The post Yes, MEV occurs on Bitcoin — here’s how appeared on BitcoinEthereumNews.com.

Ask most active crypto traders to define MEV, and they’ll likely recall the acronym ‘Miner Extracted Value’ or use a phrase like ‘the money that miners make by cheating at DeFi.’ Ask a more sophisticated user, and they would define it as ‘Maximal Extractable Value’ or the money made from block production by reordering, censoring, or adding transactions. Finally, ask almost anyone if MEV occurs on Bitcoin, and they’ll probably say no, MEV is mostly on Ethereum or Solana. However, MEV does exist on Bitcoin. In fact, Bitcoin is the first blockchain that had MEV. MEV on Bitcoin #1: Full RBF In modern mempools — queues of transactions awaiting inclusion in a block — modern pool operators select the transactions that bid the highest transaction fees. This wasn’t always the case. Bitcoin’s first block construction policy was First Seen, an altruistic policy by early miners who believed that it was worth sacrificing a bit of profit in order to provide a better experience to merchants accepting bitcoin payments.  At the time, the Bitcoin community was concerned about small business adoption, with ‘Bitcoin Jesus’ Roger Ver evangelizing bitcoin point-of-sale terminals and apps to business owners. In order to make their experience of receiving an on-chain payment more seamless, miners vowed to include transactions in the block in their received order.  ‘First Seen’ Because the mining policy was First Seen, merchants could simply monitor a public mempool, see that the customer broadcast a valid transaction, and render the good or service immediately — trusting that miners would include the customer’s transaction in the next block, even if it took an average 10 minutes to mine each one. Although this policy benefitted merchants, the First Seen policy was ludicrously altruistic. Soon, rogue miners started accepting Replace By Fee (RBF) transactions, thereby overriding a…

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Filed under: News - @ June 21, 2024 12:28 pm