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George Hristov

To celebrate the  [recent launch of TWAP orders](https://blog.cow.fi/cow-swap-launches-twap-orders-d5583135b472), the CoW team is running a trading raffle with several prizes up for grabs. To enter,  **all you have to do is make at least one TWAP trade during the month of September (TWAP-tember)**!

At the end of the month, the CoW team will select one Safe address to receive the grand prize:

> **_🏆 FREE CoW Swap orders for the month of October (aka, Up-tober_**_📈_**_)*_**

That’s right, Swap for free all month long… how’s that for greener pastures?

But we’re not done milking the fun, while only one lucky winner will receive the grand prize, there’s still more up for grabs:

-   **⌚5 people**  will receive CoW Swap-branded watches, to help time your trades
-   **💳 10 people**  will receive custom CoW Swap-branded  [Gnosis Pay](https://gnosispay.com/)  cards

Keep in mind, Ethereum mainnet TWAPs start at a minimum of $5k per part, but you can  [TWAP on Gnosis Chain](https://swap.cow.fi/#/100/advanced/WETH?utm_campaign=twap-tember-medium)  with only $5 per part! **In fact, TWAPs on Gnosis Chain have lower fees (thanks to lower gas costs) and lower $$ minimums than mainnet** (which should also come in handy for Safe deployment).

So what are you waiting for anon? Grab your  [Safe](https://safe.global/)  wallet and head over to  [CoW Swap](https://swap.cow.fi/#/1/advanced/WETH?utm_campaign=twap-tember-medium)  to get your TWAP on. If you’re new to TWAP, we’ve created a handy  [how-to guide](/learn/how-to-use-cow-swap-twap-orders-via-safe-wallet)  to help you with your first trade.

## 🐮 Let TWAP-tember begin! 🐮

Visit  [CoW Swap today to TWAP](https://swap.cow.fi/#/1/advanced/WETH?utm_campaign=twap-tember-medium)  your way to the top.

The winning addresses will be announced on the  [CoW Swap Twitter](https://twitter.com/CoWSwap)  so keep an eye on it for instructions on how the winners can claim their physical prizes!

_Terms & Conditions: To receive waived fees, orders must take place between the 1st and 31st of October, 2023. A maximum of $5000 in fees will be refunded._

**———————————————————————**

**UPDATE:**  The winners of TWAP-tember have been announced!

**Grand Prize Winner:** 0x4cb5eE1ad8Bf1B9d75422f9aD086Da2F84BD91B4

**Winners of the CoW-branded Watch & Gnosis Pay Card:**

1.  0xef5e42549886b9b060ee0381a3819ecaf0fdaeda
2.  0x38fe3792cea65f37cac5474dca8fff887e6d90b1
3.  0x2a4e4ab5e6680b76e00ad4555e39d2dcca42a659
4.  0x23a02d9e5d6ad9419128663976315689204be895
5.  0xf4a82a72faf46b2c55cdad3bcf7c0c1b564bab30

**Winners of just the Gnosis Pay Card**:

1.  0x3bc0cb287f74504347d50fe3ada6d90214e6f512
2.  0x952656cb0121d79a320bb0a7188fb4abb2b5dd94
3.  0x2855159d938d09d00d4fccf42f69ccb8f5b620e2
4.  0xdb72b7dc6ddf0c95468ce19b6539b9a44e561679
5.  0x3e23fd468f65e77aea8f548ebd382e86e7a99309

Congratulations to the winners and thank you to everyone who participated!

To claim your prize, please  [DM us on Twitter](https://twitter.com/CoWSwap)  by November 1st.



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Attention all traders, the CoW Swap herd is thrilled to announce TWAP-tember, the greatest trading extravaganza of the year!


Introducing TWAP-tember

Maximal extractable value (MEV) has become a controversial topic in the DeFi community over the last few years as the practice has gained wider adoption. Some blockchain projects take steps to protect their users from suffering MEV, but there are also advocates of the practice who argue that it contributes to market efficiency and validator compensation.

[CoW DAO](https://cow.fi/)  creates products that protect Ethereum users from negative outcomes, so it’s clear that participants in the DAO are no fans of MEV. The technical innovations that MEV searchers have pioneered in the pursuit of maximizing profits, however, are indeed impressive.

Thankfully, this tech can be put to good use in a way that benefits users and still makes money: Rather than being MEV searchers, these users should consider becoming CoW Protocol solvers.

## What is a Searcher?

Searchers are DeFi market participants, most often bots, that monitor pending Ethereum transactions for arbitrage opportunities.

Captured arbitrage is known as  [maximal extractable value (MEV)](/learn/understanding-mev-protection), and it’s a pernicious form of price exploitation that occurs across all types of transactions. To date, MEV has cost traders over $1.5 billion in losses. Most of these losses have been facilitated by searchers who pocket a large portion of the arbitrage for themselves.

## What is a Solver?

![1-switch-from-searcher-to-solver.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_switch_from_searcher_to_solver_7763c26103.webp)

CoW Protocol is a meta DEX aggregator that relies on bonded third parties known as “[solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)” to execute user trades. The protocol uses an  [intents-based trading system](https://docs.cow.fi/cow-protocol/concepts/introduction/intents)  where user intents get grouped into  [batches](https://docs.cow.fi/cow-protocol/concepts/introduction/batch-auctions). The solver that can execute the orders at the best price wins the right to settle the batch (find out more about how CoW Protocol works  [here](https://docs.cow.fi/category/concepts).)

Solvers are compensated in COW tokens for settling batches, incentivizing them to compete to find better prices and win the right to execute user intents. In return for this compensation, solvers provide users with a number of benefits including:

-   Finding optimal prices for the trades in a batch
-   Protecting users from MEV by executing transactions on their behalf
-   Providing abstraction that allows for benefits like gasless trades, transaction bundles, directly tapping into LPs, and more

## Searchers vs. Solvers

Fundamentally, searchers and solvers optimize for the same thing: maximizing profits. However, they serve different purposes, so their incentives diverge.

Searchers make money by performing MEV attacks on vulnerable transactions — giving users worse prices and keeping the difference for themselves. Searchers are incentivized to maximize their profits while ensuring that they are bidding enough for their transactions to be included in the next block.

In Ethereum, searchers work to out-bid each other to have their transactions included and make money. This is similar to what solvers do on CoW Protocol. The difference, of course, is that  **searchers benefit validators while solvers benefit users.**

## Why Become a Solver?

The fundamental difference between searchers and solvers is that searchers extract value from user transactions while solvers add value to them.

MEV may be a profitable enterprise in the short-term, but it hurts users and makes for a more toxic ecosystem. This turns potential new entrants away, feeding a vicious cycle — after all if there are no users left, who will searchers make money off of?

Solvers are the opposite: they take the same tech but they leverage it for the benefit of users. This cycle is virtuous, rather than toxic. Users achieve better prices, so they’re incentivized to use the product more, which means more order flow and better compensation for solvers.

From a technical standpoint, the methods searchers use to find arbitrage opportunities can be used to instead find solutions to batches. Searchers can leverage their existing nodes, algorithms, servers, AMM-indexed liquidity, simulation services, and more to become a good solver. This means that the lift to turn a searcher into a solver is relatively minor, while the upside is significant.

## Who can be a Solver?

CoW Protocol was the first DEX to implement intent-based trading, a model that the entire DeFi industry is now moving towards. This means that  [opportunities for solvers](https://dune.com/cowprotocol/solver-info)  will only grow in the coming years.

Thanks to a permissionless structure, anyone can become a solver. The main requirement is to put up a bond which serves as a guarantee that the solver will follow the  [rules](https://docs.cow.fi/cow-protocol/reference/core/auctions/competition-rules)  or risk getting slashed.

Solvers that do well find good solutions to the  [batch auction problem](https://docs.cow.fi/cow-protocol/reference/core/auctions/the-problem). They also generally:

-   Develop an efficient optimization algorithm
-   Identify and solve special problem instances that are easy to solve
-   Consider diverse liquidity sources
-   Integrate external market makers

## How to Become a Solver

Transforming a searcher setup into a solver setup or writing a new solver takes some technical expertise. We won’t go into it in this article, but you can find the requirements and specifications for becoming a solver in the  [CoW Protocol solver documentation](https://docs.cow.fi/cow-protocol/tutorials/solvers).

We also answer questions and provide technical support through the CoW Protocol  [Discord](https://discord.gg/cowprotocol).

Happy solving!

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Searchers make Ethereum worse for everyone, but with just a few tweaks they could contribute to the ecosystem instead


MEV Bots: Switch From Searcher to Solver

## TL;DR

-   During the month of  **July**, CoW Protocol handled a total volume of  **$865M**, and generated a surplus of  **$4.8M**
-   In exciting news, CoW Protocol  [launched CoW Hooks](https://thedefiant.io/cowswap-enables-complex-swaps-with-hooks), completed a big  [overhaul of surplus notifications](https://blog.cow.fi/announcing-cow-swap-surplus-notifications-f679c77702ea), processed a  [$27.3 million swap for Nexus Mutual](https://www.theblock.co/post/240750/nexus-mutual-diversifies-27-3-million-into-rocket-eth-using-cow-swap?utm_source=twitter&utm_medium=social), and much more

## Protocol Stats

This month, CoW Protocol settled a total of  **$865M.**
![1-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_july_2023_highlight_47dd26561a.webp)

This month, the top 3 batches worth highlighting are the following:

-   **Batch with the highest % of CoW trades (**[**Transaction details**](https://explorer.cow.fi/tx/0xf5fcc8147ebc22122407d514770e2473c2536ff5768780e560076cfe8b020feb?tab=orders&vis=trades)**).** The total batch volume was  **$514,649.23**, and it was created by two traders who were CoWed for  **10% ($49,916)** of the batch volume. One trader was selling  **GHO** with **USDC**, and the other trader was selling  **USDC**  with  **GHO**.
![2-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_july_2023_highlight_11e4b6d7ec.webp)

-   **Batch containing the highest volume (**[**Transaction details**](https://explorer.cow.fi/tx/0x1371ea08e02d465f3225a98f6c73b90473b49493adb6791e5443112173adc974?tab=graph)**)**: The total batch volume was  **$26,737,269.23** and it was created by a single trader who was swapping  **ETH**  **to**  **rETH**.
![3-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_july_2023_highlight_51e10b7ef8.webp)

-   **Batch with the highest amount of surplus (**[**Transaction details**](https://explorer.cow.fi/tx/0xc54930ec6a9b45490e069bbf1a6159f056ea35b64f0c8fbfa4766ef869f5cf37?tab=graph)**):**  The total batch volume was  **2,300 ETH** and it was created by a single trader who was swapping  **ETH**  **to**  **stETH**. This trader achieved the largest surplus for the month of  **July**  by getting  **46 stETH**  extra, which at the time of trade was roughly  **$87,139.36K**  (**2.04%**  surplus).
![4-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_july_2023_highlight_7887ec7eb7.webp)

During the month of  **July**, the top 10 traders traded a total of  **$27M.**
![5-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_july_2023_highlight_40c0cc45e5.webp)

In the table below you can see the trade volume that CoW Swap traders have executed as well as the total volume for all trades. Our most active trader executed a whopping  **$7.5M** in trades with CoW Protocol this month.
![6-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_july_2023_highlight_d1c9054351.webp)

## Solvers

In  **July**, solvers generated a total of  **$4.8M**, which is money in the pockets of traders.
![7-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_july_2023_highlight_5efbb058a2.webp)

Below you can find a breakdown of how each solver performed in July.

![8-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_july_2023_highlight_544663fea9.webp)

## Governance

It has been a quiet month in terms of executed proposals, the CoWs were relaxing!
![9-july-2023-highlight.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_july_2023_highlight_a85b28a529.webp)

### Draft Proposals

This month, there were two new proposals asking for feedback before moving into the next phase, final CIPs, in their current form:

-   [Adjust Solver Rewards to Allow for a Higher Cap](https://forum.cow.fi/t/adjust-solver-rewards-to-allow-for-higher-cap/1842/1)
-   [CIP-28: Should CoW DAO send its profits to the CoW Treasury Core unit to generate extra revenues?](https://forum.cow.fi/t/cip-28-should-cow-dao-send-its-profits-to-the-cow-treasury-core-unit-to-generate-extra-revenues/1805)

### Technical Discussions

As an “agora” for technical topics on batch auctions or CoW Protocol-related topics, the forum surfaced some very interesting posts:

1.  [Merge Settlement Contract and Uni v4](https://forum.cow.fi/t/merge-settlement-contract-and-uni-v4/1769)
2.  [Automated Treasury Management Methodology](https://forum.cow.fi/t/automated-treasury-management-methodology/1799)
3.  [Fast Liquidity in CoW](https://forum.cow.fi/t/fast-liquidity-in-cow/1841)

Make sure to read them and leave comments — your feedback is highly appreciated and will help move these important topics forward. If you are interested in submitting a proposal to the CoW DAO, make sure to use the following  [template](https://forum.cow.fi/t/cip-0-template/28).

## CoWmunity News

-   Launched  [CoW Hooks](https://thedefiant.io/cowswap-enables-complex-swaps-with-hooks), allowing users to execute multiple DeFi actions like swapping, bridging, staking, depositing, borrowing, & more through a single intent
-   Released a CoW Swap widget that allows any dApp to inject the CoW Swap UI directly into their website
-   Upgraded surplus notifications on  [the swap page](https://swap.cow.fi/)  to show users how much surplus they have received after every trade, as well as their overall surplus through the wallet overview page
-   Nexus Mutual used CoW Swap to  [diversify $27.3 million into Rocket Pool ETH](https://www.theblock.co/post/240750/nexus-mutual-diversifies-27-3-million-into-rocket-eth-using-cow-swap?utm_source=twitter&utm_medium=social)
-   Aave DAO swapped aBAL & aWETH into an 80/20 Balancer pool  [in a trade worth close to $2 million](https://twitter.com/CoWSwap/status/1678498134195044361?s=20)
-   Andre Canidio from the the CoW Research Team  [published a paper](https://twitter.com/CoWSwap/status/1679883540740325376?s=20)  exploring a novel method for making batch AMMs more efficient
-   The CoW Swap team  [headed to Paris](https://twitter.com/CoWSwap/status/1680848132173713408?s=20)  to take on ETH CC where CoW Swap  [hosted an MEV day](https://twitter.com/CoWSwap/status/1671216421660147712?s=20)  and  [participated in a “Desiging a DEX” panel](https://www.youtube.com/watch?v=6K-QX6HtoiM)
-   MEV Blocker  [surpassed 4 million transactions](https://twitter.com/CoWSwap/status/1684602457056563200?s=20), protecting over $11 billion of trading volume
-   A grant proposal for “Improvement and Enhancement of the CoW Swap Explorer” was  [approved through Snapshot](https://snapshot.org/#/cowgrants.eth/proposal/0xa9bedf14d3b6fc01c5944390c9ef2a153e0cecc56f4354e198a2ba873900fb18)
-   A grant application for v2 of the Milkman contract  [was posted to the forum](https://forum.cow.fi/t/grant-application-milkman-2-0/1840?u=middleway.eth)
-   Published several articles on our blog:  [CoW Hooks: You are in control](https://blog.cow.fi/cow-hooks-you-are-in-control-480ccb40044a),  [Announcing CoW Swap Surplus Notifications](https://blog.cow.fi/announcing-cow-swap-surplus-notifications-f679c77702ea)  and  [What is Frontrunning?](https://blog.cow.fi/what-is-frontrunning-b2641ad7af21)

## Product Updates

**Backend**

The backend team has been working hard to improve the product infrastructure. In  **July**, we:

-   Deployed arak to start indexing liquidity-related events
-   Identified and proposed fixes for CIP-20 support in co-located driver
-   Recorded order events into a database for accurate measurements for our SLAs
-   Stored solver addresses with the winning quotes for CIP-27
-   Ran more price estimators
-   Made minor driver bug fixes and consistency changes

**Frontend**

The frontend team has been pushing hard for several improvements in the UI front as well as the overall UI infrastructure. In  **July**, we:

-   Deployed a hotfix with WalletConnect v2 support
-   Worked on displaying all parts and filled % for the TWAP UI
-   Added default UTMs for links (to credit volume to people that found CoW Swap using cow.fi)
-   Made bug fixes and put final touches on TWAP
-   Made AppData changes to the frontend stack (app-data, SDK, Explorer, CoW Swap)
-   Implemented a Google analytics update for the Grants website

## Open Job Positions

The CoW Protocol team is currently looking to hire:

### Engineering

[Backend Engineer with RustRemote or Lisbon](https://boards.eu.greenhouse.io/cowswap/jobs/4208538101)

For more information on our latest job openings, visit:  [https://cow.fi/careers](https://cow.fi/careers)


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Welcome back to another CoW Update, where we break down the most notable developments of the last few weeks at CoW Protocol.


CoW Protocol July 2023 Highlights

The CoW Swap team is excited to release a simpler trading experience for its users. Gasless approvals allow traders to swap over 150 tokens completely gaslessly through CoW Swap.

Before the launch of gasless approvals, CoW Swap users benefitted from gasless trading thanks to CoW Swap’s  [intent-based](/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade)  execution model. However, they still needed to pay gas fees (in ETH) to execute approval transactions the first time they wanted to trade any token.

With gasless approvals, CoW Swap now allows users to sign a message (gas free!) that gives  [solvers](https://docs.cow.fi/solvers/solvers)  permission to execute the approval transaction on their behalf. Solvers then bundle the approval transaction with the first swap, and users pay fees in the sell token.

The result? Users can now do an entire swap, even for a new token, without spending a gwei in ETH, or even holding any ETH in their wallet at all. That’s a smoooooother (and cheaper) user experience. Moo-gnificent!

## Benefits of gasless approvals

This new upgrade comes with a host of benefits relevant to EOA and multisig wallets alike.

-   **Fully ETH-less swaps:** New users and fresh wallets can complete swaps end-to-end without needing ETH — that’s especially nice for airdrop farmers and privacy seekers
-   **Faster trades**: CoW Swap users don’t have to wait for an approval transaction to execute before the swap — traders can now swap right away, even with tokens they haven’t traded before
-   **Bundling efficiency**: Approval transactions execute alongside orders, in the same block — shielded from fluctuating gas prices, for a more cost-efficient experience overall
-   **Enhanced security**: Only an approved spender can execute transactions on behalf of a trader — users can trust that CoW Swap is as secure as ever

## Gasless approvals under the hood

Gasless approvals rely on  [ERC-2612: Permit Extension for EIP-20 Signed Approvals](https://eips.ethereum.org/EIPS/eip-2612).

Essentially, a function creates a signature that can call approvals directly on behalf of the owner. This allows a third party, such as a solver, to spend funds on behalf of the user. For security, gasless approvals rely on nonces which indicate the number of times a permit signature has been used. (There is also a time window in which the signature must be used.) This protects users from replay attacks because it is impossible to replicate an approval with the same nonce.

Each Ethereum transaction has a minimum fixed transaction cost associated with it. When executing transactions individually, this cost is usually higher per action than if users bundle multiple transactions together. So, in addition to creating a better user experience for traders, gasless approvals also lower the overall cost of trading on CoW Swap.

## Now live on CoW Swap

Gasless approvals are now live on  [CoW Swap](https://swap.cow.fi/#/1)  for Ethereum Mainnet. See which tokens are currently supported by checking out the  [CoW Swap Permittable Tokens List](https://hackmd.io/@mastercow/cowswap-gasless-approvals).

As always, on CoW Swap:

-   Orders are free to place and cancel
-   Traders never pay for failed transactions
-   Fees that cover settlement costs are paid in traders’ sell tokens
-   Traders are fully protected from MEV

Happy trading!

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Announcing Gasless Approvals on CoW Swap


CoW Swap has recently become one of the first DeFi projects to launch native support for Time-Weighted Average Price (TWAP) orders. TWAP orders spread out large trades into multiple smaller orders. This reduces slippage & price impact and helps traders enter or exit a market position at an average price.

TWAP has been around for a while on centralized exchanges, but CoW TWAP — CoW Swap’s version of TWAP — comes with several important benefits that traders won’t find on CEX alternatives.

## Benefits of TWAP orders

### Dollar-Cost Averaging (DCA)

TWAP orders help automate the dollar-cost averaging (DCA) investment strategy. DCA involves investing a fixed amount of money in an asset at regular intervals, regardless of the asset’s price, in order to reduce the impact of market volatility.

In highly volatile markets like crypto, the risk of making a large investment just before a sudden price shift is significant. TWAP minimizes this risk by breaking down your investment into smaller, evenly distributed purchases over time. This finds an average market price and helps smooth out market volatility. Want to buy an asset but you’re not sure exactly when to click the “Swap” button? TWAP-enabled DCA means you can forget about timing the market and get the average price instead.

Investors can also use TWAP to sell their positions through dollar-cost averaging. Simply switch the assets you’re swapping and TWAP will help you exit the market for an average price.

Riding the crypto waves has never been so s-moooo-th! 🐮

### Reduce your price impact

Large orders move markets and traders often get worse prices as a result. By splitting up large trades into multiple smaller orders, TWAP helps mitigate the negative effects of price impact. A bunch of smaller orders affect prices much less than one big order, meaning you end up getting a better deal for your trades.

### Reduce your slippage

Finding the right slippage can be tricky. Set it too low and your order might not go through, too high and you could fall prey to MEV. Using TWAP to split up a large order into smaller parts allows you to use a smaller slippage tolerance for each part. The MEV bots can stay hungry…

## Why TWAP with CoW Swap?

Those familiar with CoW Swap know there’s always something extra in our barn 😉. Below are some exclusive benefits you’ll only find on CoW TWAP.

### Always receive 100% of your order surplus

CoW Swap searches for surplus opportunities on every order and TWAP orders are no exception. In fact, since TWAP orders are split up into different parts, each part is another opportunity to find surplus for your trade.

In our tests, selling 1,000 ETH in four parts of 250 ETH each allowed us to get a price for the order that was 3.5% better than selling the 1,000 ETH all at once! This was in large part thanks to CoW Swap’s batch auctions that include finding  [Coincidence of Wants](/learn/what-are-cows-on-cow-swap) and other price improvements.

### Get price protection
![1-why-twap.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_why_twap_bd8b2c362b.webp)

After you select the assets you want to trade through CoW Swap’s TWAP interface, you’ll need to indicate the number of order parts you want to use, as well as the total duration over which you’d like your TWAP order to execute. From these selections, the interface automatically calculates each part duration and the amounts you will be buying and selling per part.

Unique to TWAPs on CoW Swap is the “price protection” feature. Price protection ensures that your order will stop executing if the market price of the assets moves by more than your specified percentage.

## Get started with CoW TWAP

To get started with TWAP orders on CoW Swap, you’ll first need to ensure that you have a Safe wallet. Currently, TWAP is only available through Safe but support for more wallets will be coming soon.

Don’t have a Safe? No problem! Create one  [here](https://app.safe.global/share/safe-app?appUrl=https%3A%2F%2Fswap.cow.fi&chain=eth). After you make a Safe, you’ll also need to upgrade your fallback handler. Learn what this means and how to do it  [here](/learn/all-you-need-to-know-about-cow-swap-new-safe-fallback-handler).

Once your Safe is fully set up, you can access TWAP directly through the  [CoW Swap order interface](https://swap.cow.fi/#/1/advanced?utm_source=medium&utm_campaign=why-twap).

TWAP orders on Ethereum Mainnet have a $5,000 minimum per order part. This ensures that gas costs are relatively low compared to the entire order size, even with multiple parts involved. Smaller traders can also enjoy CoW TWAP on Gnosis Chain where part minimums are only $5 (and the gas is much cheaper!)

You can find the full how-to guide on CoW TWAP orders  [here](/learn/how-to-use-cow-swap-twap-orders-via-safe-wallet).

As always, on CoW Swap:

-   All prices are aggregated from the best available on-chain and off-chain liquidity
-   Traders are fully protected from MEV
-   Orders are free to place and free to cancel
-   Traders never pay for failed transactions
-   Transactions are gasless as fees are paid in the sell token

Happy TWAPping!
![2-why-twap.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_why_twap_6f088c5738.webp)

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How CoW Swap’s new feature, Time-Weighted Average Price (TWAP) orders helps you get better prices for your trades


Why TWAP?


When CoW DAO released [CoW AMM](https://cow.fi/cow-amm), its goal was simple: help liquidity providers keep hold of their liquidity. Why was this a problem? Outside of stable-to-stable pools, liquidity providers typically lose 5-7% of their liquidity each year. It’s the dirty secret of automated market making: [hundreds of millions of dollars](https://cow.fi/cow-amm) of LP funds are stolen by arbitrageurs every year.

  

These losses are known as loss-versus-rebalancing (LVR). LVR is a bigger source of MEV than frontrunning and sandwich attacks combined. [CoW AMM](https://cow.fi/cow-amm) is the first product CoW DAO built that directly keeps LVR out of liquidity pools.

  

Since its inception, LPs have been protected from LVR, and also benefited from [CoW AMM](https://cow.fi/cow-amm)’s batch auction and solver system. This has meant LPs have enjoyed [additional surplus](https://dune.com/cowprotocol/cowamms), as solvers work to find the most effective way of rebalancing liquidity pools.

  

Providing liquidity on [CoW AMM](https://cow.fi/cow-amm) has changed the liquidity provider game to such an extent, CoW AMMs behave more like Enhanced Index Funds than the leaky pools of old.

  

In this article we explain why that’s happened, and what doors [CoW AMM](https://cow.fi/cow-amm)s open for more sophisticated pools in future. CoW AMMs are evolving, fast, meaning the possibilities for liquidity providers are changing too.

## What is an Index Fund?

  

An index fund is a type of mutual fund (a professionally managed investment portfolio that pools money from many investors to purchase securities) or exchange-traded fund (ETF) that tracks the performance of a specific index by buying stocks of every company in that index.

  

Index funds are a popular choice for investors because they are a low-cost way to diversify their investments, all the while being passive: no fund manager is actively creating an investment strategy, and charging hefty fees for the privilege. They are so popular, index funds, as well as other kinds of passive investors [hold 33.5% of the US stock](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4188052) market.

  

Index funds typically outperform hedge funds running fancy investment strategies. So much so, legendary investor Warren Buffett made a [$1 million bet](https://www.bloomberg.com/news/videos/2024-07-30/buffett-s-famous-bet-on-the-s-p-500-and-hedge-funds?sref=23bomWKL) in which he wagered that an S&P 500 index fund would outperform a hedge fund over ten years.

  

These funds can be designed to track anything from the price of a commodity to a large and diverse collection of securities. ETFs, or exchanged traded funds meanwhile, can be designed to track specific investment strategies. Those strategies could be for different purposes: income generation to speculation or to partly offset risk in an investor’s portfolio.

  

But these aren’t the only types of Index Funds. There are also Enhanced Index Funds, which we explore in the next section.

## What is an Enhanced Index Fund?

  

If an Index Fund is a passive fund, an enhanced index fund (EIF) is a fund that uses active management to improve returns. They typically use a combination of active and passive investing strategies to generate returns that are higher than the benchmark while keeping risk within a controlled level.

  

The ‘enhanced’ part of the Index Fund is where experts assess which assets inside an index are performing strongly, and which are performing poorly. Once identified, an EIF can be rebalanced, to increase the weighting of one asset, and reduce the asset for another to help the overall fund perform better.

  

This management falls under a broader category called portfolio theory. It is a branch of finance that studies how people should design their portfolios. At a super high level, it says that:

-   People should care both about expected returns and risk.
    
-   Holding multiple assets instead of a single asset (i.e., diversification) is valuable because it reduces risk.
    
-   The problem with diversification is deciding how much to invest in each asset, and several theories exist on how to do so. But broadly speaking, an asset should constitute a higher share (or weight) of the portfolio if its expected future return is high, its volatility is low, and its correlation with the rest of the portfolio is also low.
    

  

Now that we understand the principles behind Index Funds and Enhanced Index Funds, let’s turn to how [CoW AMM](https://cow.fi/cow-amm)s behave like EIFs, and what that means for crypto more broadly.

## What is a CoW AMM?

  

[CoW AMM](https://cow.fi/cow-amm) is the first product on any blockchain to tackle the Loss-Versus-Rebalancing problem head on.

  

LVR is a form of maximal extractable value (MEV) responsible for more price exploitation than all other forms of MEV combined. Many liquidity providers haven’t even heard of LVR, but it costs them 5–7% of their liquidity, resulting in hundreds of millions lost each year. In fact, when accounting for LVR, many of the largest liquidity pools are not profitable for LPs at all.

  

The [CoW AMM](https://cow.fi/cow-amm) is a special kind of automated market maker designed to help liquidity providers capture MEV from arbitrageurs.

  

Here’s how it works:

1.  Liquidity providers deposit tokens into protected [CoW AMM](https://cow.fi/cow-amm) liquidity pools
    
2.  This liquidity becomes available to CoW Swap traders, who can access it similarly to other sources of liquidity
    
3.  Solvers bid to rebalance [CoW AMM](https://cow.fi/cow-amm) pools whenever there is an arbitrage opportunity
    
4.  The solver that offers the most surplus to the pool wins the right to rebalance the pool
    

  

This design eliminates LVR by capturing arbitrage value for LPs and shielding it from MEV bots.

Said another way: while most AMMs allow arbitrageurs to make money at the expense of their LPs, CoW AMM protects this money for the LPs instead.

## Why does a CoW AMM act as an Enhanced Index Fund?

  

As highlighted in earlier sections, Index Funds passively follow an asset or strategy. Because LVR is removed, whenever prices change the AMM will be rebalanced so to make sure that its total TVL is split between the different assets in a pre-specified way: 50/50 for standard constant product, and 80/20 for 80/20 pools.

  

The AMM therefore behaves like a simple index with two components. But CoW AMM pools go one step further: liquidity providers earn trading fees whenever liquidity in the AMM is used to fulfil a user order.

  

Does this mean all liquidity pools can be considered to behave similarly to an Enhanced Index Fund. Not exactly. The simple answer is LVR. CoW AMM was the first on-chain product that solves this. Other pools leak liquidity meaning they aren’t as viable an option as a CoW AMM for investors looking for more consistent returns.

  

With the launch of 80/20 pools, LPs have more options. These pools now offer features including:

  

- Asymmetric upside

- Reduced impermanent loss

- Hedging

  

In essence, these pools can maximize exposure to the native token while providing an avenue to boost returns via trading fees and token rewards.

## But this is just the beginning

  

For now, this is limited to simple, fixed-weight rebalancing strategies, but in the future, more complex passive investment strategies will be possible. For example, a multi-token [CoW AMM](https://cow.fi/cow-amm) could have a “manager” who can change its weights and add and remove assets.

  

At present CoW AMM pools feature just two assets. But in future, CoW AMMs will be capable of hosting multi-asset pools. Over on Balancer, there are already [8-asset pools](https://medium.com/balancer-protocol/the-benefits-of-multi-token-pools-653eea3ef03a) featuring multiple tokens within a single pool.

  

Liquidity providers are able to set up their own pools with custom token splits and weights. This level of customization helps providers have full control over their portfolios and plan to reduce their exposure to risky assets. It also enables low-fee swaps for traders using those same pools.

  

CoW DAO has plans to bring multi-asset pools with customisable weights to liquidity providers in future with its class-leading LVR protection. They’re called Decentralized Trading Funds or DTFs.

  

The Decentralized Traded Fund offers the chance for holders to earn a passive income. It combines the ability to gain exposure to assets, but also the ability to enter and exit the fund whenever it is convenient. On top of that, a DTF does not require holders to pay a fee to CoW DAO. More on that in the coming weeks.

  

The end game is a market mechanism that allows retail investors who want to run simple passive investment strategies to do so by contributing liquidity to AMMs, while earning additional returns.

  

If traditional finance is an indication, these AMMs could attract up to a third of the total market cap of various assets as liquidity, providing super-efficient trading at close to zero slippage.

  

Decentralized finance will finally provide better market mechanisms than traditional finance, opening the door to rebuilding the financial system on blockchain rails.

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Thanks to CoW AMM's LVR busting capabilities, LPs can earn passive income, in new and exciting ways.

Why CoW AMMs Act as Enhanced Index Fund

A smart contract is an executable program on a blockchain network. Smart contracts make up the backbone of the web3 industry as they enable many of the use-cases that blockchains are known for including staking, swapping, lending, borrowing, and much more.

Blockchains eliminate the need for a central authority or intermediary when it comes to running a mass, decentralized network of nodes. Smart contracts bring these benefits to specific use-cases by enabling the creation of decentralized apps (dApps).

Smart contracts were first popularized with the launch of the Ethereum blockchain in 2015. Ethereum also includes a programming language for creating smart contracts known as “Solidity.”

## How do Smart Contracts Work?

Smart contracts are created as computer code that is hosted and executed on a blockchain network. A decentralized set of nodes keep a copy of the entire state of the blockchain, including all deployed smart contracts, in order to ensure that the smart contracts are executed in a reliable and transparent way.

Let’s take a look at the process of creating and deploying a smart contract:

**Contract Creation**: Developers write smart contracts using programming languages compatible with the blockchain, such as Solidity for Ethereum. The code within the smart contracts include rules for execution and the logic necessary for the smart contract to perform its function — such as lending, swapping, borrowing, etc.

**Compiling**: After it’s written, the smart contract is compiled into bytecode. This is the machine-readable language that execution environments such as the Ethereum Virtual Machine (EVM) use.

**Deployment**: Once it’s compiled, the smart contract is deployed to the blockchain through a transaction that includes the contract’s code. This transaction is then broadcast to the network and assigned a unique address on the blockchain, similar to how blockchain wallets have addresses.

**Trigger**: Smart contracts are designed to automatically execute when predefined conditions are met. They can be triggered by various events, including receiving a certain amount of cryptocurrency, the expiration of a timer, receiving a trigger from an external data source, and more.

**Execution**: Once a contract is triggered, blockchain nodes execute the contract’s code. Since every node on the network independently runs the code, the execution is verified and validated multiple times. This multi-party validation is what provides the security and transparency smart contracts are known for.

**State Change**: All actions taken by a smart contract are treated as transactions. These transactions can change the state of the contract, interact with other contracts, alter user balances, and more.

**Results**: The state change caused by the execution of the smart contract is recorded on the blockchain and assimilated by the various nodes. Changes in balances, variables, ownership records, and more are recorded on the blockchain in an immutable manner.

**Continuous Interaction**: Smart contracts can remain on the blockchain indefinitely, ready to be triggered again under the right conditions.

An important aspect of smart contracts is that they are permisionless, meaning that anyone can develop and deploy a smart contract on any public blockchain. All they have to do is pay the necessary gas fees to deploy the smart contract.

## What are Smart Contracts Used For?

Smart contracts are at the heart of decentralized apps (dApps). They power the entire world of decentralized finance (DeFi) as well as other fields like blockchain insurance, gaming, NFTs, social networks, and much more.

### Decentralized Exchanges

dApps that enable trading, like Uniswap, rely on smart contracts for processing user funds, finding liquidity, and executing swaps.

More complex decentralized exchanges such as  [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=smart-contracts-article)  use smart contracts to power solver competitions where multiple independent parties find liquidity on behalf of users. In this case, smart contracts are essential for enforcing the rules of the competition and ensuring users get the best deal for their trades.

### Lending & Borrowing Platforms

Platforms like Aave allow blockchain users to take out overcollateralized crypto loans without relying on traditional counterparties. These dApps utilize smart contracts to allow users to lend out their crypto assets or borrow against them.

The platform works by having users deposit crypto tokens into liquidity pools managed by smart contracts and allowing borrowers to take out loans from these liquidity pools by providing collateral. Smart contracts automatically enforce the terms of the loan, such as collateral requirements, interest rates, and repayment terms. They also managing liquidations whenever necessary.

Additionally, on-chain lending platforms use algorithmically determined dynamic interest rates, which adjust based on the current supply and demand for each asset in the pools. Smart contracts calculate and update these rates in real-time, ensuring that lenders receive competitive returns and borrowers pay fair rates.

### Liquidity Providing

Exchanges that rely on automated market makers (AMMs) use smart contracts not only for the swap process, but also for allowing users to provide liquidity.

[AMMs](/learn/cow-protocol-glossary#:~:text=amm)  allow users to trade assets without the need for a centralized intermediary, or even a traditional orderbook. Whenever a user swaps tokens, they interact with the appropriate liquidity pool’s smart contract. The contract calculates the amount of tokens that can be received based on the current ratio of tokens in the pool, with the goal of ensuring that the pool remains balanced. The transaction is then executed automatically by the smart contract without requiring a traditional buyer-seller match.

### Staking

Many smart-contract-enabled blockchains, such as Ethereum, use proof-of-stake consensus mechanisms. These systems require users to lock up, or “stake,” tokens in order to validate the state of the blockchain. Smart contracts are essential to this process.

Tokens used for staking are locked in a smart contract that ensures that the tokens cannot be spent elsewhere while they are staked. This contract typically specifies conditions such as the minimum staking period, the minimum and maximum stake amounts, and other rules governing the staking process.

Smart contracts also calculate the rewards distribution for stakers, select which validators should create the next block, slash (penalize) validators in case of misconduct, and facilitate unstaking and withdrawals.

**In summary, smart contracts are crucial to the functions of modern-day blockchains.** They ensure these systems run according to certain rules, with no down-time, and with set rules for processing all submitted transactions. All with no centralized control or trusted intermediary!

## What are the Benefits of Smart Contracts?

So far, we’ve seen that smart contracts ensure that dApps are online 24/7 and function without the need for counterparties. Below we take a look at some additional benefits.

**Automation**: Smart contracts are automatically executed, meaning they effectively eliminate counterparty risk. Various parties in transactions also have their funds transferred automatically without having to wait for signatures, notaries, or other forms of manual verification.

**Transparency**: Smart contracts deployed on blockchains are publicly visible, meaning anyone can audit the code and determine what the smart contract does. This transparency encourages trust as malicious code can be quickly identified and there is no doubt about what steps a smart contract will take when executed.

**Immutability**: As a corollary to transparency, smart contracts are also immutable, meaning that they cannot be changed without these changes becoming public. This adds an additional layer of transparency which ensures smart contracts perform what they are supposed to with no malicious code and without censoring outputs.

## What are the Limitations of Smart Contracts?

The main downside of smart contracts is (aptly) known as “smart contract risk” — which is the risk that the smart contract has a bug that prevents it from executing properly or puts user funds at risk.

A powerful benefit of smart contracts is that they are immutable, meaning no one can sneak changes in. This can also prove to be a headache, however, if a smart contract is deployed with an error. For this reason, it’s extremely important that code deployed on blockchains is as error-free as possible. In service of this goal, the cottage industry of smart contract audit services has emerged to help make sure deployed code has no bugs and smart contract risk is well managed.

## How Smart Contracts Enable Decentralized Finance

Decentralized finance, or “DeFi” is an emerging field that aims to transform the way individuals move money, ending the reliance on centralized intermediaries like banks.

![1-what-is-a-smart-contract.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_is_a_smart_contract_80275c1ffb.webp)

A core DeFi function is the ability to swap cryptocurrencies from one to another permissionlessly. One of the leaders in this space, CoW Swap, is a meta DEX aggregator that enables the most efficient and price optimal swaps in DeFi.

CoW Swap relies on smart contracts for much of its functionality. Not only do smart contracts enable the nuts and bolts of processing user funds, they also govern the solver competition that sets CoW Swap apart from other decentralized exchanges.

Smart contracts ensure that CoW Swap users receive the best prices for their trades through a decentralized solver competition where independent third parties compete for the right to settle user trades. The best solution is algorithmically determined based on which solver provides the most surplus to users. Thanks to smart contracts, CoW Swap users know that they are getting the best deals for their trades.

Give CoW Swap a shot and put its smart contracts to work for you:  [swap.cow.fi](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=smart-contracts-article).

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Smart Contracts enable the majority of decentralized apps and are critical to modern blockchain ecosystems


What is a Smart Contract?

_Blockchains enable reliable, trustless transactions on a large scale, however the automated nature of the technology leaves room for price manipulation by bots and malicious actors. In this talk, Olga Fetisova of CoW Protocol takes a look at Maximal Extractable Value (MEV) and its impact on the Ethereum ecosystem._

_The first part of the talk focuses on defining MEV and considering metrics, while the second part covers transparency initiatives, challenges, and solutions._

<iframe width="560" height="315" src="https://www.youtube.com/embed/hbgJYZlSU1k?si=IXHbjvmu9cdhWKC4" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

_What follows is a transcript of Olga’s talk:_

## What is MEV?

![1-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_mev_transparency_a_dappcon_talk_f6131f7a7a.webp)

Blockchain technology is great at ensuring the validity of all transactions and creating new blocks with no downtime, however not all transactions are ordered in the same manner that they are submitted.

While block producers have full autonomy over selecting which transactions to include in each block, they usually opt to maximize profits by ordering transactions based on the highest gas price. This means that validators may censor or re-order transactions before creating the block. Re-ordering transactions with a profit motive is known as “maximal extractable value” (MEV).

In other words, MEV is the profit extracted by miners or other actors in the blockchain network who insert, remove, and re-order transactions.

According to  [Flashbots](https://www.flashbots.net/), a research and development organization focusing on MEV, over $500 million in MEV has been extracted just since The Merge. This value is only the recorded amount paid out to Ethereum validators; the attackers themselves have earned much more.

As we can see, MEV creates a set of skewed incentives. On certain days, Ethereum validators earn more ETH from extracting MEV than from network fees themselves.

Some MEV activities are indeed legitimate, as the practice makes sure that transactions are ordered in an optimal way. Overall, however, the practice creates unfair advantages for a small minority.

Today we will talk about the most common types of MEV.

**Frontrunning attacks**

Frontrunning is when a bot sees a profitable transaction in a public mempool, duplicates it, and places their own order in front of the victim transaction, extracting its value for themselves.

**Backrunning attacks**

Very similar to frontrunning, but in reverse. In backrunning, the attacker places a transaction after the victim transaction to capitalize on any arbitrage left by the victim’s order.

Frontrunning and backrunning transactions are not very common by themselves, but a combination of the two, known as a “sandwich attack,” accounts for most MEV.

**Sandwich attacks**

Sandwich attacks combine frontrunning and backrunning, placing a buy order before the victim transaction and a sell order directly after. This creates a “sandwich” of the victim transaction.

Let’s take a deeper look into sandwich attacks.

## Sandwich attacks on the blockchain

![2-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_mev_transparency_a_dappcon_talk_8e1295469d.webp)

A sandwich attack begins after a user places a transaction in the mempool.

During order placement, the user indicates a slippage tolerance. Slippage is the necessary deviation in price that a trader is willing to accept for their transaction. Since the user indicates that they are willing to accept a particular sub-optimal price, MEV bots take this opportunity to exploit the price of the asset and capture the value for themselves.

The bot frontruns the user by placing a transaction directly in front of the victim’s trade. This strategically raises the price of the token by the exact amount necessary to make the victim transaction clear at its maximum slippage tolerance.

After the user’s transaction goes through (at the max slippage), it pushes the price of the asset up even further. The bot places a sell transaction (backrunning) directly after, benefiting from this artificial price arbitrage.

In essence, the bot places a transaction at a low price, rides the user’s slippage and price impact up, and sells at a higher price.

The user loses out, as they have to pay more than they would have otherwise and they receive fewer tokens for their trade. This is not fair.

## MEV Attacks in Practice

We can look at the chain to examine sandwich attacks directly. If we see the same token trading multiple times in one block, this may be an indicator that MEV attacks are occurring.

![3-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_mev_transparency_a_dappcon_talk_0bf4aae45b.webp)

In a block analyzed by the research organization  [ZeroMEV](https://zeromev.org/block?num=15956603), we can see that the DAI token was traded multiple times, suggesting actions by MEV bots.

The ZeroMEV analysis indicates that this block contains nearly $40 of lost value. The last transaction in the block was a payment to the miner in the form of 0.41 ETH, meaning that the attacker themselves earned an even higher amount.

![4-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_mev_transparency_a_dappcon_talk_6d599f75e5.webp)

To put this into perspective, the average MEV payout per block is about $100. On certain days of volatile market activity, however, this value can be much higher.

![5-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_mev_transparency_a_dappcon_talk_f76cf0cd60.webp)

![6-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_mev_transparency_a_dappcon_talk_aa4faee6ce.webp)

Looking at  [a block from November 2022](https://zeromev.org/block?num=15957277)  around the time of the FTX crash, we can see a completely different set of numbers.

In just one block, a bot caused over $5,000 in user losses and the validator received a kickback of over 3.5 ETH, suggesting, once again, that the gains for the MEV bot were significantly higher.

One notorious MEV searcher is known as “jaredfromsubway.” In a report by  [The Block](https://www.theblock.co/post/230218/jaredfromsubway-mev-bot), this searcher earned $34 million through MEV extraction in just the span of 3 months.

Using  [on-chain data](https://transparency.flashbots.net/), we can break down MEV price exploits by DEX. In the below image, we can see that Uniswap V2 and V3 account for over 90% of all MEV attacks on Ethereum.

![7-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_mev_transparency_a_dappcon_talk_d48aacf263.webp)

This, of course, is primarily as a result of Uniswap capturing the majority of trading liquidity — the more trades, the more potential MEV.

Thankfully, it’s quite simple to check if you have been MEV attacked. One of the easiest methods is by entering your Ethereum address on  [ZeroMEV’s website](https://zeromev.org/). You can also use a transaction hash or a particular block number.

![8-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_mev_transparency_a_dappcon_talk_60f3ba93f7.webp)

## Transparency Initiatives

Several organizations specialize in tracking MEV. These include Flashbots, Eigenphi, and ZeroMEV, among others. There are, however, practical ways that you can protect yourself from MEV exploits.

One of the most effective methods involves using a specialized RPC (remote procedure call) endpoint. RPC endpoints send calls to the blockchain for data and stand as an intermediary between your wallet and the blockchain itself.

RPC endpoints can be swapped out by the user depending on their needs. Most wallet applications such as MetaMask make it relatively straightforward to add custom RPC endpoints. Some well-known examples of specialized RPC endpoints include  [MEV Blocker](https://mevblocker.io/),  [MEV-Share](https://docs.flashbots.net/flashbots-protect/mev-share), and  [BackRunMe](https://backrunme.com/).

## MEV Blocker

![9-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_mev_transparency_a_dappcon_talk_08bc87a2fd.webp)

[MEV Blocker](https://mevblocker.io/)  was developed by CoW DAO and, as the name suggests, it provides MEV protection for users.

When a user submits a transaction using MEV Blocker, rather than sending it to the public Ethereum mempool, the RPC sends the transaction to a specialized private pool. This conceals the transaction from public exposure, protecting it from exploitation by MEV searchers.

As an extra layer of security, MEV Blocker generates fake transactions that prevent probabilistic exploitation by advanced searchers. In addition, MEV Blocker offers rebates on trades by capturing value from potential backrunning opportunities. If a user transaction creates a backrunning opportunity, MEV Blocker guarantees that at least 90% of the backrunning value will be forwarded back to the user in the form of a rebate.

While it’s relatively new, MEV Blocker has already enjoyed a meteoric rise. So far, the RPC endpoint accounts for $16 billion in protected volume and 370 ETH in user savings.

To add MEV Blocker to your wallet, check out the MEV Blocker website:  [https://mevblocker.io/](https://mevblocker.io/)

## Dedicated dApps

While RPC endpoints protect against price exploitation, the most extensive MEV protection comes at the application layer.

One dApp that provides comprehensive MEV protection is  [CoW Swap](https://swap.cow.fi/). CoW Swap is a meta-DEX aggregator that matches orders with the best liquidity available on-chain and protects trades from MEV exploitation.

CoW Swap actually sends all transactions through MEV Blocker by default, but the dApp also uses some extra techniques to combat MEV.

1.  **Delegated Trade Execution**: On CoW Swap, dedicated parties known as “[solvers](https://docs.cow.fi/solvers/solvers)” execute transactions on behalf of the users. This means that users are never directly exposed to the chain, as they only sign an “intent to trade” message which the solvers execute as a blockchain order.
2.  **Coincidence of Wants (CoW)**: CoW Swap enables users to trade off-chain with each other through a peer-to-peer trading mechanism. These trades don’t have to go through the public mempool, so they avoid the dangers lurking there.
3.  **Uniform Clearing Prices**: Transactions on CoW Swap get grouped together into “batches.” Each time a particular asset (such as WETH) trades in a batch, it trades for a constant price. This mechanism obviates the price advantages of reordering transactions, preventing MEV exploits.

These two categories of protection — RPC endpoints and dedicated dApps — are the current ways that we can protect ourselves from MEV attacks. It’s important to remember, however, that MEV is a broader problem that evolves quickly, with bots constantly finding new ways to attack us and steal our precious ETH.

## Conclusion

There are many challenges in combating MEV.

For one, there is a lack of data availability. Centralized exchanges, for example, don’t share their data so it’s difficult to understand the full scale of the MEV problem and come up with a complete solution.

While lots of organizations focus on combating MEV, the issue continues to pose a significant challenge. This also creates opportunities, however, for the community to come together, innovate, and ensure that Ethereum remains the gold standard in the blockchain world.


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A DappCon Talk by Olga Fetisova of CoW DAO


MEV Transparency: Ensuring Fairness In DeFi Markets

> _Note: TWAP orders are most useful for big trades! So, when trading on Mainnet, the minimum TWAP order size is $5k. This minimum ensures that your savings from reduced price impact are not lost on execution fees (AKA gas fees). If you want to trade smaller amounts, head over to Gnosis Chain, where the TWAP order minimum is only $5 (and the gas fees are much cheaper!)_

TWAP orders are now available in the  [CoW Swap order interface](https://swap.cow.fi/#/1/advanced)  under the “Advanced” tab.

**Have a Safe?**  Awesome! You can try out TWAP  [here](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=TWAP-guide).

**Don’t have a Safe?**  Not a problem! Create one  [here](https://app.safe.global/share/safe-app?appUrl=https%3A%2F%2Fswap.cow.fi&chain=eth).

For the below guide, we already have a Safe created. To get started, navigate to  [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=TWAP-guide)  and connect your Safe wallet via Wallet Connect, or directly using the CoW Swap Safe native app.

Once your wallet is connected, there are two ways to access TWAP orders:

-   Next to “Limit” in the center module, there is a tab that says “Advanced Orders” → clicking this opens the TWAP orders interface
-   On the top-left corner of the page, next to the CoW Swap logo, it says “Trade” → clicking this opens a drop-down menu that lets you choose between “Swap,” “Limit orders,” and “Advanced orders”

Once you have selected the “Advanced” tab, you will see the following screen:
![1-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_twap_how_to_6290090db4.webp)

After you click “Unlock TWAP orders (BETA)”, you will be taken to the TWAP orders interface.


![2-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_twap_how_to_0171b4ab6d.webp)

On the left side of this screen, you can see the order box where you input your TWAP order parameters. On the right, there is a panel that shows your open orders and order history.

In order to place a TWAP trade, you need to input your tokens and amounts, indicate how many parts you would like to split your order into, and select the time duration of your order.


![3-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_twap_how_to_c1d0d380d2.webp)

To get started, select the tokens you would like to swap from the token list.


![4-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_twap_how_to_961f05a961.webp)

Once you’ve chosen your tokens, you need to select the numbers of parts your TWAP order will be split into, as well as the duration of the TWAP order as a whole.


![5-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_twap_how_to_577542d502.webp)

As an added bonus, trading via a smart contract wallet like Safe automatically bundles your approval transaction and your trade together to save you time and gas.


![6-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_twap_how_to_bcfd7564ec.webp)

Below the Safe bundling banner, you will see a yellow notice. This notice is not related to your TWAP order itself, but to your wallet. TWAP orders are based on the “Composable CoW” conditional order framework which uses Safe fallback handlers to enhance the functionality of your smart contract wallet.


![7-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_twap_how_to_5563d17bc7.webp)

In order to use TWAP orders, you will need to upgrade your Safe fallback handler. This is a secure process; the code was co-developed by CoW Swap and the Safe team and it has undergone two external audits (you can find the final results of the audits  [here](https://github.com/cowprotocol/composable-cow/tree/ab3addad9bc05acdbf5fb040eb5c336209b58e31/audits)).

_Note: if you are interested in learning more about the fallback handler upgrade process, please refer to this_ [_article_](/learn/all-you-need-to-know-about-cow-swap-new-safe-fallback-handler)_. If the fallback handler is new to you, please refer to this Safe_ [_article_](https://help.safe.global/en/articles/40838-what-is-a-fallback-handler-and-how-does-it-relate-to-safe) _for a full introduction to the concept._

Once you understand how the fallback handler interacts with your Safe wallet, you can check the “Modify Safe’s fallback handler when placing order” box in order to upgrade your wallet. This upgrade will take place alongside your trade and bundle any token approvals as a single transaction.


![8-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_twap_how_to_6aab5754fc.webp)

After you click “Approve”, you will be prompted to review your order one last time. Review all of your order details including the price protection, limit price, the minimum tokens you’re set to receive, and all your TWAP properties and ensure everything looks good.


![9-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_twap_how_to_39ea16bee1.webp)

To actually place your TWAP order, click “Place TWAP order” and review & sign your transaction from your Safe interface.


![10-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/10_twap_how_to_6a196bdf6b.webp)



![11-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/11_twap_how_to_e39305a40f.webp)

After you sign your order, you will see an “Order submitted” pop-up and your order will appear in the order panel on the side.


![12-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/12_twap_how_to_71bea598ed.webp)

In the order panel, you will notice that the order status is not “open,” but rather indicates that your order is still in the “signing” stage. The wallet used in this example requires 2 out of 3 signers to execute a transaction. By creating the transaction, we have performed one of the signatures, and to reach the threshold we need one more signer. To sign, the second signer would need to connect to the Safe wallet and navigate to the “Transactions” queue.


![14-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/14_twap_how_to_a703daa281.webp)

In the queue, we can see our pending transaction and confirm it with the last signature required.


![15-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/15_twap_how_to_f995c65744.webp)



![16-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/16_twap_how_to_43c9f04edd.webp)



![17-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/17_twap_how_to_21dd244dc5.webp)

After the last confirmation for the order is done, the order is placed and it will appear in the “Your Orders” UI.

The interface includes several ways to view your orders. You can get a high-level overview at a glance, expand to see the different parts of your TWAP order (in this example the first part executed immediately, which is why only 3 parts are shown), or click into the order to view a full list of details.


![18-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/18_twap_how_to_58564c545d.webp)



![19-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/19_twap_how_to_c6eab87d53.webp)



![20-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/20_twap_how_to_41156cc84e.webp)

Now that your TWAP order is placed, you can sit back, relax, and watch it get filled with CoW Swap’s signature MEV protection and best prices.


![21-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/21_twap_how_to_935598c651.webp)

We wish you much surplus and happy  [TWAP order trading](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=TWAP-guide)! Give  [TWAP orders a try](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=TWAP-guide)  today and let us know what you think by reaching out on  [Twitter](https://twitter.com/CoWSwap)  or  [Discord](https://discord.com/invite/cowprotocol)!


![22-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/22_twap_how_to_07e8708fcb.webp)



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How to use CoW Swap’s TWAP orders via Safe Wallet, step by step guide


How to use CoW Swap’s TWAP orders via Safe Wallet

## Overview

-   Backrunning is one of the three main types of MEV, but it’s the least harmful as it only involves capturing arbitrage left over after a large trade
-   When a trader places a large trade that artificially inflates the price of an asset on an AMM, an MEV bot can backrun the trade and profit from the arbitrage
-   CoW Swap eliminates backrunning opportunities through its delegated trading mechanism, while MEV Blocker pays out rebates for any backrunning opportunities user trades create when transacting anywhere on Ethereum

![what-is-backrunning-mev-attacks-explained-cover-photo.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/what_is_backrunning_mev_attacks_explained_cover_photo_7573e1bea9.webp)

Backrunning is a specific type of MEV (Maximal Extractable Value) which causes some traders to miss out on potential profit opportunities from their trades.

In practice, backrunning involves strategically executing a transaction immediately after another, high-value transaction. By doing this, the backrunning transaction capitalizes on the arbitrage opportunity left over from the  [price impact](/learn/cow-protocol-glossary#:~:text=Price%20impact) of the initial transaction.

Backrunning involves the tactical use of the information contained within the Ethereum mempool — a holding area for all pending transactions — to place transactions immediately after high-value trades in order to profit.

Out of the three types of MEV ([frontrunning](/learn/what-is-frontrunning),  [sandwich attacks](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself), and backrunning) backrunning is considered the least harmful. In fact, if performed by itself, this method simply captures the arbitrage opportunity left over by a large trade without affecting the initial trade itself. Backrunning is only harmful to the user when combined with a  [frontrunning attack](/learn/what-is-frontrunning), which results in the worst kind of MEV —  [the sandwich attack](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself).

For advanced traders who are capable of capturing the leftover arbitrage from their trades, backrunning may be considered a missed opportunity since it’s technically money left on the table.

Thankfully, not everyone has to be an experienced trader to capture the backrunning profits from their trades. Retail traders can automatically benefit from backrunning opportunities through specialized RPC endpoints such as  [MEV Blocker](https://mevblocker.io/).

## How backrunning works

The most common perpetrators of backrunning are MEV bots programmed to monitor pending Ethereum transactions. These bots place strategic trades directly after existing trades in order to capture the arbitrage left over from their price impact.

The process takes advantage of the mechanisms of  [automated market makers (AMMs)](/learn/cow-protocol-glossary#:~:text=amm). Whenever a large trade goes through, it imbalances the liquidity pools of the AMM, causing the price of the asset being sold to go down, and the price of the asset being bought to go up. This price imbalance leaves an arbitrage that MEV bots correct by placing a follow-up trade, earning a profit in the process.

## Backrunning example

To better understand the concept of backrunning, let’s consider an example scenario. In this example, a user named Alex initiates a substantial trade, selling $10,000 of ETH to buy COW on Uniswap. Due to the nature of AMMs, this swap leads to a jump in the value of COW and a drop in the value of ETH on this particular exchange (Uniswap).

At the same time, an MEV bot notices Alex’s large transaction and springs into action. The MEV bot acquires Alex’s sell token (ETH) at this lower price and immediately turns around and sells it for a higher price on a different exchange where this price arbitrage has not yet been reflected. The bot profits from the price difference between the assets on these two exchanges.

From a technical perspective, Alex’s transaction doesn’t result in any realized loss for him, since he still got the price he was quoted for his trade. However, his trade created an arbitrage opportunity that he didn’t capture, leaving money on the table.

The actions of the MEV bot have broader implications for the DeFi ecosystem. Bots monopolize arbitrage opportunities between exchanges and deny regular users the chance to benefit from the price impact their trades create.

## Related MEV tactics

[**Frontrunning**](/learn/what-is-frontrunning)**:** In a frontrunning attack, an MEV bot spots a profitable transaction, duplicates it, and offers a higher gas fee so that validators execute the duplicate transaction before the original one. In effect, the MEV bot hijacks the profits of the original transaction and keeps them for itself.

[**Sandwich Attacks**](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself)**:**  This tactic combines frontrunning and backrunning. An attacker first executes a frontrunning transaction before a valuable trade, pushing the price of the asset up to the slippage tolerance set by the victim trade. This increases the price of the purchased asset. The victim trade then goes through at this new higher price and its price impact raises the price of the asset even more. Finally, the attacker performs a backrunning attack which captures the newly-created arbitrage, generating a profit in the process.

## How harmful is backrunning?

Backrunning is not as harmful as the other types of MEV attacks since it doesn’t result in traders receiving a worse price for their trades. Rather, it simply means that traders leave money on the table by not capturing the arbitrage opportunities from their large trades.

This opportunity cost primarily affects advanced traders who would otherwise be able to capture this arbitrage for themselves. Everyday traders are usually not sophisticated enough to backrun their own trades, so backrunning does not really result in measurably worse outcomes for them.

However,  [MEV Blocker](https://mevblocker.io/)  can help anyone trading on Ethereum automatically capture any backrunning opportunities that their trades create.

## How CoW Swap protects against backrunning

CoW Swap has developed an innovative set of mechanisms for mitigating harm from all types of MEV, including backrunning. The system relies on  [Order Flow Auctions](/learn/understanding-order-flow-auctions)  that gather and consolidate user orders into a batch before execution. Specialized parties known as “[solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers)’’ compete to find the most optimal execution path and provide the best settlement solution.

The design of CoW Swap helps protect against MEV attacks in several ways:

1.  **Delegated trade execution**: When users submit orders on CoW Swap, they are not directly initiating a blockchain transaction, like they would on Uniswap for example. Instead, users submit orders as signed “[intent to trade](/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade)” messages which include the details of the intended trade, but don’t actually get submitted to the blockchain. The solvers then find the best execution path for the specified trade and execute the trade on-chain on behalf of the user.
2.  **Uniform clearing prices:**  The batch auction system ensures that each asset in the batch only executes for a single price, even if there are multiple trades using that asset. This negates the price variations inherent to AMMs that result in different prices for trades within the same block due to sequential transaction processing. Uniform clearing prices nullify the strategy of transaction re-ordering, thereby mitigating the impact of MEV.
3.  **Liquidity:**  CoW Swap’s unique solver design executes trades optimally without leaving room for arbitrage opportunities. Thanks to Uniform Clearing Prices, all token pairs traded in the same batch will clear at the same price, leaving liquidity pools balanced with no opportunity for arbitrage.

In addition, CoW Swap leverages off-chain interactions known as “[Coincidences of Wants](/learn/what-are-cows-on-cow-swap)” (CoWs) to swap user assets peer-to-peer, leaving zero room for MEV. Furthermore, the protocol’s Order Flow Auction mechanism ensures that user trades are maximally protected from all types of MEV.

Backrunning is prevalent in the DeFi space, leaving everyday traders with suboptimal outcomes at the expense of searchers & MEV bots. However, innovative solutions like CoW Swap are combating the issue of backrunning and MEV as a whole through innovative Order Flow Auction design.

## MEV Blocker — Profit from backrunning

On  [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=backrunning-article), your orders are protected from all types of MEV, including backrunning, sandwich attacks, and frontrunning.

CoW DAO has taken MEV protection a step further, however, with  [MEV Blocker](https://mevblocker.io/). MEV Blocker is a custom RPC endpoint that you add to your crypto wallet which routes all of your transactions through a trusted network of searchers that scan for backrunning opportunities, but cannot frontrun or sandwich your trades. The best part? The RPC passes the profits from backrunning opportunities back to you in the form of rebates. This means you can make money from any backrunning opportunity you create just by routing your transactions through MEV Blocker.

MEV Blocker works on all types of transactions across all of DeFi. Just  [add the RPC endpoint to your wallet](https://mevblocker.io/#rpc)  and start trading.

While MEV Blocker should be part of every Ethereum user’s arsenal, it’s still optimal to use CoW Swap when doing swaps. CoW Swap is specifically engineered to give traders the best prices and protect against all types of MEV without leaving backrunning opportunities.

Remember: if you’re swapping, use CoW Swap. For everything else, rely on MEV Blocker.

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What is Backrunning? — MEV Attacks Explained



## TL;DR

-   During the month of  **March**, CoW Protocol handled a record-breaking total volume of  **$3.42B**  and generated a surplus of  **$23.4M**
-   In exciting news, CoW Protocol saw its  [largest month ever in terms of trading volume](https://dune.com/queries/2508216/4127586), the CoW team touched grass with an off-site retreat in Portugal, and a protocol fee report  [showed 130 ETH generated with no impact on user retention](https://twitter.com/CoWSwap/status/1773163707331461620?s=20)
-   In terms of Governance, CoW DAO executed  [CIP 39](https://snapshot.org/#/cow.eth/proposal/0xd4b23381a63b19d971e625e1fcef6ffa26d6d685df8b28ca590c251506669a53)  and received several important proposals regarding  [MEV Blocker fees](https://forum.cow.fi/t/cip-40-mev-blocker-fees/2366),  [CoW DAO’s SHU token allocation](https://forum.cow.fi/t/cip-41-claim-and-delegate-cow-daos-shu-token-allocation/2360), and  [strategies for enhancing treasury asset usage](https://forum.cow.fi/t/cip-42-enhancing-treasury-asset-usage/2361)

## Protocol Stats

This month, CoW Protocol settled a total of  **$3.42B.**

![1-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_cow_dao_march_2024_highlights_2ba332d346.webp)

The top 3 batches worth highlighting are the following:

**1. Batch with the highest % of CoW trades (**[**Transaction details**](https://explorer.cow.fi/tx/0x613e4155d95f1f9ca7e15a210e54a6b446c5f69ae2638da572289cddc099e4aa?tab=orders&vis=transfers)**):**  The total batch volume was  **$89,900**, and it was created by two traders who were CoWed for  **$85,813, (95.5%)**  of the total batch volume. One trader was buying USDC, the other was selling USDC, and the CoW was facilitated through a common hop in WETH.

![2-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_cow_dao_march_2024_highlights_1e110aa48d.webp)

**2. Batch containing the highest volume (**[**Transaction details**](https://explorer.cow.fi/tx/0xe2f795665577f65b4985b6003761ab8e6364222cbec122388b7ee467644dd712?tab=orders)**):**  The total batch volume was  **$20,193,757** and it was created by a single trader swapping  **ETH for USDC**.

![3-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_cow_dao_march_2024_highlights_5e00b79ce8.webp)

**3. Batch with the highest amount of surplus (**[**Transaction details**](https://explorer.cow.fi/tx/0xe2f795665577f65b4985b6003761ab8e6364222cbec122388b7ee467644dd712?tab=orders)**):**  The batch with the highest surplus was the same as the batch with the highest volume, for a total volume of  **$20,193,757** and a surplus of  **325,762 USDC (1.58%).**

![4-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_cow_dao_march_2024_highlights_adfaa341fe.webp)

During the month of  **March**, the top 10 traders traded a total of  **$44,898,507.**

![5-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_cow_dao_march_2024_highlights_468f2d3834.webp)

In the table below you can see the total volume for this month’s biggest trades. The most active trader executed a whopping  **$19,601,868**  in trades with CoW Protocol this month.

![6-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_cow_dao_march_2024_highlights_3095ac6111.webp)

## Solvers

In  **March**, solvers generated a total of  **$23M**  in surplus, which is money in the pockets of traders.

![7-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_cow_dao_march_2024_highlights_e1caf63a45.webp)

Below you can find a breakdown of how each solver performed in March.

![8-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_cow_dao_march_2024_highlights_2c3cb003af.webp)

## Governance

It was an active month in terms of governance! The CoWs cannot be stopped 💪

![9-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_cow_dao_march_2024_highlights_d5eee98f7e.webp)

## Executed Proposals

The DAO  **executed one important proposal**  this month:

-   [CIP-39: Continued funding for development services — Service Agreement №3](https://snapshot.org/#/cow.eth/proposal/0xd4b23381a63b19d971e625e1fcef6ffa26d6d685df8b28ca590c251506669a53)

## Draft Proposals

This month,  **there were three new proposals**  asking for feedback before moving into the next phase, final CIPs, in their current form:

-   [CIP-40: MEV Blocker fees](https://forum.cow.fi/t/cip-40-mev-blocker-fees/2366)
-   [CIP-41: Claim and Delegate CoW DAO’s SHU Token Allocation](https://forum.cow.fi/t/cip-41-claim-and-delegate-cow-daos-shu-token-allocation/2360)
-   [CIP-42: Enhancing Treasury Asset Usage](https://forum.cow.fi/t/cip-42-enhancing-treasury-asset-usage/2361)

Make sure to read the proposals and leave comments — your feedback is highly appreciated and will help move these important topics forward. If you are interested in submitting a proposal to the CoW DAO, make sure to use the following  [template](https://forum.cow.fi/t/cip-0-template/28).

## CoWmunity News

-   In March, CoW Protocol had its  [largest month ever](https://dune.com/queries/2508216/4127586), with a trading volume of over  **$3.4 billion**. The CoW is quickly becoming a bull 😈

![10-cow-dao-march-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/10_cow_dao_march_2024_highlights_ae68c0eeda.webp)

-   The CoW team came together in Portgual for a yearly off-site that included a hackathon, presentations, and valuable in-person quality time
-   After taking the DeFi world by storm in February, CoW AMM  [received a Safe App announced by none other than Steve Ballmer](https://x.com/CoWSwap/status/1767587714826956807)  in a new video
-   A  [first report](https://twitter.com/CoWSwap/status/1773163707331461620?s=20)  of the newly-enabled out-of-market limit orders has identified they’ve generated 130 ETH for the protocol with no negative impact on user retention
-   The marketing team featured a new  [Widget](https://x.com/CoWSwap/status/1770489389900292344?s=20)  campaign, added new terms to the  [CoW glossary](https://x.com/CoWSwap/status/1765396565504717225?s=20), and posted a  [transaction highlight featuring surplus-capturing limit orders](https://twitter.com/CoWSwap/status/1773759519522533509?s=20)
-   CoW Protocol  [joined in the call to unblock crypto](https://x.com/CoWSwap/status/1765756459755634824)  together with some of the biggest names in DeFi
-   Anna from the CoW team was featured on the  [Deus Ex DAO](https://x.com/CoWSwap/status/1764621816633385090?s=20)  podcast
-   The blog received an update with a new article: “[MEV Bots: Switch From Searcher to Solver](/learn/mev-bots-switch-from-searcher-to-solver)”

## Product Updates

**Backend**

The backend team has been working hard to improve the product infrastructure. In  **March**, we:

-   Replaced orders with custom appdata
-   Transitioned solvers to a new API
-   Made steady progress on protocol and partner fees
-   Rolled out verified quotes on staging

**Frontend**

The frontend team has been working hard on improvements in the UI front, as well as the overall UI infrastructure. In  **March**, we:

-   Released CowSwap 1.62.0 which includes a partner fee option for the Cow Swap Widget, a “recreate limit order” option which allows users to duplicate their limit orders in a couple of clicks, and a redesign of the fee display
-   Prepared the CoW Swap “I’m Feeling Lucky” feature as an April Fool’s joke
-   Worked on a feature that allows placing limit orders for amounts beyond what a user currently has in their wallet

## Open Job Positions

### Engineering

[DevOps Engineer](https://boards.eu.greenhouse.io/cowswap/jobs/4311312101)

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CoW DAO March 2024 Highlights

_CoW Swap, a DEX trading platform, has undergone a remarkable transformation over the last few years._

_The platform has transformed substantially from its early days as a dutch auction swap to a leading authority on intents forging new ground through conditional programmatic orders. In a recent presentation, Alex Vinas, the Product Marketing Manager at CoW Swap, traced CoW Swap’s journey and offered insights into its history, pivotal developments, and the promise of the brand new_ [_Programmatic Order Framework_](/learn/introducing-the-programmatic-order-framework-from-cow-protocol) _(Please Note: At the time of the presentation, the Programmatic Order Framework was known as “Composable CoW.”)_

<iframe width="560" height="315" src="https://www.youtube.com/embed/6dA4V_yYn8A?si=M5UYcWadWAU5Mifo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

_What follows is a transcript of Alex’s talk:_

## A Brief History of CoW Swap

![1-navigating-the-evolution-of-cow-swap.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_navigating_the_evolution_of_cow_swap_ebc6a318b6.webp)

Cow Swap’s journey began back when its current team was a part of Gnosis. At the time, the team was working on decentralized mechanisms for trading prediction market outcomes. It was this work that helped bring to life the famous “x*y=k” formula for AMMs back in 2017 — earlier than even the founding of Uniswap.

### Dutch Auctions

While their initial ideas were good, Gnosis recognized the vulnerabilities of the traditional AMM design and its weakness toward MEV, so the team pivoted to Dutch auctions.

However, this mechanism also came with its own set of downfalls.

It worked well for initial coin offerings and wasn’t susceptible to MEV, however it fell short when faced with the growing diversity of tokens on Ethereum. Dutch auctions also had to compromise on speed, resulting in a slow trading experience for users.

### Batch Auctions

The team realized they needed a new auction mechanism for trading large amounts. It was here that the batch auction was born.

After cycling through several different iterations of batch auction DEX’s, CoW Protocol was born in 2021. CoW Protocol was built on the learnings from earlier projects and introduced innovative features like an intents-based architecture and comprehensive MEV protection.

The product was designed to address the challenges faced by retail users, smart contract accounts, and decentralized autonomous organizations (DAOs). At the core of the protocol is a delegated trading execution model in which bonded third parties known as “solvers” handle order execution on behalf of users.

The delegated trading model of CoW Protocol offers several benefits:

-   **For retail users**, it abstracts away Ethereum complexities such as gas fees, MEV, and the need to search for the most up-to-date AMM pools
-   **For smart contract wallets,** it enables a seamless trading experience. Before CoW Swap, smart contract wallets often had their trade execution paths expire by the time they gathered signatures. Today, smart contract wallets only commit to a particular  _price_  (rather than a specific trading path), leading to more flexibility and optimizing order execution
-   **For DAOs**, features like the  [Milkman](/learn/what-is-milkman-cow-swaps-solution-for-delayed-execution-trading)  contract bridge the gap in time between a governance proposal and an on-chain swap by allowing the DAO to specify an on-chain price feed from which to pull real-time prices (rather than specifying a fixed price)

### The Path Toward Smart Contract Intents

Initially, gasless trading was limited to EOAs since smart contract wallets don’t have private keys and thus can’t sign messages. It wasn’t until the introduction of  [ERC-1271](https://eips.ethereum.org/EIPS/eip-1271)  smart orders that gasless trading was enabled for smart contracts using a new method called “isValidSignature.” This allowed smart contracts to delegate order placement while maintaining control through interactive signature verifications.

The first implementation of smart orders in CoW Swap was the  [native ETH flow](https://medium.com/@cow-protocol/moooove-over-weth-native-eth-trading-is-now-live-on-cow-protocol-96f107e53a49)  which allowed traders to trade ETH just like they would any other ERC-20 token. The second implementation was the  [Milkman](/learn/what-is-milkman-cow-swaps-solution-for-delayed-execution-trading)  contract. Milkman protects governance-based swaps from price exploitation as users specify an on-chain data source from which to pull prices rather than specifying a fixed amount and slippage. This allows the “minOut” variable of a swap to be modular and enables much more streamlined governance-based swaps.

While ERC-1271 smart orders have advantages including conditional on-chain guarantees, they also have drawbacks: they are gas-heavy for autonomous execution, require trust in an intermediary contract holding funds, and are limited to one order per signature.

## Enter the Era of Programmatic Orders

Programmatic orders build on top of batch auctions to enable even more user-friendly, trustless, and autonomous trading.

Programmatic orders take advantage of ERC-1271 smart orders to unlock intents for smart contracts. This has been transformative for the ecosystem, as it allows smart contracts to delegate order placement while still ensuring secure and customizable trading conditions.

[The Programmatic Order Framework from CoW Protocol](/learn/introducing-the-programmatic-order-framework-from-cow-protocol)  allows users to execute unlimited smart orders in parallel, with enhanced gas efficiency and full self-custody. The Framework opens the door to a number of use-cases including automated fee collection, DAO payrolls, TWAP orders, and even private conditional orders such as stop-loss.

### Understanding the Programmatic Order Framework Architecture

Programmatic orders operate through a decentralized architecture that ensures trustless execution by holding assets in the user’s safe.

![2-navigating-the-evolution-of-cow-swap.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_navigating_the_evolution_of_cow_swap_93d6afc424.webp)

The Programmatic Order Framework involves four main customizable parameters which combine with the order handling of CoW Protocol to allow developers to deploy ANY codeable strategy.

Each conditional order has the following properties or data available at settlement:

-   _handler_  — verifies the conditional order parameters via a smart contract (Programmatic Order Framework)
-   _salt_  — allows for multiple conditional orders of the same type and data (Merkle root)
-   _staticData_  — data available to ALL discrete orders created by the conditional order
-   _offchainData_  — data optionally provided from off-chain to a discrete order

## The Future of Programmatic Orders

Programmatic Orders open a world of possibilities by allowing users to turn their Safes into autonomous traders. While the Programmatic Order Framework is currently developer-focused, it unlocks a wide range of use-cases for retail users as well. The integration of  [CoW Hooks](/learn/cow-hooks-you-are-in-control)  in the future could further enhance the user experience, combining composable smart orders with additional functionalities.

In conclusion, CoW Swap’s journey to perfect DeFi orders embodies the protocol’s commitment to users and innovation. The Programmatic Order Framework emerges as a pivotal milestone, showcasing CoW Swap’s adaptability and dedication to meeting the evolving needs of the crypto community.

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Navigating the Evolution of CoW Swap: From Market Orders to Programmatic Orders


## TL;DR

-   During the month of  **February**, CoW Protocol handled a total volume of  **$1.8B**  and generated a surplus of  **$15.1M**.
-   In terms of Governance, CoW DAO executed CIP-36,37 & 38.
-   In exciting news, CoW Protocol launched the 1st MEV capturing AMM (CoW AMM), got COW token listed in tokenunlocks, and started playing around voiceover videos!

## Protocol Stats

This month, CoW Protocol settled a total of  **$1.80B.**

![1-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_february_2024_highlights_8bc23c3684.webp)

The top 3 batches worth highlighting are the following:

-   **Batch with the highest % of CoW trades (**[**Transaction details**](https://explorer.cow.fi/tx/0x070c090c7fd7e371c170f2e381cdbd4f4ab81553a9d74469aa32a5e89b5748d1?tab=orders)**):**  The total batch volume was  **$1,502,953.2**, and it was created by three traders. Two of these traders were CoWed for  **$374,483.44, (99%)**  of the total batch volume. One trader was buying  **$374K of LINK**  and the other trader was selling  **$374M of LINK**  (Getting settled via partial fills from their total of  **$1.1M LINK**  sell order)**.**

![2-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_february_2024_highlights_124f5c0396.webp)

-   **Batch containing the highest volume (**[**Transaction details**](https://explorer.cow.fi/tx/0xa50f8b71fff77e767e333401e5caca468860b21ea9d2e15e81e9d52fe41cee7b?tab=orders&vis=transfers)**):**  The total batch volume was  **$11,038,754.45** and it was created by a trader who was swapping  **ETH**  to  **stETH**.

![3-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_february_2024_highlights_99850e7562.webp)

-   **Batch with the highest amount of surplus (**[**Transaction details**](https://explorer.cow.fi/tx/0x40850075f7c6fda7c27abe24f8f49e0b52ff5222fe3c737da4457ab768f2b522?tab=orders)**):**  The total batch volume was  **$567,243.73** and it was created by a single trader who was swapping  **ETH**  **to**  **USDT**. This trader achieved the largest surplus for the month of  **February** by getting  **283,933.46 USDT**  extra, which at the time of trade was roughly **50.05% surplus**.

![4-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_february_2024_highlights_6cadcb51cc.webp)

During the month of  **February**, the top 10 traders traded a total of  **$21.8M.**

![5-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_february_2024_highlights_da09bce9a4.webp)

In the table below you can see the total volume for this month’s biggest trades. The most active trader executed a whopping  **$6.4M**  in trades with CoW Protocol this month.

![6-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_february_2024_highlights_06a8c9ba99.webp)

## Solvers

In  **February**, solvers generated a total of  **$15.17M**  in surplus, which is money in the pockets of traders.

![7-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_february_2024_highlights_f5eb61a440.webp)

Below you can find a breakdown of how each solver performed in February.

![8-february-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_february_2024_highlights_2144302bca.webp)

## Governance

It was a hectic month in terms of governance! The CoWs cannot be stopped 💪

## Executed Proposals

The DAO  **executed two important proposals**  this month:

-   [CIP-36: Adjusting and renewing the solver rewards budget](https://snapshot.org/#/cow.eth/proposal/0x4e58f9c1208121c0e06282b5541b458bc8c8b76090263e25448848f3194df986)
-   [CIP-37: Increasing liquidity for the COW token via Programmatic Order Framework and FM-AMM](https://snapshot.org/#/cow.eth/proposal/0xbe6a5e04cc284cc88adb0cee505b7bf090e5aabf4e21b2d2168b29cb03d90404)
-   [CIP-38: Solver Computed Fees & Rank by Surplus](https://snapshot.org/#/cow.eth/proposal/0xfb81daea9be89f4f1c251d53fd9d1481129b97c6f38caaddc42af7f3ce5a52ec)

## Draft Proposals

This month,  **there were no new proposals.**

Make sure to read the proposal and leave comments — your feedback is highly appreciated and will help move this important topic forward. If you are interested in submitting a proposal to the CoW DAO, make sure to use the following  [template](https://forum.cow.fi/t/cip-0-template/28).

## CoWmunity News

-   Launched  [CoW AMM](https://x.com/CoWSwap/status/1757783798601986400?s=20), the first live AMM which solves LVR. The new AMM aimed at protecting liquidity providers from the dangers of MEV got quite coverage in the media and across various influencers:  [The block](https://www.theblock.co/post/277425/cow-dao-amm-exchange-mev?utm_source=twitter&utm_medium=social), [DL news](https://www.dlnews.com/articles/defi/new-cow-swap-amm-will-stop-mev-bots-and-save-users-millions/?utm_source=twitter&utm_medium=organic_social&utm_campaign=), [Blockworks](https://blockworks.co/news/cow-dao-mev-capturing-amm), [Binance](https://www.binance.com/en/feed/post/2024-02-14-cow-dao-launches-mev-capturing-automated-market-maker-to-address-lvr-problem-4118740461410), [Delphi Digital](https://members.delphidigital.io/feed/cow-swap-releases-lvr-aware-amm), [CoinMarketCap](https://coinmarketcap.com/community/articles/65cd7aa4639eda40936e4b80/), [EthDailly](https://ethdaily.io/cow-protocol-mev-capturing-amm/), [CoinLive](https://www.coinlive.com/news-flash/442186), [Cryptonews](https://cryptonews.net/news/other/28559567/), [CryptoEconomy](https://crypto-economy.com/cow-dao-launches-automated-market-maker-to-fight-arbitrage-bots/), [OutlierVentures](https://x.com/OVioHQ/status/1758534586881942002?s=20),  [CryptoCondom](https://x.com/crypto_condom/status/1757785824484102356?s=20), [Martin K](https://x.com/koeppelmann/status/1757794954586329217?s=20), [Shoal Research](https://x.com/pt1mfv_/status/1757963151222440096?s=20), [0xKermo](https://x.com/0xKermo/status/1758892911796658541?s=20), [0xSalazar](https://x.com/0xSalazar/status/1759333374865682742?s=20), [PaulIronFinance](https://x.com/paul_ironforce/status/1757784723370160393?s=20)
-   [Revamped the UI](https://x.com/CoWSwap/status/1762153353956766022?s=20)  to make it easier for users to understand what they are trading and the amounts they are expected to receive
-   Hosted a  [twitter space to explain all things CoW AMM](https://x.com/CoWSwap/status/1761035749636362532?s=20)  and the inner workings of how it actually solves LVR.
-   To boost CoW AMM outreach, marketing prepared a pair of meme videos to get everyone’s attention around the first MEV capturing AMM.  [Jamie Dimon](https://x.com/CoWSwap/status/1760740193773212031?s=20) &  [Wolf of Wall street](https://x.com/CoWSwap/status/1763232025081753674?s=20)
-   [COW token got listed on tokenunlocks](https://x.com/CoWSwap/status/1762522857697911089?s=20)  and now all the information regarding the COW tokenomics can be easily found there.
-   [COW Tokens can now be leveraged to borrow DAI thanks to Ajnas permissionless pools](https://x.com/CoWSwap/status/1759132605335601201?s=20)
-   Said goodbye to our longtime  [Goerli Network friend](https://x.com/CoWSwap/status/1753099953403310084?s=20)  which was replaced by the new Sepolia Testnet
-   Prepared a new  [monthly stats summary for MEV Blocker](https://x.com/CoWSwap/status/1754539321359806696?s=20)  stats throughout the month
-   [MasterCoW´s treasure hunt](https://x.com/CoWSwap/status/1754877940175688106?s=20)  came to an end as someone was able to decipher all the clues and claim the prize
-   Felix went on  [Leviathian News](https://x.com/CoWSwap/status/1755158002720444619?s=20)  to cover all things CoW Swap
-   Started gathering UX research and feedback on how can CoW Swap Limit orders improve ([Poll 1](https://x.com/CoWSwap/status/1755565833739292693?s=20),  [Poll 2](https://x.com/CoWSwap/status/1759989378066038957?s=20),  [Poll 3](https://x.com/CoWSwap/status/1762619014369407131?s=20))
-   Worked on multiple blogspost aimed at improving CoW Swap´s SEO results:  [January 2024 Monthly highlights](https://x.com/CoWSwap/status/1756486330627084549?s=20),  [What does an MEV Blocker do?](https://x.com/CoWSwap/status/1756828056134754522?s=20),  [CoW DAO launches 1st MEV Capturing AMM](https://blog.cow.fi/cow-dao-launches-the-first-mev-capturing-amm-bc7199e217a3),  [What is LVR?](https://x.com/CoWSwap/status/1761070004844511477?s=20)
-   Anna & Andrea jumped on  [Strange water podcast to discuss](https://x.com/CoWSwap/status/1759899359095709866?s=20)  how a fair competition of solvers fixes DeFI.

## Product Updates

**Backend**

The backend team has been working hard to improve the product infrastructure. In  **February**, we:

-   Simplified transaction submission logic for solvers
-   Implemented several changes in the backend to make it compatible with CoWAMM
-   Looked into providing more attractive quotes by allowing internalization of trades to Solvers
-   Developed a new automated spam protection system for the backend
-   Removed goerli infra
-   Worked on adapting all backend solver logic to rank by surplus instead of score
-   Moved the entire node infra to Reth.

**Frontend**

The frontend team has been pushing hard for several improvements in the UI front, as well as the overall UI infrastructure. In  **February**, we:

-   Deprecated Goerli from the front end
-   Revamped the entire UI with a new modal: Display confirmation information while signing to be able to compare values in the app and in the wallet, Custom recipient displaying unification, “Order submitted” popup styles fixes, “Order confirmed” screen styles fixes
-   Shipped the new CoW AMM landing page
-   Worked on several fixes such as handling errors, Sepolia crash, Twap order cancelation issue, Issue with localstorage growing too much
-   Made several improvements to the Widget
-   Events from widget to integrator (order submitted, order filled, etc.)
-   Sounds and images customization
-   Hide connect/account button in the header
-   Option to disable “Connect wallet” button
-   Improve wallet provider integration between app and integrator

## Open Job Positions

There are currently no open positions.

Convinced you can contribute to Cow Protocol?  [Get in touch](https://discord.com/invite/cowprotocol)

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CoW Protocol February 2024 Highlights

CoW DAO, which builds user-protective products like CoW Swap and MEV Blocker, is launching the first MEV-capturing AMM — CoW AMM.

While CoW DAO’s other products protect traders from MEV, CoW AMM is the first product from CoW DAO built to protect liquidity providers. CoW AMM is the first product on any blockchain to tackle the LVR problem head on.

## The LVR Problem

First described by Jason Milionis, Ciamac C. Moallemi, Tim Roughgarden, and Anthony Lee Zhang in the paper  [Automated Market Making and Loss-Versus-Rebalancing](https://arxiv.org/abs/2208.06046), LVR is defined as the losses LPs incur due to arbitrage bots constantly rebalancing liquidity pools.

Research suggests that:

-   Liquidity providers for major token pairs lose 5–7% of their liquidity due to LVR¹
-   In aggregate, arbitrageurs are responsible for well over $500M in LP losses every year²
-   LVR accounts for more MEV than frontrunning and sandwich attacks combined

LVR disincentivizes liquidity provision in DeFi, restricting its potential utility and growth. And LVR is a contributing factor to block-builder centralization, which many people consider undesirable for Ethereum as a whole.

## How CoW AMM Works

The CoW AMM is a special kind of automated market maker designed to help liquidity providers capture MEV from arbitrageurs. According to research by Andrea Canidio and Robin Fritsch in the paper “[Arbitrageurs’ profits, LVR, and sandwich attacks: batch trading as an AMM design response](https://arxiv.org/pdf/2307.02074v3.pdf),” the most promising way to capture LVR is by using batch auctions to rebalance liquidity pools based on surplus.

![1-cow-dao-launches-cow-amm.gif](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_cow_dao_launches_cow_amm_303d6058bb.gif)

CoW AMM, therefore, works as follows:

1.  Liquidity providers deposit tokens into protected CoW AMM liquidity pools
2.  This liquidity becomes available to CoW Swap traders, who can access it similarly to other sources of liquidity
3.  Solvers bid to rebalance CoW AMM pools whenever there is an arbitrage opportunity
4.  The solver that offers the most surplus to the pool wins the right to rebalance the pool

This design eliminates LVR by capturing arbitrage value for LPs and shielding it from MEV bots.

Said another way: while most AMMs allow arbitrageurs to make money at the expense of their LPs, CoW AMM protects this money for the LPs instead.

## Expected Outcomes

Research suggests that CoW AMM LPs will fare as well if not better than CFAMM LPs.  [Backtesting over 6 months in 2023](https://arxiv.org/pdf/2307.02074v3.pdf)  shows that LP returns on CoW AMM would have been equal to or greater than returns on Uniswap in 10 of the 11 most liquid, non-stablecoin pairs.

## Why is CoW DAO launching CoW AMM?

Launching CoW AMM is a natural extension of CoW DAO’s mission to protect Ethereum users from MEV. With two successful products (MEV Blocker and CoW Protocol) aimed at traders, the time is right to extend MEV protection to liquidity providers.

LVR is a large problem, estimated to be responsible for over $500M in value lost to MEV bots every year — more than all trading-related forms of MEV combined.

CoW DAO is uniquely capable of bringing an FM-AMM design to market, as it relies on a surplus-capturing solver network to balance liquidity pools. CoW Protocol currently runs the largest solver competition on Ethereum, with 19 active solvers.

**Find out more about CoW AMM here:** [**cow.fi/cow-amm**](http://cow.fi/cow-amm)

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The novel AMM design protects liquidity providers from MEV bots by eliminating LVR (loss-versus-rebalancing), which costs LPs more than $500M every year


CoW DAO launches the first MEV-capturing AMM

MEV, or maximal extractable value, is a form of price exploitation that acts as a “hidden tax” on Ethereum transactions.

To date, MEV has caused over a billion dollars in losses for everyday traders, especially beginners who often don’t know how to protect themselves.

![1-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_understanding_mev_protection_5c36d92e50.webp)

In this article we’ll take a look at what MEV is and explore some of the popular protection solutions.

## What is MEV protection?

MEV protection refers to a broad set of strategies that keep users safe from price manipulation when trading, providing liquidity, minting NFTs, and more.

### What exactly are you protecting against?

To understand MEV, we must first understand how Ethereum transactions are processed.

![2-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_understanding_mev_protection_9bb7157306.webp)

When a user places an order, it initially gets submitted to a holding area for pending Ethereum transactions known as the “mempool.” Transactions in the mempool are public, meaning that MEV bots (known as “searchers”) can monitor them for exploitation opportunities. MEV relies on reordering transactions from the order in which they were submitted to a new, more profitable order.

To better understand this process, let’s trace the flow of a sandwich attack — the worst type of MEV.

![3-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_understanding_mev_protection_b1a61b2259.webp)

Essentially, traders place orders on  [AMMs](/learn/cow-protocol-glossary#:~:text=AMM)  by designating a  [slippage tolerance](/learn/cow-protocol-glossary#:~:text=Slippage%20Tolerance). Searchers can exploit these orders by placing similar trades before and after the user trade, manipulating the price of the assets on the AMM and forcing the victim trade to execute at a higher price.

Searchers pocket this difference in price for themselves. Their only cost is the amount of money they spend bribing the Ethereum block builders to order the transactions in a specific way.

To learn more about the different types of MEV, check out our articles on  [sandwich attacks](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself),  [frontrunning](/learn/what-is-frontrunning), and  [backrunning](/learn/what-is-backrunning-mev-attacks-explained).

Now let’s take a look at how you can protect yourself from MEV.

## Slippage tolerance and MEV protection

The most basic defense against MEV is setting a low slippage tolerance.

Since MEV relies on slippage for price manipulation, transactions with a lower slippage tolerance give searchers less room to exploit trades.

For users who aren’t utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it’s by no means a complete solution. Setting the slippage tolerance too low often results in failed transactions. Even with optimal slippage, MEV bots may still be able to extract value from your trades.

## RPC endpoint tools for MEV protection

A better protection method is to install an MEV protection RPC endpoint.

A Remote Procedure Call (RPC) endpoint is an intermediate layer that routes transactions from a user’s wallet to the blockchain itself. Transactions pass through RPC endpoints before getting to the mempool, so RPCs can provide additional functionality across any blockchain application or protocol.

Normally, RPCs are a boring piece of blockchain infrastructure. Recently, however, specialized RPCs have begun incorporating extra security guarantees for transactions before they reach the blockchain.

### MEV Blocker

One of the most popular specialized RPC endpoints is  [MEV Blocker](https://mevblocker.io/).

As the name suggests, MEV Blocker provides protection against MEV across all of Ethereum. The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions. Instead, they capture value through  [backrunning](/learn/what-is-backrunning-mev-attacks-explained).

Anytime a searcher backruns a user’s transaction, the searcher keeps up to 10% of the value and send the other 90% back to the user as a rebate. So even when a transaction leaves money on the table, MEV Blocker puts it back into the pockets of users.

MEV Blocker provides protection for any type of Ethereum transaction (not just swaps), and it works with all Ethereum wallets. Install the MEV Blocker RPC endpoint by following the instructions  [here](https://mevblocker.io/).

## Decentralized applications and MEV protection

While RPC endpoints provide significant MEV protection, the most complete protection comes at the application layer.

As MEV has become more prevalent, decentralized applications (especially decentralized exchanges — DEX’s) have begun offering creative protection solutions to users. For example, many DEXs offer an “auto-slippage” feature which determines the optimal slippage for user trades, reducing the chances of price exploitation.

### Native MEV protection on CoW Protocol

CoW Protocol is a meta DEX aggregator that finds the best prices for trades and provides comprehensive MEV protection. The protocol uses a unique trading mechanism that relies on batch auctions and  [intents](/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade)  to achieve the best outcomes for users.

![4-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_understanding_mev_protection_cf34f8959e.webp)

Starting at the application level, CoW Protocol provides end-to-end MEV protection through its unique protocol design:

**Delegated Trade Execution**: On CoW Protocol, bonded third parties known as “solvers” execute transactions on behalf of users. Solvers source liquidity across multiple DEX’s and even offchain liquidity sources to find the best prices for any given trade. Solvers also execute transactions on behalf of users, meaning they are never exposed to the blockchain directly.

**Coincidences of Wants**  **(CoWs)**: Thanks to CoW Protocol’s batching mechanism, trades may be matched using peer-to-peer liquidity in a  [Coincidence of Wants (CoW)](/learn/what-are-cows-on-cow-swap). This method of trading bypasses AMMs, reducing fees and preventing MEV.

**Uniform Clearing Prices**: Another benefit of batching is that duplicate trade pairs within a given batch clear for the same price. For example, if multiple users are trading ETH and USDC in the same batch, the assets will execute for the same price across the various trades. This makes transaction reordering useless, removing the opportunity for price exploitation.

Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Protocol users benefit from thorough MEV protection on all trades.

## CoW DAO protects you from MEV

MEV is a billion dollar problem for the Ethereum ecosystem. CoW DAO builds products to protect users from negative outcomes for transactions of all types and sizes.

DeFi traders can rely on  [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=understanding-mev-article)  as the most trusted decentralized exchange when it comes to MEV protection. For all other use-cases, including liquidity providing, NFT trading, and more,  [MEV Blocker](https://mevblocker.io/)  provides extensive MEV protection anywhere on Ethereum.

If you want to learn more about MEV, check out “[MEV Transparency: Ensuring Fairness In DeFi Markets](/learn/mev-transparency-ensuring-fairness-in-defi-markets)” and “[How CoW Swap solves the MEV problem](/learn/how-cow-swap-solves-the-mev-problem).”

Safe trading!

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MEV is a billion-dollar problem, but many Ethereum users still don’t know how to protect themselves.


Understanding MEV Protection

![CoW-Case-Study-Qantura-main-image.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Co_W_Case_Study_Qantura_main_image_3519f259be.png)
TL:DR

  

-   [Qantura](https://www.qantura.com/) provides a seamless integration layer that transforms how smart wallets engage with blockchain applications.
    
-   In order for their service to work, it needed a Meta DEX with built-in MEV protection to allow users to swap their yield tokens whenever they tap the VISA card to spend money on real-world items.
    
-   The Qantura team chose CoW Protocol to create a seamless way to rebalance customer wallets.
    
-   The result was a first-of-its-kind application that enables frictionless payments with yield-bearing assets.
    
-   Within the first month after the release, the project saw more than $100,000 USD settled.
    

## Introduction

  

CoW DAO builds products that help keep users safe. But it also builds products that other people can use and integrate. One of those is CoW Protocol. With its built-in MEV protection, simple user interface, customized order functionality, and ease of integration, projects looking for a way of providing better prices for its users while keeping them safe look no further.

## The client

  

[Qantura](https://www.qantura.com/) provides a seamless integration layer that transforms how smart wallets engage with blockchain applications. The company leverages account abstraction to simplify complex blockchain interactions while maintaining the highest security standards. Founded by crypto OGs and security experts, they're making it effortless for wallets to expand their capabilities using their plug-and-play modules. They have already partnered with industry leaders like [Zeal Wallet](https://www.zeal.app/) and [Gnosis Pay](https://gnosispay.com/).

## Identifying the problem and challenges

  

Historically, if someone wanted to pay in crypto, the merchant would have to accept that token directly or use a service provider that performed the conversion from cryptocurrency to cash. With Gnosis Pay, that’s no longer the case.

  

Gnosis Pay is the world’s first on-chain spending account with a Visa Debit Card linked to a self-custodial blockchain wallet, and thanks to [Monerium](https://monerium.com/), users with EURe, or GBPe stablecoins can now spend their currency anywhere where Visa is accepted, with a series of on-chain transactions taking place in the background. However, if a user leaves stablecoins sitting in their wallet, they’re not only missing out on yield farming but also on any capital appreciation they expect in other crypto assets.

  

Instead of simply having customers sit with idle capital on their Gnosis Pay account, Qantura wanted to offer users the opportunity to earn yield and spend that yield on whatever they liked. Qantura teamed up with Zeal and Gnosis Pay, to build a unique feature: allow customers to switch stablecoins to yield-bearing tokens in order to capture such yield, while still being able to spend money on real-world transactions.

  

While that sounds simple in theory, the devil was in the details. In order for all this to work, Qantura “needed a flexible system that worked for swapping any ERC20 token and that ensured users got competitive prices” says a member of Qantura’s team. Additionally, because most of their system is based on smart contracts, they needed a protocol that worked with [ERC1271](https://cow.fi/learn/eip-1271-explained) orders. This allowed them to have their smart contract sign the intent to trade transactions whenever the user actually tapped the card on a payment terminal.

  

Based on all these requirements, the team needed a solution that offered smart contract orders that could be customised to suit what they were building. So they turned to CoW Protocol.

## Working with CoW

  

The team were already familiar with CoW DAO’s suite of products and services, and had been regular users of CoW Swap already.

  

“CoW Protocol offered the flexibility we needed as far as token breadth goes via ERC1271 orders, and its off-chain solver competition did it for us in terms of offering a mechanism that incentivised competitive pricing in rebalancing trades.”  
  
Qantura systems use ERC-1271 smart contract signature verification for order placement. This means that when the user account is deployed, (aka the user wants to earn yield on the funds sitting on their Gnosis Pay card), the yield token is immediately approved on the CoW Protocol settlement contract.

  

This means that now, any third party can create an order as long as it satisfies the wallet’s isValidSignature() function, which in this case would be “Swap my yield token to EURe/GBPe with the best price you can find so that the user can rebalance their card after paying for the coffee bill”. For this to happen, the system places the order via CoW Protocol’s orderbook, which is eventually forwarded to solvers as part of the batch auction process.

  

While monitoring performance, Qantura analyzed nearly 4,000 trades and compared their settled sDAI/EURe prices with a proxy oracle. There’s no oracle in Gnosis chain for sDAI/EURe, so they built a sDAI/EURe proxy oracle instead.  
  

CoW Swap’s unique solver system delivered the most competitive prices than any other venue, and was on par to the comparison model.
![cow-protocol-case-study-qantura.jpeg](https://celebrated-gift-f83e5c9419.media.strapiapp.com/cow_protocol_case_study_qantura_4232e2e475.jpeg)


The graph above highlights Cow Swap’s performance against the price oracle. The median percentage difference between the price of the proxy oracle and CoW Protocol´s found price was just 9 basis points, meaning users typically paid just 0.09% more than the oracle. In the figure, the blue outliers are small amounts of around 1 sDAI.

## The solution

  

The finished product? Recharge. Built in partnership with Zeal Wallet and Gnosis Pay, it allows users to spend yield-bearing tokens via Gnosis Chain in the real world with a Visa card. In the backend, meanwhile, a complex rebalancing takes place to ensure assets are able to be converted for a competitive price and moved to the right places at the right time. It’s a unique showcase of what happens when TradFi meets DeFi composability.

  

Where does CoW Protocol feature in this unique solution? CoW Protocol was integral to ensuring that when rebalancing happens, the execution cost is as low as possible and the best price is achieved.

How does Recharge work? Let’s look at an example. But before you do, we need to clarify a few terms:

  

-   EURe - this is the first fully authorized and regulated euro stablecoin.
    
-   sDAI - or Savings DAI is a token that allows users to earn yield from holding DAI.
    
-   Recharge Smart Contracts - Recharge is a feature that allows Zeal wallet users to maintain a minimum amount of a given currency at any time via the Coordinator. When the amount drops below a threshold, the wallet automatically rebalances itself by swapping one currency for another. In this example, we’ll be using sDAI and EURe. The Coordinator is a smart contract that starts the rebalance once a threshold has been reached.
    

  

### Let’s take a closer look at an example:
![Screenshot 2024-10-25 at 8.39.00 AM.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2024_10_25_at_8_39_00_AM_db0ac99d12.png)


-   (1) Alice pays 5 EURe with her Gnosis Pay card. Before that, Alice had set up rebalance with sDAI and EURe.
    

  

-   (2) Prior to the transaction at the coffee shop, Alice had 1,000 EURe in her Gnosis Pay safe account.
    

  

-   (3) She had also set up her Coordinator smart contract to top up whenever her wallet dropped below 1,000 EURe.
    

  

-   (4a) Qantura's automation service detects Alice’s setup and notices that the new balance of the account is 995 EURe. This takes her below the threshold.
    

  

-   (4b) The service sees that Alice holds 5K sDAI, enough to top up the account.
    

  

-   (4c) The bot drafts the rebalance order, making sure that it meets all conditions specified by the sDAI account including that the order is:
    

  

-   Selling sDAI
    
-   Buying EURe
    
-   Issuing a buy order for 5 EURe
    
-   Sending the funds to the intended receiver; i.e., the user’s Gnosis Pay Safe
    

  

-   (4d) A bot posts the order to CoW Protocol’s orderbook.
    

  

-   (5) The order is forwarded to all solvers as part of the auction process, where they compete to provide the best possible price at the lowest execution cost.
    

  

-   (6) CoW Protocol executes the winning solution, sending 5 EURe to the Gnosis Pay Safe and pulling the sDAI from Alice's sDAI account. The amount pulled is determined by the auction.
    

  

-   (7) Alice's Gnosis Pay Safe is now balanced again.
    

  

CoW Protocol is instrumental in allowing this to happen smoothly. CoW Protocol´s competition pushes solvers to get as much surplus as possible. In the case of Alice, solvers will submit a solution that gets 5 EURe for the least amount of sDAI.

  

## The result

  

Since Recharge launched, more than $100,000 USD has been settled. At the time of writing, there is more than 300k USD generating yield for users. You can follow live metrics on [Qantura's Recharge Dashboard](https://dune.com/steakhouse/qantura-rebalance).

  

Qantura is revolutionizing the payments industry by allowing users to remain capital-efficient in a self-custodial setup. That’s a tall order. But then again, CoW DAO is the place people go to build big things.

## CTA

  

Want to get in touch with Qantura for more details about their solution powered by CoW Swap? [Get in touch with Qantura](https://x.com/QanturaTech).

  

Want to work with CoW DAO’s class-leading suite of products? [Head this way](https://forum.cow.fi/).

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Welcome to CoW Case Studies: in this series we explore how partners used CoW Protocol to build their products.

How Qantura Harnessed CoW Swap To Power the Future of Payments


The vast world of DeFi offers many kinds of tokens, with more being added every day. Decentralized aggregators like CoW Swap allow users to swap between practically any two ERC-20 tokens, but sometimes you need to manually add a custom token before you can trade it.

## Add Custom Tokens

In order to display user balances, CoW Swap queries the blockchain to see what tokens a wallet holds. To ensure a smooth user experience, this analysis is limited to tokens included on official token lists such as CoinGecko.

![1-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_add_custom_tokens_a00d95fa40.webp)

For this reason, your wallet may hold tokens that don’t show up in your balance on CoW Swap. This doesn’t mean you can’t trade them! The CoW Protocol network of  [solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)  searches all available liquidity to bring you the best prices, even for tokens outside of the default lists.

To trade custom tokens, you simply need to add them to the UI. Here’s how:

## Step 1

Navigate to CoW Swap and click “Select a token.”

![2-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_add_custom_tokens_c80ddc6351.webp)

## Step 2

A token list will come up. Here you can either search the name of your token or enter the contract address in the search box.

![3-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_add_custom_tokens_f8dd21ae8e.webp)

## Step 3

For maximum security, you should always paste the official token contract address into the search box. This prevents any form of manipulation or phishing.

![4-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_add_custom_tokens_1ee5946e85.webp)

For ERC-20 tokens, the contract address starts with “0x” and is followed by 40 characters. You can usually find it by looking up the token you want to trade on reputable websites like  [CoinGecko](https://www.coingecko.com/).

_Note: While rare, it is possible for token lists to show the wrong contract address. Always check the official channels of the project you are trading for the most up-to-date information on token contract addresses._

## Step 4

Once you’ve found the token you’re looking for, click the “Import” button to add it to CoW Swap.

![5-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_add_custom_tokens_da75a6cce1.webp)

## Step 5

Ensure you’ve entered the correct token address and click “Import.”

![6-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_add_custom_tokens_160c90e632.webp)

## Step 6

Once imported, you will be able to trade the token on CoW Swap. Tokens only need to be imported once per browser.

![7-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_add_custom_tokens_149eafcaa6.webp)

If you have any questions or need help importing tokens, feel free to reach out to us on  [Discord](https://discord.com/invite/cowprotocol)  or on  [X](https://twitter.com/CoWSwap). Happy swapping!

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How to Add Custom Tokens on CoW Swap

Slippage is the difference between the price at which a cryptocurrency order is submitted and the price at which it’s executed.

Since crypto prices fluctuate constantly, it’s necessary to set a “slippage tolerance” for every trade which allows users to accept a slightly higher or slightly lower price for their trades at execution time.

## What is Slippage?

Slippage is the amount that a trade price may vary by between the time the trade is placed and the time it actually executes.

To better understand slippage, let’s take a look at an example.

Let’s say a user places an order to buy 1 ETH while the price of ETH is exactly $3,000. By the time the order executes, however, ETH has shifted slightly in price and the user ends up only paying $2,980 for 1 ETH. The $20 difference between the $3,000 that they initially placed their order at and the $2,980 per ETH price that the order eventually executed for is known as slippage.

## What is a Slippage Tolerance?

![1-what-is-slippage.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_is_slippage_0b1a557216.webp)

_The slippage setting on_ [_CoW Swap_](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=slippage-article)

Decentralized exchanges require users to set a “slippage tolerance” percentage every time they make a trade. This determines how much deviation the trader is willing to accept in the price of the asset they are trading.

For example, if a user wants to buy 1 ETH, it might cost them $3,000 at the time they place their trade, but by execution time that price may have changed to $2,950 (approximately 2% less). If they had no slippage tolerance, their trade would fail, potentially still incurring gas fees and forcing them to resubmit the transaction.

Meanwhile, if they set a slippage tolerance of 2% when they place their trade, their trade would be able to execute at prices 2% below or 2% above the quoted price. In this example, this would allow the trade to go through as long as 1 ETH is between $2,940 and $3,060 at execution time.

All decentralized exchanges use slippage tolerances for user trades, so it’s important to understand the concept and know what percentage to use.

## What Slippage Tolerance Should I Use?

As a rule, you should try to use the smallest slippage you can get away with. On most exchanges, the default slippage tolerance is between 0.5% and 2%, however, the optimal slippage tolerance depends on the type of asset you’re trading.

Generally speaking, the more volatile a crypto asset is, the higher a slippage tolerance you’ll need to use.

**For stable assets**: Assets like stablecoins generally require a low slippage tolerance because their prices don’t fluctuate by much. Exchanges specializing in stablecoins (such as Curve) set the default slippage tolerance for these assets at between 0.25% and 0.5%.

**For standard assets**: The standard slippage tolerance for most trades is between 0.5% and 2%. This is a good range to stick to when trading established assets with medium volatility profiles such as Ethereum.

**For volatile assets**: When it comes to cryptocurrencies whose prices jump wildly — such as memecoins or new token launches — users will often need to use a higher slippage tolerance than 2%. There is no hard and fast rule here. Depending on the volatility of the asset, user trades may require a double-digit slippage, maybe even in the high double-digits, in order for the trade to go through.

It’s important to understand, however, that setting a high slippage tolerance leaves you vulnerable to price exploitation in the form of maximal extractable value (MEV).

## The Dangers of High Slippage

While setting a high slippage tolerance helps ensure that your transaction goes through, using too high of a slippage tolerance can be dangerous.

Blockchains like Ethereum process transactions sequentially, meaning that transactions in a block execute one after the other. This, combined with the mechanism of  [automated market makers (AMMs)](/learn/cow-protocol-glossary#:~:text=amm), means that value-extracting bots can strategically place transactions before and after your trade to exploit your slippage tolerance and extract value from you. This type of price exploitation is known as maximal extractable value (MEV).

### Sandwich Attacks

![2-what-is-slippage.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_what_is_slippage_e0af2a8fb5.webp)

_The flow of a sandwich attack_

A  [sandwich attack](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself)  is a form of MEV that can occur whenever a user places a trade with a high slippage tolerance. Specifically, this is a slippage tolerance that is larger than what the market price may call for.

When a user places this trade, an MEV bot (known as a “searcher”) places another transaction before the user transaction, pushing the price of the traded asset up to the original user’s maximum slippage tolerance. The original user’s transaction then goes through, pushing the price up even further. Finally, the searcher sells the asset, cashing out on the price difference.

In the end, the user loses out because their transaction could have gone through at a lower slippage. Instead, the searcher forced the user’s transaction to execute at the limit of its slippage tolerance and kept the difference for themselves.

This isn’t a rare occurrence either, MEV is a systemic problem for chains like Ethereum where MEV losses total over $1.3 billion to date.

## What is Auto-Slippage?

Unfortunately, there is no perfect way to predict what the ideal slippage should be for every trade. In crypto, users are often competing against more sophisticated trading parties and bots who can take advantage of their sub-optimal traders for their own profit.

To protect users from MEV, some exchanges offer auto-slippage functions which automatically calculate the slippage tolerance that trades should use based on the assets they are trading and market conditions.

## CoW Swap: Premium Auto-Slippage and Delegated Trade Execution

![3-what-is-slippage.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_what_is_slippage_4170bdeb89.webp)

One of the exchanges with the most advanced auto-slippage features is CoW Swap. CoW Swap is an intents-based DEX aggregator that uses third parties known as “solvers” to execute trades on behalf of users. Solvers calculate the optimal slippage tolerance for user trades and take on all the risks of MEV.

![4-what-is-slippage.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_what_is_slippage_4f3c2ce1e4.webp)

In fact,  [data shows](https://blog.cow.fi/do-cows-slip-age-less-389150154f84)  that CoW Swap offers a low default slippage the overwhelming majority of the time compared to 0x and 1inch.

On CoW Swap, you can make the perfect trade every time, even if you’ve never heard of “slippage” before!

Trade worry-free at  [swap.cow.fi](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=slippage-article).

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Slippage occurs in most crypto trades, and it’s an important concept for traders to understand


What is Slippage in Crypto?

**Intent to Trade:** When users submit orders on CoW Swap, they are not actually initiating a blockchain transaction, like they would on Uniswap. Instead, orders are submitted as signed “intent to trade” messages which include the details of the intended trade, but are not actually submitted to the blockchain. From here, independent parties known as “[solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers)” find the best execution path for the specified trade and execute the trade on-chain on behalf of the user. If a trade route cannot be found for any reason, the transaction will not execute and the user will not be charged a fee for the failed transaction.

**Delegated trade execution**: When it’s time to actually execute a settlement (which can contain multiple trades),  [solvers](https://docs.cow.fi/solvers/solvers)  lock in the execution path and submit the transaction to the blockchain. Note here that it is the solvers who are completing the transaction on behalf of the user, meaning that they determine the correct slippage tolerance to use, the right amount of gas fees, as well as taking on the risk of negative price movements or MEV.

The delegated trading model also means that traders using CoW Swap do not have to spend ETH to cover gas. Instead, gas fees come out of the sell token when making trades.

**AMM**: Automated Market Makers, also known as “DEXs,” are trading mechanisms that allow traders to buy and sell assets in real-time. Unlike traditional “orderbook” trading, which relies on counterparties for every transaction (you need a seller in order to buy and a buyer in order to sell), AMMs work by maintaining a constant ratio between the prices of two assets. For example, ETH and COW. AMMs use the formula “x*y = k” to determine a fair price based on the ratio between two assets (x and y) in the liquidity pool.

Any time a trade alters this ratio by depleting the supply of one asset and increasing the other, the prices of the assets adjust in order to preserve the established ratio. For instance, if a trader buys COW and sells ETH, the COW price rises and the ETH price falls. The opposite happens when traders sell COW and buy ETH.

**Slippage Tolerance**: When placing a trade, traders set a “slippage tolerance” for their transactions which represents the maximum price difference they’re willing to accept for their trade. For example, if ETH is trading at $2,000 and you place an order to buy ETH with a 5% slippage tolerance, you’re willing to buy ETH at up to $2,100. If ETH goes above $2,100, however, your trade will fail as it’s outside your slippage tolerance.

Some amount of slippage tolerance is always necessary because the prices of crypto assets are constantly fluctuating. By the time your trade executes, the price may have moved. Setting your slippage tolerance too high, however, leaves room for searchers to sandwich your trades.

**Price Impact**: Crypto markets, like all markets, are based on supply and demand. AMMs maintain “liquidity pools” of assets which they use to fill trades. Each trade drains some amount of this liquidity and moves the asset's price. This price movement is known as “price impact.”

The larger the trade, the bigger the price impact. A trade of $100 ETH will not move the price of ETH very noticeably, since it only makes up a tiny fraction of the available liquidity. A trade of $1,000,000 ETH, however, will noticeably move the price of ETH.

**Transaction Reordering**: Blockchain transactions do not always enter the block in the order that they were submitted. Searchers can “bribe” the validators responsible for creating the block to get them to arrange transactions in a specific sequence. This transaction reordering is what makes all of MEV possible.

**EOA Wallets:**  Externally owned accounts (EOAs) are Ethereum accounts controlled by private keys. EOA wallets — for example: MetaMask, Rainbow, and Rabby Wallet — allow users to (1) send, hold, and receive Ethereum-native tokens, and (2) interact with smart contracts. Unlike smart contract wallets, EOA wallets are usually generated with a seed phrase and do not have any code associated with them.

**Milkman**: The  [Milkman](https://github.com/charlesndalton/milkman)  smart contract ensures trades are executed for the real-time price or better by utilizing a price checker, such as a Uniswap pool or an oracle. Instead of setting a fixed slippage tolerance based on the current market price, DAOs can utilize Milkman to determine a maximum percentage deviation from a real-time price sourced from a price checker, guaranteeing that their trade will finalize at a fair market price. If a trade can’t be executed within the defined price or better, the order remains pending until the price condition is met, or until the trader cancels the order.

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A list of terms & definitions related to CoW Protocol


CoW Protocol Glossary


A DEX aggregator is a platform that searches multiple decentralized exchanges to find the best prices for crypto trades.

The rise of permissionless trading venues known as decentralized exchanges (DEXs) allow users to swap between virtually any cryptocurrency assets. Navigating multiple decentralized exchanges, however, can be cumbersome and inefficient.

This is where a decentralized exchange (DEX) aggregator comes in.

DEX aggregators are decentralized applications that search decentralized exchange trading platforms (like Uniswap, Balancer, and others) to find the best prices for any given trade. DEX aggregators have become pivotal to the world of decentralized finance (DeFi) by providing a single trading platform for users looking to get the best deal on their swaps.

## How does a DEX aggregator work?

DEX aggregators search various sources of liquidity to find the best trade route for on-chain assets.

Since liquidity is often fragmented across various sources, different decentralized exchanges may quote different prices for the same asset. DEX aggregators “aggregate” quotes from decentralized exchanges and fulfill user orders at the best available price. Sometimes, DEX aggregators may even route a single trade across multiple decentralized exchanges to reduce  [price impact](/learn/cow-protocol-glossary#:~:text=Price%20impact)  and provide better execution.

There are multiple types of DEX aggregators and the last few years have seen ever-more advanced versions of these platforms become available.

### Traditional DEX Aggregators

![1-what-is-a-dex-aggregator.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_is_a_dex_aggregator_b90efd4ea4.webp)

_1inch DEX Aggregator_

Traditional DEX aggregators such as 1inch have been around for years. Their interfaces look very similar to those of regular decentralized exchanges. A user is presented with a swap module that takes in two cryptocurrencies: a sell token and a buy token. After the user clicks “swap,” the aggregator automatically finds the best liquidity for the trade and executes the transaction on-chain.

### Meta DEX Aggregators

![2-what-is-a-dex-aggregator.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_what_is_a_dex_aggregator_2323d5b3ed.webp)

_DeFi Llama Meta DEX Aggregator_

Meta DEX aggregators are a step up from traditional aggregators. As the “meta” name implies, they aggregate DEX aggregators. This leads to better liquidity coverage across more venues, while still providing users with a single interface for their trades.

### Intent-Based DEX Aggregators

![3-what-is-a-dex-aggregator.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_what_is_a_dex_aggregator_198d1d6719.webp)

_CoW Swap Intent-Based DEX Aggregator_

Intent-based aggregators are the most advanced type of DEX aggregator out there.

They not only aggregate on-chain liquidity across exchanges and other aggregators, they also delegate execution to third parties known as “solvers.” These third parties provide additional sources of liquidity by including private inventory and, in certain cases, even matching trades peer-to-peer. This avoids protocol fees and makes for the most efficient trades in DeFi.

## Benefits of Using a DEX Aggregator

DEX aggregators provide a number of benefits, simplifying trading and providing better outcomes for users.

**Better Prices**: DEX aggregators look across multiple on-chain decentralized exchanges to find the best prices for any given token pair. Since most on-chain trading relies on  [automated market makers (AMMs)](/learn/cow-protocol-glossary#:~:text=amm), liquidity may be fragmented across various exchanges. As their name suggests, aggregators collect this liquidity in one place, giving traders the best deal for their swaps.

**Convenience**: By using a DEX aggregator, traders can reliably get good prices for their trades in one place without having to check multiple exchanges.

**Price Impact Protection**: Fragmented liquidity can sometimes make for shallow pools, meaning large trades experience significant  [price impact](https://blog.cow.fi/cow-protocol-glossary-ad7313a2c71#:~:text=Price%20Impact). Aggregators can break up trades across multiple exchanges, reducing price impact and providing better prices.

**MEV Protection**: In the case of intent-based DEX aggregators, solvers execute trades on behalf of users—protecting them from price exploitation in the form of  [maximal extractable value (MEV)](/learn/understanding-mev-protection).

Fragmented liquidity often makes finding the best route for trades difficult. DEX aggregators bring this liquidity back together and take the work of finding the best prices off the backs of users.

## What is the Best DEX aggregator?

There are a number of DEX aggregators on the market today. By market share, the most popular DEX aggregator is 1inch. However, when it comes to innovation, intent-based protocols like CoW Swap go the furthest.

## CoW Swap: The Leading Intent-Based Aggregator

![4-what-is-a-dex-aggregator.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_what_is_a_dex_aggregator_8768b6d9fb.webp)

CoW Swap is a leading innovator in the intent-based aggregator space. It’s the second most popular DEX aggregator after 1inch, and a leader among DAO & Safe wallets.

Whales and DAOs (as well as retail users) rely on CoW Swap as their aggregator of choice because CoW Swap does more than just aggregate liquidity. It also provides comprehensive  [MEV protection](/learn/understanding-mev-protection)  and enables price optimizations — such as  [CoWs](/learn/what-are-cows-on-cow-swap)  — that traditional aggregators can’t. Thanks to its intent-based architecture, CoW Swap supports 22 solvers that compete with each other to find the best prices for each user trade, and even provide price surplus on top.

While other aggregators claim to provide the best prices, CoW Swap’s architecture is built from the ground up to incentivize the best prices and the most surplus for trades, all in an easy-to-use, worry-free interface.

Give CoW Swap a try for yourself at  [swap.cow.fi](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=dex-aggregator-article).

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Decentralized exchange (DEX) aggregators are used to find the best prices for user trades


What is a DEX Aggregator


## TL;DR

-   During the month of June, CoW Protocol handled a total volume of  **$2.19B**  and generated a surplus of  **$14M**
-   In exciting news, CoW DAO  [received a new look](https://x.com/CoWSwap/status/1805606262744531260)  and CoW Protocol  [launched on Arbitrum](https://x.com/CoWSwap/status/1797996272349323412)
-   In terms of Governance, CoW DAO executed CIPS  [46](https://forum.cow.fi/t/cip-46-funding-for-marketing-business-development-services-service-agreement-no-1/2476/1)  and  [47](https://forum.cow.fi/t/cip-47-funding-for-the-purpose-of-facilitating-the-listing-cow-token-on-cexs/2458)

## Protocol Stats

This month, CoW Protocol settled a total of  **$2.19B**

![1-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_june_2024_highlights_bbbd21676b.webp)

The top batches worth highlighting are the following:

**Batch containing the highest volume**  **(**[**Transaction details**](https://explorer.cow.fi/tx/0x15a8acee86e3ddd8943f6cb7bf7b6c9dfc98219f0d49dede6501f30e1e6ad327?tab=orders&vis=transfers)**)**: The total batch volume was  **$27,086,967** and it was created by two traders who were swapping  **WeETH to WETH**  and  **USDT to USDC**.

![2-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_june_2024_highlights_997a9b5cf0.webp)

**Batch with the highest amount of surplus**  **(**[**Transaction details**](https://explorer.cow.fi/tx/0xfde66662c4df3e9c7e4ea1cf0dc6e645b53912486826f892d2c7b4dc37947518?tab=orders)**)**: The total batch volume was  **4,119 ETH** and it was created by two traders — one swapping  **WEETH to WETH**  and the other swapping  **ETH to ZAAR.** The batch achieved a surplus of  **$71,600**  **(0.49%).**

![3-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_june_2024_highlights_5ed5d8db9d.webp)

During the month of June, the top 10 traders traded a total of  **$17,397,532.**

![4-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_june_2024_highlights_9025cd7c9a.webp)

In the table below you can see the total volume for this month’s biggest trades. The most active trader executed a whopping  **$4,143,954**  in trades with CoW Protocol this month.

![5-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_june_2024_highlights_e205f5c02b.webp)

## Solvers

In  June, solvers generated a total of  **$14M**  in surplus, which is money in the pockets of traders.

![6-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_june_2024_highlights_f3e48e0cc2.webp)

Below you can find a breakdown of how each solver performed in June.

![7-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_june_2024_highlights_87f40f594b.webp)

## Governance

It has been a hectic month in terms of governance! The CoW cannot be stopped 💪

![8-june-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_june_2024_highlights_8ec68b11a8.webp)

## Executed Proposals

The DAO executed one important proposal this month:

-   [CIP-45: Balancer & Cow Protocol Strategic Partnership — Launching CoWAMM Pools](https://snapshot.org/#/cow.eth/proposal/0x5a7435a287fda55133fa5973b4979465687c341def703564986f2771780352b0)

## Draft Proposals

This month, there were two new proposals asking for feedback before moving into the next phase, final CIPs, in their current form:

-   [CIP-46: Funding for Marketing & Business Development Services — Service Agreement No 1](https://forum.cow.fi/t/cip-46-funding-for-marketing-business-development-services-service-agreement-no-1/2476/1)
-   [CIP-47: Funding for the purpose of facilitating the listing COW token on CEXs](https://forum.cow.fi/t/cip-47-funding-for-the-purpose-of-facilitating-the-listing-cow-token-on-cexs/2458)

Make sure to read them and leave comments — your feedback is highly appreciated and will help move these important topics forward. If you are interested in submitting a proposal to the CoW DAO, make sure to use the following  [template](https://forum.cow.fi/t/cip-0-template/28).

## CoWmunity News

-   CoW DAO has a  [new look](https://x.com/CoWSwap/status/1805606262744531260)  including a new logo, new landing pages for each product, and an entirely overhauled brand feel!
-   CoW Protocol  [launched on its first L2](https://x.com/CoWSwap/status/1797996272349323412)  — Arbitrum and  [participated in an X Space with members of the Arbitrum foundation](https://x.com/CoWSwap/status/1800544944396075390)
-   Curve finance  [launched a fee burner using the Programmatic Order Framework](https://x.com/CoWSwap/status/1806001775335580016)
-   Published a  [report on the findings of the second fee test](https://x.com/CoWSwap/status/1799172243995693195)
-   Put  [out a call for CoW DAO delegates](https://x.com/CoWSwap/status/1806741521594720490)
-   Reduced TWAP order minimums to just  [$1,000 per order segment](https://x.com/CoWSwap/status/1799446283662536789)
-   Helped facilitate  [Gnosis DAO’s $30 million buyback program](https://x.com/CoWSwap/status/1800974615264756174)
-   Got  [featured in the “Our Network” newsletter](https://x.com/ournetwork__/status/1807202388538978436)
-   Published a flagship “[What is MEV](https://cow.fi/learn/what-is-mev)” article

## Open Job Positions

[**Content Marketing Manager**](https://boards.eu.greenhouse.io/cowswap/jobs/4343031101)

[**Senior Data Engineer**](https://boards.eu.greenhouse.io/cowswap/jobs/4362645101)

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Welcome back to another CoW update, where we break down the most notable developments of the last few weeks at CoW DAO.


CoW DAO June 2024 Highlights


# How to create a LVR Protected Liquidity Pool on CoW AMM

## Accessing the creation page UI

CoW AMM is a new type of AMM built from the group up to protect LPs from price exploitation in the form of [LVR](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr). Liquidity providers expect their tokens to earn yield, but most liquidity pools are actually not profitable after accounting for stale prices. Arbitrageurs exploit these stale prices at the expense of LPs. CoW AMM fixes LVR once and for all, with liquidity pools proven to outperform reference Balancer and Uniswap pools.

Now, you can create your own CoW AMM pools too! To get started, navigate to the [Balancer CoW AMM pool creator](https://pool-creator.balancer.fi/cow).

You can access the pool creator in several ways. The first is to navigate to the [CoW AMM liquidity pools page](https://balancer.fi/pools/cow), scroll down to the bottom, and click “create a pool.”

![Cowamm_poolguide_1.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_1_8dcf4f3760.png)
![Cowamm_poolguide_2.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_2_9e8feff94c.png)
  
You can also open the pool creator from the banner on the [CoW Swap](https://swap.cow.fi/) homepage.

![Cowamm_poolguide_3.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_3_70c3bd8093.png)

The third way is to access the pool creator directly at [https://pool-creator.balancer.fi/](https://pool-creator.balancer.fi/) and click the icon to enter the pool creation page.

![Cowamm_poolguide_4.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_4_0aef667f89.png)

Once inside, you’ll see the following interface:

![Cowamm_poolguide_5.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_5_fb12211f1f.png)

## Configuring your own LVR Protected pool for deployment

To get started, select the tokens you want to use to create your LVR-protected pool.

![Cowamm_poolguide_6.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_6_542472caad.png)

After selecting your tokens, specify the deposit amounts. Keep in mind that the pool creator currently only supports 50/50 pools so add an equivalent dollar amount of both assets.

![Cowamm_poolguide_7.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_7_124b34dcdb.png)

After selecting your assets and amounts, tick the checkbox confirming that you understand assets must be added proportionally or you risk loss of funds via arbitrage. Once you’ve done this, click the “Preview” button.

![Cowamm_poolguide_8.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_8_84c160ab40.png)

## Deploying your LVR Protected pool onchain

Creating a pool requires several approval and swap steps through your wallet. The first is the actual pool creation, to initiate this click the “Create Pool” button and check your connected wallet interface.

![Cowamm_poolguide_9.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_7a477d22d7.png)

In your wallet, approve the pool creation by signing. Remember to double check that you are signing the correct transaction!

![Cowamm_poolguide_9.1.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_1_bed5d89c73.png)

Once you’ve created the pool, click “Approve” to approve the first token you want to create a pool for.

![Cowamm_poolguide_9.2.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_2_bfdabb689f.png)

Sign the transaction in your wallet.

![Cowamm_poolguide_9.3.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_3_08ff4c5184.png)

The next step is to approve the second asset you’re adding to the pool by clicking the “Approve” button once again.

![Cowamm_poolguide_9.4.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_4_1cf27aeeaa.png)

Sign the transaction in your wallet.

![Cowamm_poolguide_9.5.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_5_2493187384.png)

The next transaction adds the initial funds for your first asset to the pool.

![Cowamm_poolguide_9.6.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_6_0717143d89.png)

Sign the transaction in your wallet.

![Cowamm_poolguide_9.7.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_7_3ad3877cea.png)

The transaction after that adds the initial funds for your second asset to the pool.

![Cowamm_poolguide_9.8.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_8_f05506ce78.png)

Sign the transaction in your wallet.

![Cowamm_poolguide_9.9.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_9_4dd69d06c0.png)

Almost there! The second to last transaction sets the swap fee for the pool. Currently, all CoW AMM pools must set the swap fee to the maximum amount (99.99%)

![Cowamm_poolguide_9.91.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_91_3d71ad96df.png)

Sign the transaction in your wallet.

![Cowamm_poolguide_9.92.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_92_f8caadd193.png)

Last, click the “Finalize” button to make your last transaction and finalize the pool creation.

![Cowamm_poolguide_9.93.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_93_f703a7b940.png)

Sign the transaction in your wallet.

![Cowamm_poolguide_9.94.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_94_02c63b4721.png)

Once created, you can view your pool by clicking the “View on Balancer” button.

![Cowamm_poolguide_9.95.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_95_377e64c199.png)

Your new pool will now appear in the [list of CoW AMM pools on Balancer](https://balancer.fi/pools/cow)! Once created, users can LP their own tokens, growing the size of the pool for the two assets you’ve selected.

![Cowamm_poolguide_9.96.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_96_6c0d9f5c17.png)

You can click on the pool to view its current size, APR, yield, and more.

![Cowamm_poolguide_9.97.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_97_374dca4ee9.png)

The interface also showcases the exact amount of liquidity you specifically have added out of everyone for this pool, as well as the pool composition split between assets.

![Cowamm_poolguide_9.98.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_98_2fd5e07452.png)
![Cowamm_poolguide_9.99.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Cowamm_poolguide_9_99_1636bf73fd.png)

Congratulations! You’ve created your first CoW AMM Balancer pool.

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A step-by-step guide to creating a LVR Protected Liquidity Pool using CoW AMM on Balancer. CoW AMM safeguards liquidity providers from price exploitation due to stale prices, ensuring better yield protection and profitability than traditional pools.

How to create a LVR Protected Liquidity Pool on CoW AMM

## TL;DR

-   During the month of  **November**, CoW Protocol handled a total volume of  **$1.49B**, and generated a surplus of  **$11.2M**
-   In terms of Governance, CoW DAO executed CIP-33 and received two important CIP drafts in regards to charging protocol fees and changing the method in which the protocol collects fees
-   In exciting news, CoW Protocol launched a new class of orders called “Programmatic Orders,” launched a configurable CoW Swap widget, took over Istanbul during Devconnect, and participated in several Twitter spaces and podcasts

## Protocol Stats

This month, CoW Protocol settled a total of  **$1.49B.**

![1-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_November_2023_highlights_ff892a4ef9.webp)

The top 3 batches worth highlighting are the following:

-   **Batch with the highest % of CoW trades**  ([Transaction details](https://explorer.cow.fi/tx/0x3dea3947bfd480bdfed6251c4a31ff4d040c14cc430338afa110ba7885e3de17?tab=graph)**)**. The total batch volume was  **$747,799.76** , and it was created by two traders who were perfectly CoWed for  **98%**  ($734,793.86) of their volume. One trader was buying tBTC for  **$371,378.52**, and the other trader was selling tBTC for  **$384,428 via a partially fillable limit order**.

![2-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_November_2023_highlights_2d2caf95bb.webp)

-   **Batch containing the highest volume**  ([Transaction details](https://explorer.cow.fi/tx/0x0c41ee0a2d1c75034c9258579069dd2e8e7a2a5e59703865e2c0ac47343102c7?tab=graph&vis=transfers)**)**: The total batch volume was  **$8,813,659** and it was created by a single trader who was swapping  **$8.8M of USDT**  **for**  **$8.7M of USDC**.

![3-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_November_2023_highlights_550a6dba21.webp)

-   **Batch with the highest amount of surplus**  ([Transaction details](https://explorer.cow.fi/tx/0xb9a63242596218936cb0cd83d2cc460bf7504c563d54a4c2b3e8674f38975d20/?tab=graph&vis=transfers)**)**: The total batch volume was  **$133,898** and it was created by a single trader who was swapping  **RLB**  **for**  **USDC**. This trader achieved the largest surplus for the month of  **November**  by getting 99.33% surplus, which at the time of trade was roughly $**133,002 USDC**, proving once again that solvers are here to improve your trades, not to attack them.

![4-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_November_2023_highlights_90bab101e1.webp)

During the month of  **November**, the top 10 traders traded a total of  **$56M.**

![5-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_November_2023_highlights_79e346c7a3.webp)

In the table below you can see the total volume for this month’s biggest trades. The most active trader executed a whopping  **$27M**  in trades with CoW Protocol this month.

![6-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_November_2023_highlights_de62650639.webp)

## Solvers

In  **November**, solvers generated a total of  **$11.2M**  in surplus, which is money in the pockets of traders.

![7-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_November_2023_highlights_09eda2bfdd.webp)

Below you can find a breakdown of how each solver performed in November.

![8-November-2023-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_November_2023_highlights_a807afb001.webp)

## Governance

It has been a steady month in terms of governance! The CoW cannot be stopped 💪

### Executed Proposals

This month the DAO executed one important proposals:

-   [CIP-33: Should the CoW Treasury Core unit be added to the MEVBlocker Rebates Safe?](https://snapshot.org/#/cow.eth/proposal/0x999a4840ecb71e7edb4102caf19ea5f9ee7b237ece649a0d22eec74f7c1f1c16)

### Draft Proposals

This month, there was 2 new proposals asking for feedback before moving into the next phase, final CIPs, in their current form:

-   [CIP-Draft: Testing Fee Models for CoW Protocol](https://forum.cow.fi/t/cip-draft-testing-fee-models-for-cow-protocol/1984)
-   [CIP-Draft: Solver Computed Fees & Rank by Surplus](https://forum.cow.fi/t/cip-draft-solver-computed-fees-rank-by-surplus/2061)

Make sure to read them and leave comments — your feedback is highly appreciated and will help move these important topics forward. If you are interested in submitting a proposal to the CoW DAO, make sure to use the following  [template](https://forum.cow.fi/t/cip-0-template/28).

## CoWmunity News

-   [Launched a new class of orders with the release of the Programmatic Order Framework](https://x.com/CoWSwap/status/1722735351972983030?s=20)
-   [Launched a CoW Swap widget](https://x.com/CoWSwap/status/1724037068610056354?s=20)  to make it easier for projects to integrate with CoW Protocol and enjoy its benefits
-   [Proposed to CoW DAO an entirely new fee collecting method](https://x.com/CoWSwap/status/1729508014686601621?s=20)  aimed to reduce the selling pressure of $COW tokens by solvers.
-   [Took over Istanbul with our packed participation across different events during the Devconnect week](https://x.com/CoWSwap/status/1722341346827202687?s=20). Here are all the available talks:
  → Arbitrageurs’ profits, LVR, and sandwich attacks: batch trading as an AMM design response
-   Intent.wtf →  [Talk](https://www.youtube.com/watch?v=-OXMPmpzFXU)  → Advancing Beyond Swap Intents |  [Panel](https://www.youtube.com/watch?v=1gxweVY9edU)  → The Role of Intent-Driven Transactions in DeFi’s Evolution
-   Good intentions →  [Talk](https://www.youtube.com/watch?v=CTwC204N-68)  → CoW Swap more than swap intents |  [Panel](https://www.youtube.com/watch?v=4n2ChWn1ksQ)  → Intents and MEV Panel
-   Decentralized Scaling summit →  [Talk](https://www.youtube.com/watch?v=evyjRRteZCg)  → The rise of smart orders |  [Panel](https://www.youtube.com/watch?v=v4Y-hf5BTWk)  → How do we balance privacy and surveillance?
-   MEV & Intents Day →  [Talk](https://www.youtube.com/watch?v=hoFVSFn181Y)  → The rise of smart orders |  [Panel](https://www.youtube.com/watch?v=xauLHm98zYc)  → Intents
-   [Sponsored the ETH Global Hackthon Istanbul where we had a great list of submissions for our bounties](https://x.com/CoWSwap/status/1726242733466280436?s=20)
-   Appeared on  [the Bell Curve Podcast to do a breakdown of Frequent Batch Auctions](https://x.com/thebellcurvepod/status/1725193559748272441?s=20), covering why they are superior to other auction types when it comes to DEX trading
-   [Mastercow launched his own treasure hunt](https://x.com/CoWSwap/status/1725579868581306859?s=20)  to make developers race for a treasure and understand the inner workings of the new Programmatic Order Framework
-   [Brave wallet improved the signing modal for CoWSwap](https://x.com/CoWSwap/status/1723027440472400107?s=20)  trades to make it easier for their users to understand what the intent they were signing was
-   Wrote an article about the DAO tooling product “[Milkman](https://x.com/CoWSwap/status/1727326002202935304?s=20)” explaining what it is, and how it works to your DAO’s benefit
-   Joined a Twitter space organized by Taiko debating if “[intents exists outside of Twitter](https://x.com/CoWSwap/status/1729818776013840586?s=20)”
-   Got featured by Chainpatrol.io on  [“Case studies in web3 brand protection”](https://x.com/ChainPatrol/status/1720096549009838328?s=20)
-   Covered CoW Swap in  [Spanish extensively at the DeFi Lab podcast](https://x.com/DeFi_LaB/status/1720113820624974279?s=20)
-   Wrapped up the MEV series articles with our latest article explaining  [what backrunning is](https://x.com/CoWSwap/status/1720143397527368001?s=20)
-   Posted a draft on the  [CoW DAO forum listing the reasons on why adding a protocol fee for CoW Protocol](https://x.com/CoWSwap/status/1720513622474920157?s=20)  is beneficial to the ecosystem and how CoW DAO should approach it
-   CoW Swap got  [integrated into Caddi Finnance](https://x.com/CoWSwap/status/1721559378401034573?s=20)
-   Jumped on a twitter spaces with Diego Defi to explain to our  [Hispanic community what CoW Swap is](https://x.com/diego_defi/status/1721921766132478295?s=20)  (Alta falopa ;) )

## Product Updates

**Backend**

The backend team has been working hard to improve the product infrastructure. In  **November**, we:

-   Worked on several Driver Colocation tests in prod for the new solver set up
-   Fixed error parsing score_cap CLI argument (caused slightly suboptimal score bidding)
-   Optimised driver pipeline (solve → encode → verify / simulate)
-   Worked on several performance optimization fixes for fetching liquidity for quoting
-   Worked on the liveness/readiness probe for the driver to improve rollover when deploying to the cluster
-   Migrated shadow competition to colocated setup (helps debug performance issues)
-   Worked on several performance improvements for the Enso simulator used in the solver submission checks

**Frontend**

The frontend team has been pushing hard for several improvements in the UI front, as well as the overall UI infrastructure. In  **November**, we:

-   Worked on the landing page for the CoW Swap widget, as well as on the configurator website
-   Widget codebase has been reiterated a few times
-   Improved the performance of loading balances on the CoW Swap UI
-   Improved the robustness of the WatchTower for TWAP orders
-   Worked on expanding the WatchTower capabilities to allow the indexing of all new programmatic order types by implementing an allow/deny list
-   Added widget theming 🌈 to allow teams to configure it to their branding

## Open Job Positions

The CoW Protocol team is currently not hiring

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Welcome back to another CoW update, where we break down the most notable developments of the last few weeks at CoW Protocol.

CoW Protocol November 2023 Highlights

Providing liquidity to automated market makers (AMMs) like Uniswap has become one of the most popular ways to earn yield in crypto.

While other yield-bearing methods like staking and lending depend on protocol economics and aggregate market demand, there is always alpha in providing liquidity. Between new token launches, incentive programs from ecosystem grants, and ever-evolving AMM models, liquidity providing is one of the most mature sectors for earning returns on crypto assets.

However, liquidity providing has one major downside: it is subject to a pernicious form of price exploitation known as loss-versus-rebalancing (LVR).

LVR is a form of maximal extractable value (MEV) responsible for more price exploitation than all other forms of MEV combined. Many liquidity providers haven’t even heard of LVR, but it costs them 5–7% of their liquidity, resulting in hundreds of millions lost each year. In fact,  **when accounting for LVR, many of the largest liquidity pools are not profitable for LPs at all**.

How can this be? Let’s examine how liquidity providing works to learn what loss-versus-rebalancing is and where it comes from.

## What is LVR

First coined by a  [team of researchers from Columbia University](https://arxiv.org/abs/2208.06046), LVR is a form of arbitrage that occurs whenever an AMM has an outdated (stale) price in comparison to some other trading venue.

Arbitrageurs exploit this difference by trading from the AMM to the more liquid exchange (usually a centralized exchange like Binance), correcting the arbitrage and extracting value from LPs in the process.

To better understand LVR as a process, however, we first need to understand the nature of automated market makers, as well as the pre-cursor to LVR — impermanent loss.

## The CF-AMM Design

Most AMMs (such as Uniswap) are examples of constant function automated market makers—CF-AMMs.

These AMMs take in two assets and automatically re-calculate prices after each trade to ensure ample liquidity at all times. As one asset gets depleted, the other must trade at a higher price in order to maintain a constant ratio where the value of all “A” tokens in a pool is equal to the value of all “B” tokens.

CF-AMMs use the constant product function  _x*y=k_  to calculate the ratio of assets, where  _x_  and  _y_  are the two tokens and  _k_  is the constant maintained. Thus, all trades on a CF-AMM can be mapped on the constant product function curve:

![1-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_is_lvr_8d10b97884.webp)

### Liquidity Positions

Let’s look at an example of providing liquidity which will help illustrate the design (and shortcomings) of CF-AMMs.

Let’s say that the price of ETH is $1,000 and we have 2 ETH worth $2,000 that we would like to earn yield on. We can start by providing liquidity to, say, an ETH-USDC pool. In order to do this, we must first split the value of our holdings into 50% ETH and 50% USDC (remember, most AMMs require LP positions to be split 50/50 between your two assets.)

> **LP Position:**   
> 1 ETH   $1,000 USDC  
> _Total value: $2,000_

Over time, we earn LP fees on this position for our service of providing liquidity to traders. So our $2,000 is slowly growing by just sitting in a liquidity pool… sounds great, right?

## Loss-Versus-Holding (Impermanent Loss)

In our example, we’re making free money off LP fees up until the moment ETH starts to move in price. This is where we risk incurring “impermanent loss” which can be thought of as the opportunity cost of our LP position compared to what we would have had if we just held the assets (without putting them in a liquidity pool). That’s right—LPing is not automatically better.

Let’s take a look at how this shakes out for our particular example:

In an extreme scenario, let’s say the price of ETH jumps from $1,000 per ETH to $4,000 per ETH. The liquidity pool will adjust so that our assets are still 50% ETH and 50% USDC.

To calculate the new position, we use the formula  [_x=√(p1ETH∗p2ETH_](https://medium.datadriveninvestor.com/impermanent-loss-in-defi-the-risks-involved-in-providing-liquidity-67c54fdf1cfc)_)_,  where _p1ETH_ represents the original price of ETH and _p2ETH_ represents the new price of ETH. Solving for  _x_  will give us the updated (dollar-denominated) value of each asset after the AMM re-calculates prices back to 50/50 in this new price environment.

The  _sqrt(1000*4000) = 2,000_, meaning that the dollar value of each asset in our liquidity pool will be $2,000 after the recalculation. This leaves us with $2,000 USDC, and 0.5 ETH in our liquidity pool, for a total of $4,000. We started out with $2,000 and we end up with $4,000 — doubling our money.

> **Original LP Position:**   
> 1 ETH   $1,000 USDC  
> _Total value: $2,000_  
>    
> **New LP Position:**  
> 0.5 ETH   $2,000 USDC  
> _Total value: $4,000_

That’s great! …until we look at what we could have made if we had just  _held_  our 1 ETH and $1,000 USDC without ever putting them in a liquidity pool in the first place.

If we had held, our 1 ETH would be worth $4,000, which in addition to our original $1,000 USDC would leave us with $5,000 net. That’s $1,000 more than what we end up with through the liquidity pool!

> **Original LP Position:**   
> 1 ETH   $1,000 USDC  
> _Total value: $2,000_     
> 
> **New LP Position:**  
> 0.5 ETH   $2,000 USDC  
> _Total value: $4,000_   
>   
> **Holding Position:**   
> 1 ETH   $1,000 USDC  
> _Total value: $5,000_

This difference is known as “divergence loss,” or, more colloquially, “impermanent loss.”

It’s “impermanent” because if the price of the assets were to return to their original value ($1,000 per ETH in our example) the loss would be reversed and the value of our LP position (excluding yield earned) would be equal to the value of a portfolio where we had just held. So impermanent loss can also be conceptualized as “loss-versus-holding.”

If we begin thinking about counterfactual scenarios where rather than LPing, we had taken some other course of action with our money, a world of possibilities opens up. The first, “loss-versus-holding,” we just covered. The second, “loss-versus-rebalancing,” is the topic at hand that we now turn to.

## Loss-Versus-Rebalancing (LVR)

In the case of impermanent loss, if an asset begins and ends a time period at the same price, there is no loss incurred by the LPs. However, it turns out that there is a portfolio scenario which would have made money even in the case of an asset beginning at and returning to the same price. This would be a “rebalancing” portfolio.

Rather than leaving your money in an AMM or simply holding, in a rebalancing portfolio you trade your way up the price curve when it’s going up and trade down when it’s going down, effectively “rebalancing” your portfolio in real time.

**“Loss-versus-rebalancing” is the difference in value between an LP portfolio and a rebalancing portfolio.**

Let’s look at another example.

### LVR in numbers

Say we start with an LP position of 1 ETH and $1,000 USDC.

Over time, the price of ETH jumps from $1,000 to $2,000. Using the  _x=√(__p1ETH∗p2ETH__)_  formula, we can calculate that our new LP holdings would consist of 0.71 ETH and $1,414 USDC, meaning we sold 0.29 ETH for $414 during the AMM recalculation. This gives us a total portfolio value of $2,828 and a loss-versus-holding value of $172.

After some more time, the price of ETH goes back down to $1,000 where it started. Here, the values of both our LP portfolio (minus fees) and our holding portfolio are equal at $2,000, with a loss-versus-holding of $0.

> **Original LP Position:**   
> 1 ETH   $1,000 USDC  
> _Total value: $2,000_  
>  
> **LP Position After Price Move**:  
> 0.71 ETH   $1,414 USDC  
> _Total value: $2,828_  
>   
> **LP Position After Price Reversion:**   
> 1 ETH   $1,000 USDC  
> _Total value: $2,000_
>      
> **Holding Position:** 
> 1 ETH    $1,000 USDC  
> _Total value: $2,000_

But what about the loss-versus-rebalancing?

![2-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_what_is_lvr_3902628499.webp)

[_Image Source: Delphi Digital_](https://members.delphidigital.io/learn/loss-versus-rebalancing-lvr)

When compared to a rebalancing portfolio executed on a liquid exchange such as Binance, our LP and holding portfolios underperform — even in the case where prices return to their original value.

The rebalancing portfolio starts at the same 1 ETH and 1,000 USDC. When the price of ETH goes to $2,000,  we copy the LP trade (selling 0.29 ETH), but we do so at the current market price of $2,000 through a liquid non-AMM exchange, earning $580 for the trade instead of the $414 we got on the AMM, for a net LVR of $166. Copying the same trade on the way down, we buy back our 0.29 ETH for $290, instead of the $414 we would have to pay through the AMM, netting another $124 in LVR.

> **Original Rebalancing Portfolio Position:**   
> 1 ETH   $1,000 USDC  
> _Total value: $2,000_  
>  
> **Rebalancing Portfolio Position After Price Move**:  
> 0.71 ETH   $1,580 USDC  
> _Total value: $3,160_  
>  
> **Rebalancing Portfolio Position After Price Reversion:**   
> 1 ETH   $1,290 USDC  
> _Total value: $2,290_

So the performance of our three portfolios (ignoring LP fees) looks like this:

![3-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_what_is_lvr_cb9ed4cb9e.webp)

### The LVR math

For any given price movement, LVR can be calculated using the formula “[_a(p-q)_](https://a16zcrypto.com/posts/article/lvr-quantifying-the-cost-of-providing-liquidity-to-automated-market-makers/)” where  _a_  is the quantity of the asset being sold,  _p_ is the “real” market price, and _q_ is the “stale” AMM price.  (_Note: “a” is a positive number when selling and a negative number when buying.)_

Unlike impermanent loss, LVR  **depends on price trajectory and volatility**. This intuitively makes sense… the more price moves there are, the more opportunities for arbitrage. The volatility of a given market can be derived using the famous “[Black-Scholes](https://www.investopedia.com/terms/b/blackscholes.asp)” options-pricing model, and is represented by  _σ_  — a lowercase sigma.

For CF-AMMs,  [instantaneous LVR can be calculated as](https://a16zcrypto.com/posts/article/lvr-quantifying-the-cost-of-providing-liquidity-to-automated-market-makers/) [_σ²/8_](https://a16zcrypto.com/posts/article/lvr-quantifying-the-cost-of-providing-liquidity-to-automated-market-makers/). There are also more complex LVR formulas which sum instantaneous LVR to find the overall LVR of any given AMM. Find these formulas, along with a technical explanation of how the numbers were derived, in  [this video](https://www.youtube.com/watch?v=XmHBiFApDXA&ab_channel=CMUCylabCryptoSeminarSponsoredbyAlgorand)  and  [this blog post](https://anthonyleezhang.substack.com/p/automated-market-making-and-loss)  by Anthony Lee Zhang, a co-author of the original LVR paper.

## LP Returns in Practice

So far, we have the concept of LVR but we’ve ignored one very important factor: LP fees. After all, LPs don’t deposit money into AMMs out of charity, they do it to earn yield.

Now that we have a reliable formula for calculating loss-versus-rebalancing, we can look at historical data to answer the question “How often do LP returns exceed LVR losses?”

Using the LVR formula, the authors of the original paper  [concluded](https://arxiv.org/abs/2208.06046)  that, in an environment of 5% asset volatility,  **a Uniswap pool would need to turnover 10% of its entire volume each day in order for LP fees of 30 basis points to offset LVR losses.**

However, we can get even more specific by retroactively looking at historical data. DeFi researcher Atis Elsts, wrote up a  [retrospective of 2023 LP returns](https://atise.medium.com/uniswap-v2-still-a-good-deal-for-liquidity-providers-a-retrospective-of-2023-11475e9d8610)  that shows real data on loss-versus-holding and loss-versus-rebalancing for ETH throughout the year.

### 2023 Loss-Versus-Holding

ETH began the year at around $1,200 and closed around $2,300. LPs outperformed a holding portfolio of 50/50 ETH/USDC by an aggregate 1–2% after fees.

![4-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_what_is_lvr_f07c7346db.webp)

![5-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_what_is_lvr_ca2c29b635.webp)

_Images: 2023 LP versus holding strategies &  2023 LP PnL over holding strategy_

### 2023 Loss-Versus-Rebalancing

Mapped alongside volatility, we can see that, as expected, loss-versus-rebalancing is highly correlated.

![6-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_what_is_lvr_b227cef436.webp)

Elsts mapped LVR (red line) versus expected fees on WETH/USDC Uniswap v2 positions and WETH/USDC v3 positions across three fee tiers. We can see that  v3 LP positions closely tracked LVR, while v2 positions largely outperformed it.

![7-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_what_is_lvr_f5972b65fd.webp)

According to Elsts, the reason for the large discrepancy between v3 and v2 positions is that v2 sees primarily “core” (non-arbitrage) trading volume while a majority of v3 trading volume is arbitrage.

![8-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_what_is_lvr_a4f9fb874d.webp)

![9-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_what_is_lvr_3d859d861e.webp)

_Images: Uniswap v2 volume makeup & Uniswap v3 volume makeup_

So here we finally get to the $500 million question: How can LPs protect themselves from LVR?

## Solutions to LVR

There are multiple proposed solutions to the LVR problem, each with its own set of tradeoffs.

**Oracle designs**: One of the most popular suggestions for solving the LVR problem involves using price oracles to feed AMMs the most up-to-date prices for assets. The oracle model is well-tested in DeFi, but an oracle-informed AMM would require significant design changes to current AMM models and introduce new problems around ensuring that the oracle always provides the most current price data.

**Decreasing block times**: Some proposals argue that  [increasing trade frequency](https://atise.medium.com/liquidity-provider-strategies-for-uniswap-v3-loss-versus-rebalancing-lvr-ee0ffdf1f937#:~:text=mitigating%20lvr)  by decreasing block times will result in even more granular arbitrage opportunities. This would theoretically increase the number of trades that arbitrageurs have to make, with the larger LP returns hopefully outpacing LVR.

**Batch auction designs**: While decreasing block times might mitigate the price lag AMMs experience, going in the opposite direction sounds even more promising. First proposed by Andrea Canidio and Robin Fritsch in the paper “[Arbitrageurs’ profits, LVR, and sandwich attacks: batch trading as an AMM design response](https://arxiv.org/abs/2307.02074v4#5.2),” a new category of “Function-Maximizing” AMMs forces traders to trade against AMMs in batches, creating a competition between arbitrageurs which eliminates LVR.

## CoW AMM

The  [CoW AMM](https://cow.fi/cow-amm)  is the first production-ready implementation of an FM-AMM and it’s designed to capture LVR on behalf of LPs, now live on [Balancer](https://balancer.fi/pools/cow).

[Backtesting research](https://arxiv.org/pdf/2307.02074v3.pdf)  conducted for a 6 month period during 2023 shows that CoW AMM returns would have equaled or outperformed CF-AMM returns for 10 of the 11 most liquid, non-stablecoin pairs.

![10-what-is-lvr.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/10_what_is_lvr_f4853d5593.webp)

The CoW AMM works by having  [solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)  compete with each other for the right to trade against the AMM.

Whenever there is an arbitrage opportunity solvers bid to rebalance the CoW AMM pools. The winning solver is the one that moves the AMM curve higher.

![11-what-is-lvr.gif](https://celebrated-gift-f83e5c9419.media.strapiapp.com/11_what_is_lvr_2618a64372.gif)

[Learn more about the CoW AMM here](https://cow.fi/cow-amm), and  [contact us](https://cowprotocol.typeform.com/cow-amm-lpers?utm_content=widget-page-footerCTA-read-docs&utm_medium=web&utm_source=LVRarticle)  if you are interested in setting up a liquidity pool.

large_LVR.webp

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small_LVR.webp

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Liquidity providers lose more than $500 million to LVR every year, but what exactly is it?


What is Loss-Versus-Rebalancing (LVR)?

On February 9th, 2023, After a successful  [governance vote](https://www.tally.xyz/gov/ens/proposal/45461903078948131870051132081249892009497709518413744958551889217805827301425)  from ENS, CoW Swap processed a large trade for the ENS DAO using the exchange’s signature intent-based trading design and Milkman contract.

## Trade Details

[ENS DAO sold 10,000 ETH](https://twitter.com/CoWSwap/status/1623680760522612738)  in exchange for USDC in order to reduce its exposure to ETH.

-   **USD value of the trade**: $16,145,549.60
-   **Slippage tolerance:**  2%
-   **Actual slippage**: 0.5%
-   **Price surplus**: $80,992.87

## Why CoW Swap?

CoW Swap’s solver competition ensured that ENS received the best possible execution price, even after announcing trade details publicly in a governance proposal ahead of time.

CoW Swap provided several benefits for a trade of this size:

1.  Protection from attack vectors caused by the delayed execution
2.  Allowing ENS to create a governance proposal that includes the exact swap parameters and protects the trade with a price checker — guaranteeing that the trade receives some minimum amount determined at the moment of swap execution (not during the creation of the governance proposal)
3.  Use of the Milkman bot for protection against MEV, slippage, and re-entrancy risk

## Milkman

The CoW Grants Program-funded, and Yearn.fi-developed  [Milkman bot](https://github.com/cowprotocol/milkman-bot)  was critical to the ENS trade.

The Milkman bot ensures that trades execute for the real-time price or better by utilizing a price checker, such as a Uniswap v3 pool, Chainlink oracles, or a custom price checker. Instead of setting a slippage tolerance, DAOs can utilize Milkman to determine a maximum percentage deviation from the price checker, guaranteeing that their trade will finalize at a fair market price. Milkman also simplifies governance for trades as DAOs don’t have to define a fixed price re-vote if the market moves significantly.

For this swap, ENS DAO chose to use a Uniswap v3 ETH/USDC pool, with a maximum slippage of 2%, guaranteeing that they would receive no less than the minimum specified in the governance proposal.

## CoW Swap: The leader in DAO trading

The largest DAO trades take place on CoW Swap, and the exchange is single-handedly responsible for more than 30% of all DAO trades. Check out  [CoW Swap for DAOs](/learn/cow-swap-for-daos)  to learn why DAOs such as  [Aave](/learn/aave-trade-breakdown),  [Nexus Mutual](/learn/nexus-mutual-trade-breakdown), and more trust CoW Swap with their large trades.

If you’re a DAO looking to make a large trade on CoW Swap, get in touch with us on  [Twitter](https://twitter.com/CoWSwap)  or through our  [Discord](https://discord.com/invite/cowprotocol). You can check out CoW Swap for yourself  [here](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=ENS-trade).



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The smartest DAOs trust CoW Swap with their most-important trades


ENS Trade Breakdown

After three years and thousands of hours of research with crypto whales, DeFi degens, finance bros, and specialized fortune tellers called “blockchain oracles”, CoW Swap has discovered that the secret to investing in crypto is simply  getting lucky.

That’s why CoW Swap is proud to announce its newest innovation — the “I’m Feeling Lucky” button.

That’s right — inspired by Google’s iconic search feature, CoW Swap is adding a splash of luck to web3. Just select a sell token, tap “I’m Feeling Lucky”, and let CoW Swap’s best-in-class solver network buy a random shitcoin for you.

## Putting the “luck” in “hodl”

Have you ever seen a crypto millionaire and thought “Damn, that was all luck!”

Wish you could “get lucky” the same way?

Well now you can.

Just head over to  [CoW Swap](https://swap.cow.fi/#/swap?utm_campaign=blog-feeling-lucky)  and use the “I’m Feeling Lucky” button right in the swap modal to let luck pick your new favorite token!

![1-feeling-lucky.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_feeling_lucky_609c959c95.webp)

## How to get lucky

To get lucky, simply:

1.  Navigate to  [CoW Swap](https://swap.cow.fi/#/swap?utm_campaign=blog-feeling-lucky)
2.  Pick ETH or a stablecoin as your sell token
3.  Click the “I’m feeling lucky” button where the “Swap” button normally appears
4.  CoW Swap will then pick a random “lucky” token for you as your “buy” token
5.  ????
6.  Profit!!!! (not financial advice)

Don’t worry — you’ll have a chance to confirm your trade before you place it. If you trust the luck of the CoW draw, simply click “Swap” once your random token appears and your transaction will proceed as normal.

## Luck out with CoW Swap this April 1

So if you’re tired of being the fool, let CoW Swap turn your luck around. No joke, the feature is real and  [live on CoW Swap](https://swap.cow.fi/#/swap?utm_campaign=blog-feeling-lucky)  for both Ethereum Mainnet and Gnosis Chain!

They say anything goes up in a bull market… While we can’t guarantee that your lucky token will pump, we can promise that your trades will always be backed by CoW Swap’s signature MEV protection and the best prices in DeFi.

Degen in peace this April 1 and let luck take the wheel with  [CoW Swap](https://swap.cow.fi/#/swap?utm_campaign=blog-feeling-lucky)!

Find your lucky clover in CoW Swap’s greener pastures


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🐮 Let TWAP-tember begin! 🐮

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