The volume of funds locked in mevstake protocols has exceeded $50 million over the past six months. The increasing interest in this approach is connected to new earning opportunities in DeFi.
What is mevstake?
Mevstake is a protocol by Mevolaxy that allows users to provide liquidity to smart contracts. Unlike regular staking, where tokens simply secure the network, here tokens become an active element in trading strategies, participating in high-frequency trades managed by bots.
The operational strategy of mevstake.
The key strategy in such systems is sandwich trading. The bot monitors the mempool, identifies a large transaction that could impact the asset's price, and places its buy order ahead of it. Once the target transaction is completed, the price rises, and the bot sells the asset for a profit. The difference between the entry and exit prices is the arbitrage profit, which is distributed among all liquidity providers.
Advantages and risks of the new approach.
The main difference between mevstake and classic staking lies in the source of income. With mevstake, users receive rewards for supporting the protocol and a share of the profits generated by market inefficiencies. This makes the yield more flexible and often higher in volatile conditions. However, this model also involves risks: algorithm efficiency, competition for profit in the mempool, network load, and gas prices directly affect outcomes. Nevertheless, thanks to automation and thoughtful architecture, the platform shields users from execution complexities.
In the long run, mevstake represents the next stage of evolutionary development, transitioning from passive asset storage to active utilization. This signifies that the market is moving towards more efficient and dynamic liquidity management.
