What Is MEV in Crypto and How It Affects Your Trades

Every time you swap tokens on a decentralized exchange, there's a decent chance someone is making money off your trade without you knowing. They're not stealing from you exactly. But they're extracting value from your transaction in ways that cost you real money. This is MEV. And it's one of the least understood but most impactful forces in crypto today.

MEV Explained Without the Jargon

MEV stands for Maximal Extractable Value. It used to be called Miner Extractable Value, but since Ethereum moved to Proof of Stake, the name got updated because validators now do what miners used to do.

Here's the simple version. When you submit a transaction on Ethereum (or Solana, or any blockchain), it doesn't execute immediately. It sits in a waiting area called the mempool while it waits to be included in a block. During that waiting period, your transaction is visible to everyone.

Specialized bots scan the mempool constantly. They see your pending swap. And if they can profit by manipulating the order in which transactions get processed, they will.

Validators (the people who create new blocks) get to decide which transactions go into their block and in what order. This power to reorder, insert, or exclude transactions creates profit opportunities. That profit is MEV.

The Three Main Types of MEV

Frontrunning

You submit a swap on Uniswap to buy 10 ETH worth of a token. A bot sees your pending transaction and submits its own buy order for the same token with a higher gas fee so it gets executed first. This pushes the price up slightly. Your transaction then executes at a higher price. The bot sells immediately after your trade for a small profit.

You end up paying more than you should have. The bot pockets the difference. This happens thousands of times per day on Ethereum.

How much does it cost you? On a typical $5,000 swap, frontrunning might cost you $10 to $50 depending on the token's liquidity and the bot's aggressiveness. Small per trade but it adds up if you're an active trader.

Sandwich Attacks

This is the nastier version of frontrunning. The bot places a buy order before your trade AND a sell order after your trade. Your trade gets "sandwiched" between the bot's two transactions.

The bot buys before you (pushing the price up), your trade executes at the inflated price, and then the bot sells right after (pushing the price back down). The bot profits from both sides of your trade.

Sandwich attacks are particularly brutal on large swaps with high slippage tolerance. If you set your slippage to 5% on a $10,000 swap, a sandwich bot could extract up to $500 from that single trade. That's not a rounding error. That's real money.

Arbitrage

This is the least harmful type of MEV. When a token's price differs between two DEXs, arbitrage bots buy on the cheaper one and sell on the more expensive one, equalizing prices across markets.

This actually benefits the ecosystem because it keeps prices consistent. You won't get a wildly different price on Uniswap vs SushiSwap because arbitrage bots close the gap within seconds. But the profit from that arbitrage comes from somewhere, and sometimes it comes at the expense of regular traders who are trading on the "wrong" DEX at that moment.

How Much Money Are We Talking About?

A lot. According to Flashbots data, MEV extraction on Ethereum has generated over $700 million in profit since January 2020. On Solana, the number is harder to track but estimated at hundreds of millions annually.

In January 2026 alone, MEV bots on Ethereum extracted roughly $45 million. That's $45 million that came from regular users' trades. It's effectively an invisible tax on every DeFi transaction.

And these are just the numbers for public, on-chain MEV. Off-chain MEV through private transaction flows is likely much larger and harder to measure.

How MEV Affects Your Trades Specifically

If you're a casual DeFi user doing a few swaps per month, MEV probably costs you a few dollars per trade. Annoying but not devastating.

If you're an active trader doing multiple swaps daily, MEV can cost you hundreds or thousands of dollars per month in worse execution prices. At that volume, it becomes a serious drag on your returns.

Here are the situations where you're most vulnerable:

Large swaps on low liquidity tokens. The less liquid the token, the more price impact your trade has, and the more profitable it is for a sandwich bot to attack you.

High slippage tolerance. Every point of slippage you allow is a point a bot can extract. If you set 5% slippage, you're telling bots they can take up to 5% of your trade value.

Trading during high gas periods. When gas is expensive, MEV bots are more active because the competition between bots drives them to bid up priority fees, which actually makes gas even more expensive for everyone.

Using DEXs without MEV protection. Standard Uniswap through the default Ethereum mempool is fully exposed to MEV. Some alternatives route transactions through private mempools to avoid this.

How to Protect Yourself

You can't eliminate MEV entirely, but you can significantly reduce your exposure.

Use MEV protected RPC endpoints. Flashbots Protect is a free service that routes your Ethereum transactions through a private mempool instead of the public one. Bots can't see your transaction before it's included in a block. This prevents frontrunning and sandwich attacks. You can add it to MetaMask as a custom RPC.

Set tight slippage. Don't set slippage to 5% "just in case." Start with 0.5% to 1% and only increase if the transaction fails. Every percentage point of slippage is money a bot can take.

Break up large swaps. Instead of swapping $50,000 in one transaction, break it into five $10,000 swaps. Smaller trades have less price impact and are less attractive to sandwich bots.

Use DEX aggregators with MEV protection. 1inch and CoW Swap have built in MEV protection features. CoW Swap specifically uses a batch auction system that prevents frontrunning by design. Jupiter on Solana also has anti MEV features.

Trade on Solana with Jito. Solana's MEV landscape is different from Ethereum's. Jito is the main MEV infrastructure on Solana. Using Jupiter's built in MEV protection routes transactions to minimize sandwich attacks.

Time your trades. MEV extraction is lower during off peak hours when fewer bots are competing. Late night and weekend trades on Ethereum often have lower MEV exposure.

The Bigger Picture

MEV is one of the hardest problems in blockchain design. It exists because blockchains process transactions sequentially and someone has to decide the order. As long as ordering power exists, people will profit from it.

Some people argue MEV is just an efficient market working as intended. Arbitrage keeps prices in line, and the competition between bots improves execution for everyone in the long run.

Others argue it's a hidden tax that makes DeFi worse for regular users and transfers wealth from retail traders to sophisticated bot operators.

I lean toward the second view. MEV makes DeFi more expensive for the people who need it most, the regular users who don't have the technical knowledge to protect themselves.

The good news is that solutions are improving. Private mempools, batch auctions, and MEV aware DEXs are making things better. But the problem isn't solved yet. Until it is, knowing about MEV and taking basic protection steps is one of the best things you can do for your DeFi trading.

Ignorance of MEV is expensive. Awareness of it is free.