Quantifying MEV On Layer 2 Networks

TL;DR

This paper quantifies the extent of Maximal Extractable Value (MEV) on Ethereum Layer 2 networks, revealing significant MEV opportunities, especially on Polygon, and emphasizing the importance of ongoing monitoring for network security and decision-making.

Contribution

It provides the first comprehensive quantification of MEV on Layer 2 networks, highlighting the scale and nature of MEV, particularly arbitrage, and offering insights into associated risks.

Findings

MEV on L2s exceeds $213 million, especially on Polygon.

Most MEV on L2s arises from arbitrage, with few liquidations.

Continuous monitoring of MEV is crucial for network security.

Abstract

This paper addresses the lack of research on quantifying Maximal Extractable Value (MEV) on Ethereum Layer 2 networks (L2s). Our findings reveal a substantial amount of MEV to be extracted on L2s, particularly on Polygon, with a lower bound of $213 million surpassing previous estimates. We observe that the majority of detected MEV on L2s consists of arbitrage opportunities, as liquidations are rare. These results emphasize the need for continuous monitoring and analysis of MEV on L2s, promoting informed decision-making for network selection and highlighting the associated risks.