Published on Fri Oct 17 2025 19:00:00 GMT-0500 (Central Daylight Time) by Orkid Labs

TL;DR

• Negative EV rate $I(t) = \max{0, -E(t)}$ measures blockchain capital inefficiency
• Generation-exploitation dynamics: Inefficiency builds at rate $\alpha(t)$, drains via arbitrage at rate $\beta I(t)$
• Entropy coupling: MEV is anti-entropy; profit $\Delta C \approx -\kappa \Delta S$ (entropy reduction)
• Real-world evidence: Searchers send 350 failed probes per successful $0.12 arbitrage, burning 132M gas
• Implication: Every MEV opportunity is a negative EV pocket waiting to be converted into profit

Introduction: What is Negative EV?

In traditional finance, expected value (EV) measures the average outcome of a bet or trade. Positive EV means profit over time; negative EV means loss. In blockchain systems, we extend this concept to EV per unit time—the rate at which value flows to or from market participants.

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Written by Orkid Labs