# Value Extraction ⎊ Area ⎊ Resource 3

---

## What is the Extraction of Value Extraction?

Value extraction is the process of capturing profit from blockchain transactions by manipulating the order in which they are processed. This practice, often referred to as Miner Extractable Value (MEV), involves identifying profitable opportunities in the mempool and executing them with priority. Searchers and validators engage in value extraction by front-running, back-running, or sandwiching transactions.

## What is the Mechanism of Value Extraction?

In derivatives markets, this often involves exploiting arbitrage opportunities between different exchanges or liquidating undercollateralized positions before other market participants. The mechanism relies on the ability to observe pending transactions and strategically place new transactions to capture the value created by market inefficiencies.

## What is the Consequence of Value Extraction?

While value extraction can contribute to market efficiency by correcting price discrepancies, it introduces friction and costs for ordinary users. The competition for value extraction can lead to higher gas fees and potential market manipulation, raising concerns about fairness and transparency in decentralized finance.


---

## [Economic Adversarial Modeling](https://term.greeks.live/term/economic-adversarial-modeling/)

## [Adversarial Game](https://term.greeks.live/term/adversarial-game/)

## [Gas War Manipulation](https://term.greeks.live/term/gas-war-manipulation/)

## [Security Game Theory](https://term.greeks.live/term/security-game-theory/)

## [Searcher Competition](https://term.greeks.live/term/searcher-competition/)

## [Notional Value](https://term.greeks.live/term/notional-value/)

## [Long-Term Value Accrual](https://term.greeks.live/term/long-term-value-accrual/)

## [MEV Impact on Fees](https://term.greeks.live/term/mev-impact-on-fees/)

## [Front-Running Resistance](https://term.greeks.live/term/front-running-resistance/)

## [Time Value of Money Calculations](https://term.greeks.live/term/time-value-of-money-calculations/)

---

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---

**Original URL:** https://term.greeks.live/area/value-extraction/resource/3/