Researcher suggests miners are manipulating Ethereum blocks to exploit DeFi

Some Ether miners appear to be re-engineering blocks to take advantage of DeFi opportunities in an instance of what is termed "Miner extractable value," or MEV. Miner extractable value was long anticipated by researchers as a potential exploit pattern for DeFi that leverages the miners' unique protocol influence.

Since miners have free reign over what transactions to include and in which order, this opens the way for several exploitation techniques for on-chain decentralized finance.

One of the transactions in question presents several features that point to miner value extraction.

Due to their power to reorder transactions at will, miners can front-run every single non-miner.

Miners could be the most efficient keepers, which would help avoid situations like Maker's $0 collateral bids going through on Black Thursday.

The flip side is that miners could send their own $0 bids and block legitimate auction participants altogether.

This is incredibly unlikely as it would require collusion from all miners for extended periods of time, but the theoretical possibility highlights the power that miners hold.

A more realistic scenario is miners competing for high-value MEV, which would incentivize them to cause chain reorganizations to steal the "Loot" from others.

Preventing miners from extracting value from DeFi is extremely difficult, as these actions do not go against consensus rules.

It is also worth noting that this is not unique to Ethereum proof-of-work miners.