She would be using her special status to make money.
Arbitrage is money to be made from the pricing differences of the same asset on different markets.
If trinkets are going in New York for $10, and they are going for $8 in Miami, an arber can buy them in Miami, ship them to New York, and make a tidy $2 profit (minus cost of trinket transfer).
In this example, the arbitrageur (arber) took advantage of a pricing difference, but he did not take advantage of any special status. It was arb, but not MEV.
That concludes the lesson for the smug kid in the back. Now, #Avalanche is a fun chain with arbitrage opportunities. Come and take advantage of them! Liquid markets are great! And you don't need to be a miner to take advantage of arb opportunities!
Loading suggestions...