MEV Impact on Slippage

MEV, or Maximal Extractable Value, refers to the profit miners or validators can make by reordering, including, or excluding transactions within a block. When a user submits a large trade on a decentralized exchange, they set a slippage tolerance to account for price movement.

MEV bots monitor the mempool for these large pending transactions. Upon detecting one, they engage in front-running, where they submit their own transaction with a higher gas fee to be processed first.

This action moves the price against the original user, causing them to receive fewer tokens than expected. Essentially, the bot captures the value the user would have received, increasing the user's realized slippage.

This process exploits the latency between transaction submission and block inclusion. It turns a user's trade into an opportunity for arbitrage or sandwich attacks.

Consequently, users experience worse execution prices due to the strategic manipulation of transaction ordering.