mev-arbitrage

The same asset on different chains, because of a <a href="https://defi-bible.com/en/glossary/security-risk/bridge/" target="_blank" rel="noopener">Cross-Chain Bridge</a>'s own confirmation delay or the oracle latency discussed earlier in this series, has price updates moving at inconsistent speeds. The time this gap persists is exactly a window an arbitrage bot can exploit — an arbitrageur shorts on the chain where the price already reflects the latest market conditions, buys on the chain where the price hasn't caught up yet, then locks in profit once the two sides' prices reconverge. This kind of cross-chain arbitrage opportunity is fundamentally a compound risk type made up of several independent concepts discussed earlier in this series combined together.

A mechanism using threshold encryption or similar cryptographic techniques that keeps a transaction's contents encrypted and invisible to all third parties, including validators, before it's packed into a <a href="https://crypto-bible.com/en/glossary/blockchain-fundamentals/block/" target="_blank" rel="noopener">Block</a> — only decrypting and executing it after transaction order has already been determined — designed to structurally eliminate the technical path that lets an attacker see transaction contents in advance and front-run them.

A technique where an <a href="/en/glossary/mev-arbitrage/mev/">MEV</a> extractor, upon detecting a large trade about to execute in the mempool, temporarily injects a large amount of liquidity into that trading pair at the last moment, earns the fee generated by that large trade, then immediately withdraws the liquidity within the same block — carrying only an extremely brief moment of market exposure throughout. A hybrid technique sitting between market-making and MEV extraction.

When a lending position's collateral value falls below its liquidation threshold, whoever submits the liquidation transaction first captures the protocol's liquidation reward. This opportunity is theoretically open to anyone, but in practice is almost entirely captured by professional liquidation bots with the fastest execution speed and the most optimized gas strategy — an ordinary user, even upon spotting the same liquidation opportunity, is almost never able to beat these bots. A third major profit model within the <a href="/en/glossary/mev-arbitrage/mev/">MEV</a> ecosystem, alongside the sandwich attack and arbitrage.

The umbrella term for the extra profit a <a href="https://crypto-bible.com/en/glossary/blockchain-fundamentals/block/" target="_blank" rel="noopener">Block</a> producer (miner or validator) or another participant capable of influencing transaction ordering can extract by deciding the order of transactions in a block, or by inserting or excluding specific transactions — an umbrella covering specific techniques like sandwich attacks, <a href="https://crypto-bible.com/en/glossary/onchain-data/front-running/" target="_blank" rel="noopener">Front-Running</a>, and <a href="https://rwa-bible.com/en/glossary/rwa-fundamentals/liquidation/" target="_blank" rel="noopener">Liquidation</a> <a href="https://crypto-bible.com/en/glossary/trading-concepts/arbitrage/" target="_blank" rel="noopener">Arbitrage</a>.

When multiple participants (<a href="https://rwa-bible.com/en/glossary/rwa-fundamentals/liquidation/" target="_blank" rel="noopener">Liquidation</a> bots, <a href="https://crypto-bible.com/en/glossary/trading-concepts/arbitrage/" target="_blank" rel="noopener">Arbitrage</a> bots, or ordinary users alike) simultaneously want to get their transaction packed into the same <a href="https://crypto-bible.com/en/glossary/blockchain-fundamentals/block/" target="_blank" rel="noopener">Block</a> first, the priority fee they're willing to pay bids against each other and escalates layer by layer within an extremely short window. This real-time auction process directly determines whose transaction gets executed first, and directly affects how high a fee an ordinary user actually needs to pay during market volatility to ensure their transaction gets processed promptly.

An arrangement where a user's trading intent, before being submitted, is first routed to specific market makers or a solver network for private bidding, rather than being broadcast directly to the public mempool or a standard private transaction pool. This arrangement typically lets the routing party (a wallet or application interface, for example) earn a kickback fee from the process — an order-routing design that involves both <a href="/en/glossary/mev-arbitrage/mev/">MEV</a> protection and a potential conflict of interest.

An attack where the attacker inserts one transaction before and one after the victim's transaction, pushing the buy price up and the sell price down to profit — leaving the victim with a worse execution price than expected. One of the most common forms of <a href="/en/glossary/mev-arbitrage/mev/">MEV</a> extraction.