MEV Bots in Crypto: How They Work & Make Profits

With the continuing expansion of the world of decentralized finance (DeFi) moonshot signals are finding novel ways to draw value out of taking place in a blockchain. One of the most effective yet debated utilities that have come up in this environment are the MEV bot, or Maximal Extractable Value bot. These are computerised programs that seek to find and capitalise on profitable opportunities that lie within the design of blockchain transactions.

In this blog, we are going to discuss what MEV is, how MEV bots work, what strategies are present to make a profit, and what consequences they are having, both technological and ethical, upon their rise within the crypto ecosystem.

What Is MEV (Maximal Extractable Value)?

The maximum that can be obtained is called the Maximal Extractable Value (MEV) and is obtained by rearranging, adding, or censoring the transactions in the block. What was originally called Miner Extractable Value but now simply validators, block producers (or searchers) on proof of stake (PoS) networks such as Ethereum and Solana.

MEV bot development is not a theoretical thing. It is an opportunity that is quantifiable to individuals with access to a history of mempool (list of pending transactions) and can predict the effects of the transactions on the price or the state of a decentralized protocol.

Some common examples of MEV opportunities include:

• Arbitrage between DEXs

• Sandwich attacks

• Liquidation sniping

• Front-running

These actions can be executed manually, but MEV bots are far more effective due to their speed, precision, and ability to process massive volumes of mempool data in real time.

How Do MEV Bots Work?

Essentially, MEV bots are algorithmic trading software that scans the mempool on the blockchain in search of opportunities or exploits. The following is a day-by-day overview of the way they usually work:

1. Mempool Monitoring

MEV bots constantly scan the public mempool for pending transactions. These bots analyze:

• Gas price bids

• Transaction volume

• Contract interactions (e.g., swaps on Uniswap or liquidity removals)

This gives them an edge in predicting how specific transactions will affect on-chain asset prices.

2. Opportunity Detection

Once a potential arbitrage, front-run, or liquidation opportunity is detected, the bot calculates whether it’s profitable after considering:

• Gas fees

• Slippage

• Competition

• Network congestion

Only highly optimized opportunities are selected to avoid wasting gas.

3. Transaction Construction

MEV bots then construct a custom transaction bundle, which could include:

• A front-running transaction

• The original victim’s transaction

• A back-running transaction

These transactions are ordered in such a way that the MEV bot benefits from price movements or system changes created by the original transaction.

4. Transaction Submission via Flashbots

In Ethereum, most MEV bots send their transaction bundles to Flashbots—a service that provides a private communication channel between bots (searchers) and validators. This prevents frontrunning by other bots and avoids spamming the public mempool.

Common MEV Strategies Explained

Here are the most widely used MEV strategies that help bots generate profits:

1. DEX Arbitrage

When the same token pair has slightly different prices on multiple decentralized exchanges, MEV bots buy low on one and sell high on the other—executing both trades in a single block.

Example: Buy ETH for 3,000 USDC on Uniswap and sell it for 3,050 USDC on SushiSwap.

2. Sandwich Attacks

In a sandwich attack, a bot places a buy order before a large user transaction and a sell order after it. The user’s trade pushes the price up, allowing the bot to profit from the price difference.

• Front-run the user’s swap to drive up the price

• The user unknowingly buys at the inflated price

• Back-run with a sell to take profit

Controversial? Yes. Profitable? Also yes.

3. Liquidation Sniping

In DeFi lending platforms like Aave or Compound, if a borrower’s collateral drops below a threshold, they become eligible for liquidation. MEV bots monitor liquidation thresholds and race to be the first to liquidate bad loans—earning a reward in return.

4. NFT Mint Arbitrage

Some MEV bots track popular NFT mints. When they detect undervalued mint prices or access to limited whitelist slots, they try to front-run other users by submitting faster minting transactions.

How MEV Bots Make Money

MEV bots are essentially automated value extractors. Here's how they generate revenue:

• Arbitrage Profits: Buy low, sell high across multiple platforms

• Liquidation Bonuses: Earn protocol-defined rewards for liquidating unhealthy positions

• Gas Rebates (via Flashbots): Some bots pay high gas but only if profitable execution is guaranteed

• Priority Fees: Bots often outbid each other in gas wars to win execution rights, but the best bots are optimized for net positive gains

In successful MEV bot operations, the profits can be massive—ranging from a few dollars per trade to hundreds of thousands in a single day, depending on market conditions.

Risks and Ethical Concerns

1. User Harm

Many MEV strategies—especially sandwich attacks—exploit ordinary users by front-running their trades and causing slippage.

2. Network Congestion

Bots often flood the network with high-gas transactions, increasing gas fees and reducing overall usability for regular users.

3. Centralization Risks

As MEV becomes professionalized, it leads to centralization where only well-funded players with high-speed infrastructure can compete.

4. Regulatory Gray Areas

Some MEV behaviors may skirt the edge of what’s considered fair or legal in traditional finance, and regulators are beginning to take notice.

Future of MEV: Can It Be Tamed?

There’s growing interest in mitigating the negative effects of MEV through:

• MEV-resistant protocols (e.g., batch auctions, frequent batch clearing)

• Encrypted mempools to prevent frontrunning

• PBS (Proposer-Builder Separation) in Ethereum

• Open-source tools like MEV-Boost to make MEV more democratic

The balance lies in making MEV more transparent and less harmful, without completely shutting down the opportunity to innovate.

Final Thoughts

MEV bots have two sides to the crypto sector. On the one hand, they enable the tapping into hidden efficiencies and the generation of liquidity because they become decentralized arbitrage engines. On the one hand, they take advantage of transactions of users, create network overloads, and provoke ethical doubts.

As a developer told me when I met up with him to learn more about this malignant environmental impact, if you are a developer aiming to create your own MEV bot, a trader trying to learn about the risks, or a protocol designer working to minimize the harms of MEV, one thing is certain: MEV is not going away. In fact, it might be helpful to know more about it to traverse DeFi in 2025 and beyond.