True believers say crypto is more transparent than traditional finance. Yet that openness—combined with clunky infrastructure and an absence of regulation–lets crypto trading firms with lightning-fast bots prey on unsuspecting retail traders.
fur coat, $50,000 Patek Philippe watch and nearly 40 tattoos on social media: “My MEV team is making more money in a day [than] your venture fund has ever made.”EV strategies come in three predominant forms. The most controversial is a particularly pernicious form of front-running known as the sandwich attack. In this maneuver, an MEV bot spots someone else’s intent to buy a coin and sets itself up to profit from the small price appreciation that the other person’s bid will likely cause.
Arbitrage is another common but less controversial MEV tactic in which traders exploit tiny price differences for the same token on different exchanges. Given there are more than 500 loosely regulated crypto exchanges globally and thousands of cryptocurrencies, there’s abundant opportunity to profit. “Many people think this sort of MEV is beneficial–it pushes the market to what the true price should be,” says Vy Le, a partner at Bain Capital Crypto and former SEC staffer.
Dean Eigenmann runs his three-person MEV team as part of Dialectic, a Swiss investment firm he founded with Ryan Zurrer, a former partner at crypto hedge fund Polychain. Zurrer and Eigenmann won’t be specific about their own MEV earnings, but Zurrer does offer some detail on the playing field. He estimates there are up to 50 teams actively competing in MEV, with perhaps 10 of them raking in most of the profits.
Have a tip about a cryptocurrency company or trend, or more information about MEV? Please reach out at“This is an organization that is actually mining blocks, so they're securing the blockchain itself,” says Worsley. “I felt it was a real affront to Ethereum users.” In September, Skip Protocol raised a $6.5 million seed funding round from the likes of Bain Capital Crypto to do for the Cosmos blockchain what Flashbots has done for Ethereum–make MEV more accessible and reduce the congestion caused by bot transactions. Other services like BloXroute, Jito Labs and Rook are also trying to mitigate MEV in different ways, such as by returning some MEV profits to users.
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