Blockchain Deep Dive
MEV and Layer-2 Infrastructure
Cryptography, the UTXO model, chain types, scaling, and tokenomics.
In this lesson
- What MEV is
- How rollups fit the scaling stack
Key takeaways
- 1MEV is value extracted by reordering transactions
- 2Rollups are Layer-2s that post compressed data on-chain
- 3Sequencing power is itself a source of profit and risk
Lesson summary
MEV is value gained by changing transaction ordering, inclusion, or timing.
Mental model
MEV and Layer-2 Infrastructure, without the jargon
MEV is value gained by changing transaction ordering, inclusion, or timing. It exists because block producers have power over how pending transactions become blocks.
- What MEV is
- How rollups fit the scaling stack
Mechanics
How to reason about MEV and layer-2 infrastructure
Searchers look for arbitrage, liquidations, and sandwich opportunities.
Builders and validators decide which bundles or transactions enter a block.
Rollups add another layer because sequencers often control ordering before settlement.
- MEV is value extracted by reordering transactions
- Rollups are Layer-2s that post compressed data on-chain
- Sequencing power is itself a source of profit and risk
Example
MEV and Layer-2 Infrastructure, applied
If a large swap is visible before execution, a searcher may trade before and after it, extracting value from the price movement the user creates.
Common mistakes
Where people slip up with MEV and layer-2 infrastructure
MEV is not only an advanced trading topic. It affects normal users through worse execution, failed transactions, and higher costs.
Risk notes
Reading the risk in MEV and layer-2 infrastructure
Centralized sequencing, private order flow, and opaque builder markets can concentrate value and weaken user execution quality.
- Define MEV in plain language.
- Explain sandwich risk.
- Check execution protection for large swaps.
Practice
Turn MEV and layer-2 infrastructure into a habit
- Define MEV in plain language.
- Explain sandwich risk.
- Check execution protection for large swaps.
Review
Key terms
- Arbitrage
- Profiting from the same asset trading at different prices across markets by buying low and selling high simultaneously.
- Block
- A batch of transactions bundled together and cryptographically linked to the previous block.
- Blockchain
- A shared, append-only ledger replicated across many computers, secured by cryptography and consensus.
- Layer 2
- A protocol built atop a Layer 1 to scale it — processing transactions off-chain then settling on-chain.
- Liquidity
- How easily an asset can be bought or sold without moving its price much.
Source notes
Editorial references
These references are starting points for verifying the mechanisms, risk checks, and product context behind this lesson.
Before you continue
Can you do these?
- Define MEV in plain language.
- Explain sandwich risk.
- Check execution protection for large swaps.
Related learning
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MEV refers to value extracted by…