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MEV and arbitrage: subtract the competition
Two screens show different prices. Is the difference yours to keep?
Calculate net spread results and explain ordering and execution risks.
Arbitrage seeks to trade related prices when they differ. On-chain transactions compete for inclusion and ordering. MEV describes value obtainable through including, excluding or rearranging transactions beyond ordinary block rewards and fees.
A displayed price may describe only a small amount or an old state. Your trade changes pool reserves; other participants can act first. The amount available at the final execution prices matters more than the screenshot difference.
Atomic execution can make linked contract actions complete together or revert together. It does not guarantee profit. Gas may still be spent on a failed included transaction. Separate transactions or venues introduce additional leg and transfer risks.
For learning, build a paper cost sheet rather than signing bot contracts. Competitive search, ordering payments, gas, trading fees and adverse price changes can absorb the gross spread. A bot promising effortless guaranteed arbitrage deserves scepticism.
Let’s work through it
- Check quantity and freshness behind each quote.
- Separate included costs from additional costs.
- Model failure, ordering competition and the total net result.
Let’s use numbers · hypothetical example
Fictional executable-price estimates show buying 10 units at 100 and selling at 102: gross spread 20. Gas 8, trading fees 6 and further execution losses 9 leave 20 − 8 − 6 − 9 = −3. These costs must not already be included in the price estimates, or they would be counted twice.
Easy mistakes to watch for
- Calling a screenshot spread guaranteed profit.
- Counting a cost twice or omitting a failed transaction.
- Assuming atomic execution eliminates gas risk.
Keep in mind
Do not send funds or grant approvals to a bot copied from a video. This lesson explains accounting, not an MEV extraction procedure.
Your turn
Keep the gross spread 20, but double gas from 8 to 16. Recalculate and identify which costs depend on whether execution succeeds.
A quick check before we move on
What remains after the example's additional costs?
- A loss of 3
- A profit of 20
- A profit of 6
Check answer
A loss of 3 Additional costs total 8 + 6 + 9 = 23; the gross spread 20 leaves −3.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.