Maximal Extractable Value: Current Understanding, Categorization, and Open Research Questions

Title data

Gramlich, Vincent ; Jelito, Dennis ; Sedlmeir, Johannes:
Maximal Extractable Value: Current Understanding, Categorization, and Open Research Questions.
In: Electronic Markets. Vol. 34 (2024) . - 49.
ISSN 1422-8890
DOI: https://doi.org/10.1007/s12525-024-00727-x

Official URL:

Abstract in another language

In traditional financial markets, front-running is a well-structured phenomenon. It represents a form of privileged actors utilizing knowledge or power advantages to extract undue profit at the cost of other stakeholders. Various mitigation strategies have emerged, ranging from market design to regulatory measures. More recently, a similar and substantially richer variety of means to gain unethical profit from power asymmetries has appeared in the context of blockchain-based decentralized applications. This phenomenon is called “maximal extractable value” (MEV). Despite the decentralized nature and inherent transparency of blockchain ledgers, MEV is particularly prevalent and challenging to mitigate. While related work in computer science and algorithmic game theory has already identified several different ways in which MEV manifests in decentralized finance (DeFi) and outlined partial solution approaches, a discussion of its impacts in the information systems (IS) domain is still absent. A holistic definition of MEV and how it can be exploited is necessary for the discussion of its potential implications for blockchain-based IS for businesses and public institutions. This paper conducts a systematic literature review to close this gap. It consolidates the diverging definitions of MEV and provides a categorization of the different ways in which it can manifest. As such, we synthesize and review the existing state of knowledge on MEV and point to undiscovered areas relevant to decentralized electronic markets in the form of a research agenda.

Further data

Item Type:	Article in a journal
Refereed:	Yes
Keywords:	Blockchain; Decentralization; DeFi; Front-running; MEV; Sandwich attack
Institutions of the University:	Faculties > Faculty of Law, Business and Economics > Department of Business Administration Research Institutions Research Institutions > Affiliated Institutes Research Institutions > Affiliated Institutes > Branch Business and Information Systems Engineering of Fraunhofer FIT Research Institutions > Affiliated Institutes > FIM Research Center for Information Management
Result of work at the UBT:	No
DDC Subjects:	000 Computer Science, information, general works > 004 Computer science 300 Social sciences > 330 Economics
Date Deposited:	04 Nov 2024 06:40
Last Modified:	04 Nov 2024 06:40
URI:	https://eref.uni-bayreuth.de/id/eprint/90936