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Ethereum Sees Largest Ever MEV Payout Blocks
On 31st July, "eric.eth", a leading Ethereum developer, announced that one of the most substantial Maximal Extractable Value (MEV) reward blocks to date, worth 584.05 Ether (ETH), has been unearthed. This surge in value has been attributed to the recent Curve Finance stable pools exploit that occurred on the previous day.
Maximal Extractable Value (MEV) Spikes
The MEV payout incident in question is reportedly only superseded by a record 692 ETH reward block observed in March. The MEV reward explosion unfolds when a bot identifies a nascent hack-in-the-making in the mempool and clones and front-runs the said transaction. Consequently, the bot compensates the block producer a substantial ETH sum for priority.
Functioning of an MEV Bot
MEV bots are engineered to generate additional profits by manipulating the order or inserting transactions in a standard block to create arbitrage opportunities. These bots can also identify impending liquidation transactions and front-run them to purchase the liquidated assets at a lower price first.
Outsourcing Block Production to MEV Bots for Extractable Revenue
The originator of MEV rewards can propose a block using a relay, transferring their block production to units that focus on extracting extra revenue. In exchange for facilitating the MEV bot in beating the transaction to the punch, these enabling units receive a portion of the revenue, known as the "block reward".
Record-Breaking Block Rewards Unearthed
The 584.05 ETH block reward, equivalent to nearly $1 million, verified at 1.34 am UTC on 31st July, ranks as the highest to be reaped by an MEV bot, as per Beaconcha.in's records. Two block rewards amounting to 345 ETH and 247 ETH were also reported around that time.
Exploring the Ethical Implications of MEV Bots
Social media conversations brought to light ethical concerns arising from potential illicit funds being offered to validators for allowing transaction front-running. One such notable instance was in April, when a Subway-themed trading bot made a fortune in extractable value by leveraging "sandwich attacks" amid the memecoin trading storm.
