Transaction Priority & Block Building on Ethereum

From coinmetrics.substack.com

Transactions on public blockchains like Ethereum are arranged into blocks before being added to the chain by validators. Along this process, a transaction goes through several steps and parties before being confirmed, often sitting first in a public queue for pending transactions known as the mempool. Because of the public nature of the mempool, competing transactions and specialized bots can pay higher fees to be prioritized in a block. Based on these fees, block builders who construct the order of a block can capture Maximum Extractable Value (MEV) opportunities. MEV is the additional value available when ... (full story)