The Idea to Make MEV to Positive-sum Game

With a real-world example

yuichiro aoki
4 min readJun 30, 2023
Ideal trade vs actual trade


  • Mev is a zero-sum or perhaps a negative-sum game
  • People lose money on a single swap and let MEV searchers make money
  • If individual users make a perfect swap, the net result will be greater than the current situation

MEV is a zero-sum game

You can tell who are the winners and losers on MEV space these days. Many of the top bots are now very sophisticated that they can detect pretty much all arbitrage opportunities and extract them right after the trigger transactions.
When they are making money, someone is losing money before their transactions. Let’s how all this works.

How people lose money on a single swap

Uniswap: Price impact warning

When people swap too large token amounts compared to the current liquidity in the pool, they will lose money.
They get receive less tokens than they should have received. The biggest DEX, Uniswap, has this nice warning message in their UI above, but still some people make a swap and lose money.

Typical cases are:

  • Relatively large low-cap token swap (e.g. 1 ETH to <some shit coin>)
  • Swap on a very low liquidity pool (e.g. total liquidity of 1 ETH & 2000 DAI)

You can minimize this negative price impact by using DEX aggregator like 1inch. They split the trade across many pools. However, some pools are not indexed on 1inch, and you still could suffer the negative price impact by swapping a large low-cap token.

1inch: Price impact warning

How to minimize negative price impact by 1inch

How MEV searchers make money after a negative price impact

How MEV searchers make money after a negative price impact
When someone suffers a negative price impact and loses money, there are opportunities to make money right after their transaction. In this post, I call the first transaction “trigger tx” and the MEV transactions after that “backrun tx”.

Here is a real-world example from Arbitrum:

  1. trigger tx
  2. backrun tx1
  3. backrun tx2

In the trigger tx, a user (0x36528721ee15c46f2d24Fb6bfc5b580029749c5a) swapped 52,500 XIRTAM for 0.021535 ETH using Uniswap Universal Router and roughly lost 0.0136 ETH ($25.8) due to the negative price impact. While in the two backrun txs, the first one made 0.01228 ($23.05) ETH and the second one made 0.000425 ETH ($0.80).

Usually, it’s a good idea to swap on Uniswap, but when you swap a low-cap token, you have to be careful, and I recommend you take a look at DEX aggregator before the swap.
In this case, you can see from the chart below that the pools on Uniswap had much less liquidity compared to SushiSwap. So, that user not just suffered the negative price impact but also created opportunities for MEV searchers to make money.

liquidity size for ETH/XIRTAM

If the user swapped on SushiSwap, the user would have received 0.0351 ETH and didn’t create any opportunities for MEV searchers. 1inch probably would suggest this route because ETH/XIRTAM uniswap pools don’t appear on 1inch at the time of this writing.

Or even the user might have received more by splitting the swap to 92% on SushiSwap and 8% on Uniswap. The user would have received 0.03516457 ETH on this route as the chart below suggests.

Ideal trade vs Actual trade

Now, let’s compare the ideal trade and the actual trade in term of the net result. You can see that the amount the user receives in the ideal trade is greater than the actual trade plus the MEV bot profits. This is a positive-sum game compared to the current situation.
Given that there are many failed MEV transactions and the MEV searchers spend a lot of money on servers, it seems the actual impact of making an ideal swap is even greater than the chart below suggests.

Ideal trade vs actual trade

Final Thoughts

I just don’t like to see people lose tons of money on a single swap and give away to searchers. I hope this post helps people understand how MEV works and how they can minimize the negative price impact.

If you have any trading strategy you want to try but don’t know how to build, please reach me out on twitter. I can help you build your bots with ~$1,000.

Thank you for reading😁