Order Flow Extraction

Order flow extraction refers to the process by which miners, validators, or searchers capture the value inherent in the stream of incoming transactions. This value, often referred to as Miner Extractable Value, can be generated through strategic ordering, liquidation, or arbitrage.

In derivatives, this extraction can significantly impact the cost of trading and the efficiency of the protocol. While some extraction is necessary for maintaining network security and liquidating under-collateralized positions, excessive extraction can harm the user experience and drive volume away from the protocol.

Managing this extraction is a key concern for protocol designers who aim to maximize user value while ensuring the economic sustainability of the underlying blockchain network.