The Marginal Effects of Ethereum Network MEV Transaction Re-Ordering

Abstract

Two MEV builders now produce nearly 80\% of Ethereum blocks. Block builders have the ability to reorder transactions on the blockchain in a way that can be harmful to participants. We estimate they would pay in the aggregate nearly \$14 million per month to ensure that they remained in the first quartile of the block. Sandwich attacks, in which a transaction is front-run, are frequent, averaging more than one per block. Gas fees on these transactions pay for nearly 15\% of the MEV payments to the validator. These attacks have especially large marginal effects and skew the distribution. Reforms such as gas fee priority or private transaction pools might be helpful.