The Marginal Effects of Ethereum Network MEV Transaction Re-Ordering

ArXiv ID: 2508.04003 “View on arXiv”

Authors: Bruce Mizrach, Nathaniel Yoshida

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.

Keywords: MEV (Maximal Extractable Value), Sandwich Attacks, Blockchain Ordering, Transaction Reordering, Gas Fees, Cryptocurrency

Complexity vs Empirical Score

• Math Complexity: 4.0/10
• Empirical Rigor: 7.0/10
• Quadrant: Street Traders
• Why: The paper uses advanced econometric modeling (probit) to estimate marginal effects, but the math is not highly abstract or theoretical, focusing on empirical measurement; it is heavily data-driven with specific datasets (Google Big Query, Mevboost.pics), statistical metrics, and real-world transaction analysis, making it backtest-ready.

  flowchart TD
    A["Research Goal:<br>Estimate Marginal Effects<br>of Ethereum MEV Re-Ordering"] --> B["Methodology:<br>Statistical Analysis of<br>Block Builder Data"]

    B --> C{"Data Inputs"}
    C --> C1["Blockchain Blocks"]
    C --> C2["Transaction Orderings"]
    C --> C3["MEV Payments"]
    C --> C4["Gas Fee Structures"]

    B --> D["Computational Process:<br>Aggregate & Marginal<br>Effect Estimation"]

    D --> E["Key Findings & Outcomes"]
    E --> E1["Market Consolidation:<br>2 builders produce ~80% of blocks"]
    E --> E2["Economic Impact:<br>$14M/month to stay in Q1"]
    E --> E3["Attack Frequency:<br>>1 Sandwich Attack per block"]
    E --> E4["Reform Suggestions:<br>Gas priority/Private pools"]