Last Friday's collapse of Silicon Valley Bank (SVB) and the subsequent contagion drove a significant increase in the profitability for validators who run the Ethereum network. Ethereum validators saw profits from MEV (maximal extractable value) spike as the bank collapsed and stablecoin USDC depegged from $1, according to data about Flashbots, which supplies the software responsible for 89% of all MEV activity.
MEV is a central component of trading on the Ethereum protocol, referring to the additional profits that validators earn as a result of inserting or reordering transactions within a block. After regulators shut down SVB, stablecoin issuer Circle confirmed late on Friday that $3.3 billion in cash deposits remained at the bank, causing the stablecoin to depeg from its 1:1 ratio with the US dollar. Consequently, users rushed to cash out their $USDC or move their crypto, leading to more transactions available to generate MEV profits.
During this time, users of Flashbots' MEV-Boost relay raked in a peak of 7,691 ETH in rewards worth about $13 million on March 11. This was more than twice as high as the last peak, which occurred during the FTX blowup on Nov. 9 when MEV rewards earned with Flashbots were 3,202 ETH or $5.5 million.
Toni Wahrstätter, an Ethereum researcher who created a Flashbots MEV-monitoring dashboard, commented that
"In times of extremely high MEV, it's good to know that the MEV rewards mostly end up with the validators, who don't have to run complex algorithms, engage in private deals or anything but just be lucky while securing the Ethereum blockchain."
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Ethereum
Infrastructure
