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George Hristov

Today, CoW Swap is proud to kick off a new era in stablecoins with the introduction of the world’s very first  **milk-backed stablecoin**.

Are you tired of constant depegs and regulatory scrutiny? Is your grandma always asking how your internet coins are doing? Well look no further than CoW Swap’s brand new stablecoin. We call it Unified Simple Dairy Coin (USDC).

CoW Swap USDC is backed by liters of the world’s oldest commodity — cow milk. That’s right, we’re finally putting the farm on the blockchain as we harness the power of silos brimming with fresh milk to back the reserves of the Unified Simple Dairy Coin.

![1-milk-stablecoin.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_milk_stablecoin_b1618ff920.webp)

Unified Simple Dairy Coin has several advantages:

-   There’s no fractional reserve banking when it comes to Dairy-Fi (or DaFi, as we call it). Each Unified Simple Dairy Coin is backed by one liter of cow milk
-   The most compliant stablecoin — milk is recognized as a commodity by the CFTC so we’re in clear waters when it comes to regulation from day one
-   Your grandma’s been drinking milk since she was a little girl — she’ll understand USDC instantly!
-   Milk is an asset endorsed by some of the world’s most famous figures, including Tiger Woods, Fernando Alonso, the Nesquik Bunny, and Santa Claus

![2-milk-stablecoin.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_milk_stablecoin_35207e7941.webp)

Do you have beef with algorithmic stablecoins, fractional reserves, and other bull? Have you been waiting for a stablecoin that’s worth its weight in milk? Are you ready to ape into a financial instrument backed by one of the oldest and most stable assets (better than gold!)?

Look no further than Unified Simple Dairy Coin! The grass is greener on this side.**™**

Airdrops are planned for the first 500 people who can send us a video chugging a liter of milk. For each liter you drink, you get airdropped one Unified Simple Dairy Coin!

So open that TikTok camera and get to posting, there’s enough milk to go around. 🥛💰

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

Check out our website  [https://cow.fi/](https://cow.fi/)

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬 [Discord](https://discord.gg/cowprotocol)  | 📊 [Analytics](https://dune.xyz/gnosis.protocol/CowSwap)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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CoW Swap Introduces New Milk-Backed Stablecoin

CoW Protocol is proud to announce the launch of CoW Hooks. You can now implement custom-coded DeFi actions that execute directly before and/or after your trades.  **CoW Hooks can be used to chain together complex actions such as trading, bridging, staking, depositing, and much more.**

The best part?  **CoW Hooks execute your entire sequence as a single transaction and, true to the CoW Protocol model, you pay gas fees in your sell token if, and only if, your transaction succeeds.**

> If you are interested in #BUIDLing, reach out, grants are available for great ideas @  [https://grants.cow.fi/](https://grants.cow.fi/)

## Background

In recent months, the crypto industry has been absorbed in discussions on “intent” messages on Ethereum and the new possibilities that this innovation unlocks.

So far, the only production-ready intents system live on Ethereum is CoW Swap. The rest has only been theory and research papers covering the possibilities of intents. What’s more, these papers frame the user transaction as an “intent” but they don’t usually allow for composability. This is why the CoW Swap model asks the user to sign the trade instead of executing it directly on chain… This allows solvers to optimize the order by composing it with other strategies and optimizations. Composability unlocks the real power of intents, as they are meant to abstract the user away from complex interactions.

CoW Swap has been the leader in the intent space for a while and has built one of the most widely-used intent-based models. On CoW Swap, users delegate their trade execution to a network of solvers that complete the transaction on their behalf. This delegated trading model makes way for composability as solvers can batch trades together, find  [Coincidence of Wants](https://blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a)  (CoW) matches, update the trading path at the moment of execution (rather than the moment of creation) and more.

Today, CoW Swap is proud to announce the launch of an overhauled intents system that allows for composability of a wide range of actions before and after a swap.

It’s called CoW Hooks.

## What are CoW Hooks?
![1-cow-hooks.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_cow_hooks_801e54dabe.webp)

CoW Hooks are arbitrary Ethereum “calls” that attach to an order and execute before and/or after the order. Developers and advanced traders can use code to express an intent that performs some action before a swap (pre-hooks) and after a swap (post-hooks).

**Pre-hooks**  can be used to “set up” conditions for an order. Examples include executing the code necessary for validating an on-chain signature, or setting the required approvals through an EIP-2612 permit.

**Post-hooks**  execute after a swap takes place and the receiver address receives the funds. Post-hooks provide an opportunity to put the funds to use immediately through staking, liquidity providing, bridging tokens to L2s, and much more.

## How do CoW Hooks work?

CoW Hooks let you do anything you can imagine. You can use whatever you can encode on-chain as a pre or post hook. The only requirement is that your action includes a trade on CoW Swap.

With CoW Hooks, users define:

-   A list of pre-hooks intents
-   The swap intent
-   A list of post-hooks intents

The flexibility of creating CoW Hooks opens up a world of possibilities — all you need to do is encode your actions in the right order for your particular use-case.

### Fresh Address Receives tokens: Permit, Swap & Bridge

Let’s say that you receive USDC and you would like to bridge the funds to another chain. You can use CoW Hooks to execute a token approval, swap, and bridge all at once.

-   **Pre-hooks**: Use a pre-hooks action to approve the token for a swap
-   **Swap**: Use CoW Swap to swap your USDC to the token you would like
-   **Post-hooks**: Send your new tokens to the bridge contract as a post-hook

And just like that, you have received, swapped, and bridged your tokens to a different chain all in one set of transactions. As a bonus, all of your gas fees will be charged in your sell token (USDC in this case,) which means that you can move your received funds without first sending ETH to cover gas costs.

If you are interested in learning more about the code behind this example, we’ve created a walkthrough on how to reproduce this exact set of actions in our CoW Hooks  [documentation](https://docs.cow.fi/overview/cow-hooks), as well as on YouTube:

### Flash Loan payback adapter for CDPs via Stop loss orders

You can also use CoW Hooks to repay debt or manage collateral levels. In this case, your hooks actions might look like this:

-   **Pre-hooks**: Approve the tokens you would like to swap
-   **Swap**: Use CoW Swap to swap for the tokens you need to service your debt
-   **Post-hooks**: Repay your debt and close your position, or use your tokens to add collateral so as to not be undercollateralized

We’ve also put together a walkthrough for how to code this set of hooks, you can view it here:

## Use CoW Hooks for everything

The examples illustrated above are just some of the uses of DeFi assets, but the possible use-cases for CoW Hooks are really endless. Here are some more examples:

-   **Repaying a debt & staking**: You could use CoW Hooks to repay a debt, close a position, swap assets for a yield bearing token, and stake your tokens all-in-one. To do this, you would set your pre-hook action to repaying the debt and closing the position, then you would use CoW Swap to swap your assets, and finally use a post-hook to deposit your new assets into a staking vault.
-   **Opening an LP position**: You can also work with only a pre-hook and a swap or only a post-hook and a swap. For example, if you wanted to open an LP position, you could first swap some assets for ETH, and then use a post-hook for the rest. If you wanted to do this via a CDP, you could deposit your ETH as collateral, borrow stablecoins, swap some stables to the other LP token side, and open a liquidity provider position.
-   **JIT (Just-in-time) smart orders**: Say that you want to leverage the benefits of programmable smart contract wallets to deploy a Safe and also trade via the composable CoW framework (ERC-1271). Using CoW Hooks, you can express the entirety of your transaction sequence at no cost. Connect the deployment of the Safe, execute your custom smart contract approval and swap, and even add on another post-swap action all in one. The entire sequence is conditional on every step being able to execute, otherwise none of it goes through.
-   **NFT sniping & selling:** CoW Hooks also come in useful in the NFT world. You can, for example, sell an NFT and encode a CoW Hooks action to immediately swap those funds for a token of your choice. Or, alternatively, you could place a limit order to purchase crypto at a certain price and then buy an NFT directly after.
-   **Bridging to another chain**: If you want to swap some tokens and bridge them to another chain, you could use CoW Hooks. In your flow, you would first swap your tokens and then send them to a bridge contract in order to combine both the approval and the bridging.
-   **Claiming airdrops**: While they’re not as common as they used to be, airdrops are a core part of many Ethereum projects. You can use CoW Hooks to sell your airdrops without spending any ETH on gas. Simply approve the token in your wallet and add a swap transaction to sell it. Your gas fees will be taken in the sell token, so you can enjoy holding on to your precious ETH.
-   **Unstaking and restaking**: If you’re an Ethereum validator and you want to claim your rewards, you’ll first need to unstake your 32 ETH in order to perform any action with them. With CoW Hooks, you can unstake your ETH, approve and swap to a token of your choice, and then re-stake your new assets somewhere else, all in a single set of encoded transactions.
-   **Automatically growing your LP position:** Let’s say that you’re a liquidity provider for a EUR — USDC pool on Gnosis chain that rewards you in GNO tokens. You can use CoW Hooks to automatically convert your GNO to EUR/USDC in a 50/50 split through CoW Swap and then use each of the assets to increase your LP position.

## What are you going to build with this anon?

The best part about CoW Hooks? They’re fully-featured and already live at the protocol level! So, if you are a developer or an advanced technical user, get your wallets ready and step into a new era in DeFi!

To get started, check out our  [documentation](https://docs.cow.fi/overview/cow-hooks). We’re really excited about all the possibilities with CoW Hooks so if you need help implementing them or have an exciting idea, please reach out on  [Twitter](https://twitter.com/CoWSwap)  or by  [joining CoW Protocol Discord](https://discord.com/invite/cowprotocol).

Happy hooking!

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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The CoW Protocol intent language just got enhanced through CoW Hooks, making a single intent matching engine into a multi purpose intent execution engine!


CoW Hooks: You are in control!

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!

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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Announcing Gasless Approvals on CoW Swap


## TL;DR

-   During the month of  **June**, CoW Protocol handled a total volume of  **$1.05 billion**, and generated a surplus of  **$5.8 million**
-   In exciting news, CoW Protocol launched the  [Tally Recipe for CoW Swap](https://twitter.com/CoWSwap/status/1671935101255688192), improved  [transaction bundling on Safes](https://twitter.com/CoWSwap/status/1666445091399933953?s=20), launched a  [brand new token page](https://cow.fi/tokens), and much more
-   In terms of Governance, CoW DAO executed CIPS 25, 26, and 27

## Protocol Stats

This month, CoW Protocol settled a total of  **$1.05B.**

![1-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_june_2023_498a813c10.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/0x531af4533af13645bb4fb54a6d4d4af75821257d6def1a0712482546f55909a9?tab=graph&vis=transfers)**)**. The total batch volume was  **$76K**, and it was created by three traders who were perfectly CoWed for  **91.8%**  of their volume. One trader was buying  **USDC-USDT,**  another trader was buying  **USDT-USDC**, and the last trader was selling  **USDC-USDT**.

![2-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_june_2023_adad65cb9c.webp)

-   **Batch containing the highest volume (**[**Transaction details**](https://explorer.cow.fi/tx/0x4469a8843ecdee0805daada813573576c2d5b31f9aedcf651d3569fb6307d4e0?tab=graph&vis=transfers)**):**  The total batch volume was  **$8.8M** and it was created by a single trader who was swapping  **USDT**  **to**  **USDC**.


![3-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_june_2023_e17114917d.webp)

-   **Batch with the highest amount of surplus (**[**Transaction details**](https://explorer.cow.fi/tx/0xe99ff4114f37ce9cb6af40636084c125b11ab4a98f1fdab5c7c353350e7a5c25/?tab=graph&vis=transfers)**):**  The total batch volume was  **$800K** and it was created by a single trader who was swapping  **USDC**  **to**  **DAI**. This trader achieved the largest surplus for the month of  **June**, by getting  **80K DAI**  extra (**11%**  surplus).


![4-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_june_2023_9c8fb4e4c8.webp)

During the month of  **June**, the top 10 traders traded a total of **$77M**.

![5-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_june_2023_d2b3f40d9b.webp)

## Solvers

![6-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_june_2023_afc3f98e04.webp)

You can find all of the solver statistics in the following table. Looking at this table, we can see that, on average for the month of  **June,**  solvers generated a total of  **$5.8M**, which is money in the pockets of traders. The highest generated surplus by a single solver was $**1.8M**.

![7-june-2023.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_june_2023_59f0fabb7a.webp)

## Governance

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

### Executed Proposals

This month we executed three important proposals

-   [CIP-25: Operational CoW DAO Safe](https://snapshot.org/#/cow.eth/proposal/0x79fdcc006030d50ab0ffe0ffd7c474a409eb70448d1c8eba58919af7559a876e)
-   [CIP-26: Solver bond funds switch](https://snapshot.org/#/cow.eth/proposal/0x1dd77a563722ac783c42276cee76754bf3e78a8895bf9dae7ac6fe5da61634f7)
-   [CIP-27: Incentives Mechanism for the Price Estimation Competition](https://snapshot.org/#/cow.eth/proposal/0x64e061568e86e8d2eec344d4a892e4126172b992cabe59a0b24c51c4c7e6cc33)

### Draft Proposals

This month, there was one new proposal asking for feedback before moving into the next phase, a final CIP, in its current form.

-   [CIP-Draft: Incentives mechanism for the Price Estimation Competition](https://forum.cow.fi/t/cip-draft-incentives-mechanism-for-the-price-estimation-competition/1718/1)

### Technical Discussions

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

1.  [Path to L2 Deployments](https://forum.cow.fi/t/path-to-l2-deployments/1774/1)

Make sure to read them and leave comments — your feedback is highly appreciated and will help move forward these important topics. 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 the  [Tally Recipe for CoW Swap](https://twitter.com/CoWSwap/status/1671935101255688192)  which allows your DAO to embed a swap action in your governance proposal
-   Took  [transaction bundling on Safes](https://twitter.com/CoWSwap/status/1666445091399933953?s=20)  a step further, enabling wrap, approve, and swap in a single click
-   Revamped the  [CoW Grants Program website](https://cow-dao-grants.super.site/)  — take a look
-   Saw early results of the Balancer discount for CoW Swap solvers with  [massive savings on a trade](https://twitter.com/CoWSwap/status/1668973199340748800)
-   Shipped a  [token page](https://cow.fi/tokens)  that helps traders find out about each token CoW Swap supports
-   Published an article on  [Effective Treasury Management for DAOs](https://blog.cow.fi/effective-treasury-management-for-daos-84bf17b8d834)  alongside CoW DAO’streasury manager,  [Karpatkey](https://www.karpatkey.com/)
-   Integrated  [Sismo badges](https://twitter.com/CoWSwap/status/1669721583873822720?s=20)  that you can use to claim swag at ETH CC
-   Alex Vinyas  [gave a talk on Order Flow Auctions in the MEV Supply chain](https://twitter.com/CoWSwap/status/1667048909498359808) at Prague DeFi Summit
-   Integrated  [Trust Wallet with CoW Swap](https://twitter.com/CoWSwap/status/1673314050380529666)
-   Participated in an  [MEV Protection Twitter Space](https://twitter.com/blocknative/status/1673420044615946241?s=20)  hosted by Blocknative
-   Received a  [Grants proposal](https://forum.cow.fi/t/grant-application-composablecow-sdk-docs/1698)  for a new “Smart Order” framework called Composable CoW
-   Receive  [another Grants proposal](https://forum.cow.fi/t/grant-application-for-audit-of-composablecow-smart-contracts/1743)  for a second audit for Composable CoW and Extensible fallback handler smart contracts
-   Published several articles:  [What are CoWs on CoW Swap?](https://twitter.com/CoWSwap/status/1674087831696994305?s=20),  [What is a sandwich attack and how can you protect yourself?](https://twitter.com/CoWSwap/status/1669344064213491716?s=20),  [Grants Wave 2 Recap](https://twitter.com/CoWSwap/status/1664633266878414850?s=20)

## Product Updates

**Backend**

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

-   Made progress on a new app data format
-   Brought the following internal hackathon projects to production: Surplus modal, and Arak (smart contract event indexer)

**Frontend**

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

-   Launched a new version of the  [CoW Explorer](https://explorer.cow.fi/)  that shows a new node (Buffers)
-   Released the bundling ETH Flow
-   Made progress on the TWAP interface including cancelations, incorporating orders table, and decoding pending safe transactions
-   Worked on internal hackathon projects including a surplus modal, widget improvements, a “Have I been MEV’d” page, and a trade graph
-   Worked on trying to implement Wallet Connect V2, but due to the lack of wallet support this has been put on hold.

## Open Job Positions

The CoW Protocol team is currently not hiring.

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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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 June 2023 Highlights

As we bid farewell to another eventful year, we’re taking some time to reflect on CoW DAO’s milestones in 2023.

CoW DAO develops two main products:

-   **CoW Protocol & the CoW Swap Interface**: A decentralized exchange providing users with the best prices and cutting-edge MEV protection for swaps
-   **MEV Blocker**: An RPC endpoint designed to protect user transactions from suffering MEV attacks. MEV Blocker leverages an order flow auction among searchers and builders to offer users a rebate (backrun) for their trades

2023 has been marked by a number of noteworthy developments that have expanded protocol functionality, enhanced the user experience, and solidified CoW DAO’s position at the forefront of DeFi.

## CoW Protocol 2023 Product Launches

### Milkman — February

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Timing trades has been a challenge for DAOs, but that&#39;s all changing thanks to Milkman. 🥛😎<br><br>Instead of a fixed trade amount, Milkman lets you use a price checker (i.e. <a href="https://twitter.com/chainlink?ref_src=twsrc%5Etfw">@chainlink</a>) to ensure a fair market price at execution, even far into the future!<a href="https://t.co/xH7fyqka0J">https://t.co/xH7fyqka0J</a> 👉</p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1727326002202935304?ref_src=twsrc%5Etfw">November 22, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

The challenging task of timing trades for DAOs has finally found its solution in Milkman. Developed through the  [CoW Grants Program](https://grants.cow.fi/)  in collaboration with  [Yearn.fi](https://yearn.fi/), Milkman enables smart contracts to specify an on-chain data source, like an oracle, as a reference for the otherwise static “min_out” function. This is a game-changer for deferred trade execution, as it gives DAOs a dynamic price backstop that guarantees up-to-date pricing despite governance-related delays.

Born of the spirit of collaboration, Milkman has already made its mark by facilitating large trades from major DAOs. In 2023,  [Aave used Milkman to swap $4 million directly into a Balancer LP](/learn/aave-trade-breakdown),  [Nexus Mutual used it to trade over 14.4K ETH for rETH](/learn/nexus-mutual-trade-breakdown), and  [ENS traded 10K ETH for USDC](/learn/ens-trade-breakdown). To date, Milkman has already handled over $20 million in trading volume!

Learn more about Milkman: “[What is Milkman? CoW Swap’s Solution for Delayed Execution Trading](/learn/what-is-milkman-cow-swaps-solution-for-delayed-execution-trading)”

### Partially Fillable Limit Orders — April

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Say hello to *partially fillable limit orders* from CoW Swap.<br><br>Now enabled by default, partial fills bring faster trade settlement to limit orders – even in moments of low liquidity. 🏃💨<br><br>Learn more here: <a href="https://t.co/lJ0b4qON9y">https://t.co/lJ0b4qON9y</a> <a href="https://t.co/iqxyI86l6Z">pic.twitter.com/iqxyI86l6Z</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1647962756400701443?ref_src=twsrc%5Etfw">April 17, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

The introduction of partially fillable limit orders in April unlocked a faster limit order experience that also reduces price impact for large orders.

Unlike traditional “fill or kill” limit orders, partially fillable limit orders execute gradually as liquidity becomes available. For users, this means that their limit orders will complete earlier, as they can gather liquidity over time rather than having to wait for it to become available all at once.

What’s more, partially fillable limit orders are “surplus capturing,” meaning that users can receive surplus on top of their limit price. If the solvers execute a limit order for better than the limit price, the positive price difference (known as “surplus”) will be passed along to the user.

Learn more about Partially Fillable Limit Orders: “[CoW Swap Improves the Limit Order Experience with Partially Fillable Limit Orders](/learn/cow-swap-improves-the-limit-order-experience-with-partially-fillable-limit-orders)”

### CoW Hooks — July

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Today, CoW Swap is ushering in a new era in intents-based DeFi.<br><br>Introducing CoW Hooks!<br><br>With CoW Hooks you can take multiple DeFi actions: swapping, bridging, staking, depositing, borrowing, and more — &amp; group them all together into one single intent!<br><br>📖 <a href="https://t.co/RZxQQYue5k">https://t.co/RZxQQYue5k</a> <a href="https://t.co/CMNIUXFtGK">pic.twitter.com/CMNIUXFtGK</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1678766456719433729?ref_src=twsrc%5Etfw">July 11, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

The launch of CoW Hooks transformed CoW Protocol from a swap-intent-matching engine into a generalized intent execution machine. Thanks to CoW Hooks, users can now specify pre and post-trade interactions for solvers to execute alongside their trades.

CoW Hooks interactions can be any DeFi actions: bridging, staking, depositing, or anything else a user would like to do before or after their trade. The best part? Solvers execute the entire sequence of pre and post interactions as a single transaction. True to the CoW Protocol model, users pay gas fees in their sell token, and they only pay if the transaction succeeds.

Learn more about CoW Hooks: “[CoW Hooks: You are in control!](/learn/cow-hooks-you-are-in-control)”

### TWAP (Time Weighted Average Price) Orders — August

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">🚨🚨<br><br>TWAP orders are now available on CoW Swap! (Call us CoW Twap!)<br><br>TWAP orders let users split their trades over time while benefiting from CoW’s signature MEV protection &amp; best prices.<br><br>Available for <a href="https://twitter.com/safe?ref_src=twsrc%5Etfw">@safe</a> wallets today.<br><br>Learn more: <a href="https://t.co/A4l5P7G696">https://t.co/A4l5P7G696</a> <a href="https://t.co/ssj2xtDr8Z">pic.twitter.com/ssj2xtDr8Z</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1692152855694803112?ref_src=twsrc%5Etfw">August 17, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

In August, CoW Protocol launched the first implementation of TWAP orders on a decentralized exchange to date. TWAP allows users to split large trades into smaller, discrete orders which execute over a specified time period. This lessens price impact, ensures entry at a “average” market price, and enhances MEV protection.

Learn more about TWAP orders: “[CoW Swap Launches TWAP Orders](/learn/cow-swap-launches-twap-orders)”

### Gasless Approvals — October

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Cows can sometimes get a bad rap for their gas emissions...<br><br>But CoW Swap is committed to reducing gas as much as possible.<br><br>That&#39;s why we&#39;re pleased to announce that gasless approvals are now live on <a href="https://twitter.com/CoWSwap?ref_src=twsrc%5Etfw">@CoWSwap</a>. <a href="https://t.co/NOQeeVtacr">pic.twitter.com/NOQeeVtacr</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1714633297408696409?ref_src=twsrc%5Etfw">October 18, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

CoW Swap has offered gasless swaps since the start, but in October we made the entire experience — approvals + swaps — entirely gasless for over 100 tokens. With gasless approvals, the intents that users sign to place an order now give solvers the permission to execute both the swap AND the approval transaction on behalf of the user.

Thanks to this, brand new wallets can use CoW Swap without holding any ETH, as all fees get deducted in the sell token.

Learn more about gasless approvals: “[Announcing Gasless Approvals on CoW Swap](/learn/announcing-gasless-approvals-on-cow-swap)”

### Programmatic Order Framework — November

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">CoW Swap is excited to announce the launch of an entirely new class of orders. We call them Programmatic Orders. ✨<br><br>Programmatic Orders execute automatically, in perpetuity, according to the conditional parameters you set.<br><br>Let&#39;s dive in. 🤿 <a href="https://t.co/sOXKCMsYLu">pic.twitter.com/sOXKCMsYLu</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1722735351972983030?ref_src=twsrc%5Etfw">November 9, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

The Programmatic Order Framework pioneered a new era of “programmatic orders,” which are automated orders that execute based on on-chain conditions.

Programmatic orders are created with just one signature, and they execute when certain on-chain conditions (prices, volumes, balances, times, etc.) are met. These orders can stretch indefinitely into the future, automating everything from complex trading strategies to advanced order types, portfolio management, DAO operations, and more.

The Programmatic Order Framework itself is used to create programmatic orders by automating the boilerplate code necessary for order placement. This allows DeFi users to programmatically create any set of orders and automatically approve them for execution with just a single signature.

Learn more about the Programmatic Order Framework: “[Introducing the Programmatic Order Framework, from CoW Protocol](/learn/introducing-the-programmatic-order-framework-from-cow-protocol)”

### Widget — November

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Merhaba. Hello.<br><br>The CoW Swap widget is live. If you&#39;ve ever thought &quot;damn, I wish my users could do MEV-protected swaps/limits/TWAPs, capture surplus, and not spend gas on their trades&quot; this widget is for you.<br><br>Learn more at <a href="https://t.co/jHxQRC2ri9">https://t.co/jHxQRC2ri9</a> or reach out to chat live.<br><br>📣 <a href="https://t.co/wuhKJkJD9m">pic.twitter.com/wuhKJkJD9m</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1724037068610056354?ref_src=twsrc%5Etfw">November 13, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

Launched with the goal of bringing the lush pastures to a wider audience, the widget embeds a CoW Swap trading module on any website or web3 dApp. Projects can now bring CoW Swap’s famous MEV protection and best prices to their users and even collect fees from swaps made through the widget.

Learn more about the widget  [on our website](https://cow.fi/widget).

## Improvements Throughout The Year

-   **Surplus Notifications →** Users now see exactly how much they received in surplus after every trade! Wallets connected to CoW Swap can also view their total historical surplus using the account tab 💸
-   **Fortune Cookies →**  Besides being the best place to trade, CoW Swap is also the most fun! This year, we added fortune cookies to the UI, welcoming you with a new message each day to inspire you along your trading journey 🥠
-   **Custom Recipient Addresses →**  It’s now possible to make a trade with funds from one wallet that sends proceeds to a different wallet. Save on gas fees and expedite your trades with custom recipient addresses 🔀
-   **Token Page Release →**  The  [token page](https://swap.cow.fi/#/account/tokens)  lists the tradeable tokens on CoW Swap. Users can use the page to sign the approval transactions necessary for trading new tokens in advance — useful if you’re trying to time the market ⏳
-   **The Limit Orders Stop Light →**  Limit orders received a useful UI upgrade that shows how close your orders are to completing. The limit order “stop light” lights up in different colors depending on how close the market price is to what it needs to be for your limit orders to execute 🚦
-   **A World of Notifications →**  Staying informed is key in the world of DeFi. To this end, CoW Swap enabled notifications through Discord, Telegram, and email to help users stay up to date with new announcements 🔔

## The CoW Protocol Revolution: A Year of Collaboration

The shipping hasn’t only been us, though. We’re proud to have encouraged innovation in DeFi even outside of the CoW DAO ecosystem. Below is a list of projects that are integrated with or built on top of CoW Protocol.

### 1. Dump Services

CoW DAO introduced  [dump.services](https://dump.services/), a dApp that allows users to swap (“dump”) multiple tokens from their wallet all at once by trading them for a single asset. This streamlines portfolio management, especially for small token balances.

### 2. CoW Swap Safe App Batch Transactions

The  [CoW Swap Safe App](https://app.safe.global/share/safe-app?appUrl=https%3A%2F%2Fswap.cow.fi&chain=eth)  introduced a game-changing feature — the ability to bundle multiple transactions into a single batch. Thanks to the Safe batching feature, users can merge approving, wrapping, and trading into a single, cost-effective transaction.

### 3. The Tally Recipe for CoW Swap

Tally, a prominent DAO tooling platform, launched  [a Recipe for CoW Swap](/learn/tally-recipe-for-cow-swaps). The Tally CoW Swap Recipe leverages Milkman to let DAOs attach a swap to a governance proposal, turning a multi-step process into only a few clicks.

### 4. Stackly DCA

[Stackly](https://stackly.eth.limo/)  is a new dApp that brings Dollar-Cost Averaging (DCA) swaps to DeFi users on Ethereum and Gnosis chain. Under the hood, Stackly leverages  [CoW Protocol ERC-1271 smart orders](/learn/tutorial-creating-smart-orders-with-cow-protocol)  for the trades.

### 5. Coinshift Apps

Treasury management platform  [Coinshift](https://coinshift.xyz/)  integrated CoW Swap as a part of its suite of apps, bringing the safety and reliability of CoW Swap to the DAOs using Coinshift for their treasury operations.

### 6. Stader Swap Feature

The liquid staking service  [Stader Labs](https://www.staderlabs.com/eth/)  added a “Swap” function powered by CoW Swap which directs users to trade tokens on CoW Swap dApp.

### 7. Lido Swap Feature

Staking service  [Lido](https://lido.fi/)  also added CoW Swap as one of their “withdrawal” options for users looking to convert stETH to ETH right on the platform.

## New Products: MEV Blocker

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">CoW Swap, in collaboration with <a href="https://twitter.com/beaverbuild?ref_src=twsrc%5Etfw">@beaverbuild</a> and Agnostic Relayer, is proud to announce MEV Blocker. <a href="https://t.co/WIhaaGtP0e">https://t.co/WIhaaGtP0e</a> ⛱️<br><br>MEV Blocker is a free RPC endpoint that *pays users* to protect themselves from MEV across a wide variety of use cases in DeFi, NFTs, and dApps. <a href="https://t.co/Fa6cRNjrxf">pic.twitter.com/Fa6cRNjrxf</a></p>&mdash; CoW DAO | MEV Blocker &amp; CoW Swap (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1643614395002499073?ref_src=twsrc%5Etfw">April 5, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

While the lush pastures of CoW DAO saw a lot of shipping in 2023, there was one flagship launch that stood above the rest:  [MEV Blocker](https://mevblocker.io/).

CoW DAO, in collaboration with  [Beaver Build](https://beaverbuild.org/)  and  [Agnostic Relay](https://agnostic-relay.net/), introduced MEV Blocker to protect Ethereum transactions from frontrunning and sandwich attacks. The free RPC endpoint routes transactions through a permissionless network of searchers who cannot frontrun or sandwich user transactions. Instead, searchers capture value through backrunning, sending 90% of all profits back to the users as rebates.

MEV Blocker addresses the multi-billion dollar MEV problem, enabling users to trade, buy NFTs, provide liquidity, and more without worrying about harmful price exploitation.

## Reflecting on our Udderly amazing Journey, and cheers to a CoW-tastic 2024!

2023 has been the most exciting year so far for CoW DAO. We’re already diving headfirst into 2024 with a renewed commitment to more products built for both novice and experienced users. Here’s to another thrilling year at the forefront of DeFi!

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365 Days of Udderly Fantastic CoWventures!


CoW DAO: 2023 in Review!


## TL;DR

-   During the month of  **May**, CoW Protocol handled a total volume of  **$2.4B**  and generated a surplus of  **$16.5M**
-   In exciting news, the CoW Swap widget got integrated by Safe {Wallet], MEV Scanner was launched, and CoW DAO Revenue & CoW AMM Performance dashboards went live
-   In terms of Governance, CoW DAO executed CIPS 43 & 44

## Protocol Stats

This month, CoW Protocol settled a total of  **$2.4B.**

![1-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_may_2024_highlights_a5aa5bc848.webp)

The top batches worth highlighting are the following:

-   **Batch with the highest % of CoW trades**  **(**[**Transaction details**](https://explorer.cow.fi/tx/0x80335524b00f7fb0ca810781b8097acd9f3a26c160a3829e6d2fbe49caa08fc0?tab=orders)**)**. The total batch volume was  **$2,165,670**, and it was created by two traders who were perfectly CoWed for  **90% ($1.9M)**  of their volume. One trader was buying  **WETH-WFTM**, and the other trader was selling  **WETH-WFTM**.

![2-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_may_2024_highlights_3a87975f5a.webp)

-   **Batch containing the highest volume**  **(**[**Transaction details**](https://explorer.cow.fi/tx/0x93f390d0a9ba487cadca006270ec5b092df9a1104438fdb7f630a0cbf64271c8?tab=orders&vis=transfers)**)**: The total batch volume was  **$15,968,035.14** and it was created by three traders who were swapping  **DAI** to **USDC, ETH** to **BTRFLY,** and **WETH** to **TOKE**.

![3-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_may_2024_highlights_c5df911595.webp)

-   **Batch with the highest amount of surplus**  **(**[**Transaction details**](https://explorer.cow.fi/tx/0xc8c849f6e8f1638b366782946b2004b6c2225f74fe9821004e9107d7b3788531?tab=orders)**)**: The total batch volume was  **$8,534,108.21** and it was created by a single trader who was swapping  **ETH to**  **USDC**. This trader achieved the largest surplus for the month of May by getting  **$173,922.78 USDC**  extra, which was roughly 2**%**  surplus.

![4-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_may_2024_highlights_152ab79f09.webp)

During the month of  **April**, the top 10 traders traded a total of  **$22M.**

![5-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_may_2024_highlights_8e3c3abf09.webp)

In the table below you can see the total volume for this month’s biggest trades. The most active trader executed a whopping  **$5.6M**  in trades with CoW Protocol this month.

![6-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_may_2024_highlights_c078f604e4.webp)

## Solvers

In  **May**, solvers generated a total of $16M in surplus, which is money in the pockets of traders.

![7-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_may_2024_highlights_c0bac7f1ea.webp)

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

![8-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_may_2024_highlights_5277340481.webp)

## Governance

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

![9-may-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_may_2024_highlights_25544c8f9c.webp)

## Executed Proposals

The DAO executed three important proposals this month:

-   [CIP-43: Operational CoW DAO Safe Renewal](https://snapshot.org/#/cow.eth/proposal/0xcf0cea1d434e3036d07cb61d3d155b2bd45af0d83d280897eb11ce69f5e1f34b)
-   [CIP-44: Reduced bonding requirements](https://snapshot.org/#/cow.eth/proposal/0x1b6f1171633ec3d20c4370db37074aa1bd830486d4d0d6c26165915cc42d9412)

## Draft Proposals

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

-   [CIP-Draft: Balancer and CoW jointly creating CoWAMM pools](https://forum.cow.fi/t/cip-draft-balancer-and-cow-jointly-creating-cowamm-pools/2429)

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

-   [Safe{Wallet} launched Native Swaps powered by CoW Swap widget](https://x.com/CoWSwap/status/1790352311124213912)
-   In collaboration with CoW Grants,  [MEV Scanner was launched](https://x.com/CoWSwap/status/1796184453007458496)  — a new tool to find how much MEV various wallets have suffered. Available on X, Discord, and Telegram!
-   Released the new  [CoW DAO Revenue Dashboard](https://x.com/CoWSwap/status/1792657133861056513)  so that anyone can check in real time how much money CoW DAO is making.
-   [Published a CoW AMM digest](https://forum.cow.fi/t/4-months-of-cow-amm-what-we-have-learned-and-the-next-steps/2432)  explaining all things happening around CoW AMM for the 4 months that it has been live
-   [Released a CoW AMM Dune Dashboard](https://x.com/CoWSwap/status/1788616025635967222)  that includes stats like aggregate pool APYs and CoW AMM performance compared to a reference pool.
-   [CoW AMM got extensively covered on the latest Blockworks Research deep dive on LVR.](https://x.com/blockworksres/status/1791184122951704758)
-   Hear our  [story how we got started in crypto](https://x.com/CoWSwap/status/1791891046668136919)
-   Had our say in the DOJ episode with our  [“MEV is theft” tweet](https://x.com/CoWSwap/status/1790889428887470243)
-   [FairyCoW Swap launched](https://x.com/CoWSwap/status/1787514538692096264)  its programmable encryption on top of CoW Protocol orders
-   Published an example of what  [optimal settlements in DeFi look like](https://x.com/CoWSwap/status/1787893735453564992)
-   Participated in  [FuruRadio Episode 8](https://x.com/furucombo/status/1790773019872465355)  twitter spaces cover all things Solver related
-   Published several blog articles:  [How to Avoid MEV Bots](https://blog.cow.fi/how-to-avoid-mev-bots-38c63584921e),  [What is a Smart Contract?](https://blog.cow.fi/what-is-a-smart-contract-13a7f33ed7c7), and  [What is Slippage in Crypto?](https://blog.cow.fi/what-is-slippage-in-crypto-59937f801663)

## Product Updates

**Backend**

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

-   Allowed solvers to simulate orders without needing to hit another backend endpoint
-   Worked on solver competition by verifying solver quotes
-   Worked on collocated driver solver quoting
-   Worked on backend refactoring to enable running a circuit breaker in the autopilot (a requirement for actual colocation where solvers run their own drivers)
-   Merged CoW AMM fixes, unblocking further progress on the CoW AMM feature
-   Worked on Arbitrum deployment, including various fixes, gas price estimator, and a core component that subscribes to new blocks from the blockchain
-   Made further progress on full colocation, creating an execution plan and starting implementation
-   The backend team attended DappCon

**Frontend**

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

-   Fixed automatic IPFS publishing with a new ENS deployment (good for the decentralization of CoW Swap and the protocol): [https://cowswap.eth.limo](https://cowswap.eth.limo/)
-   The frontend team had a retreat in Turkey, where they worked on several new and upcoming features
-   Launched CoW Swap and the CoW Explorer on Arbitrum
-   Launched EIP 6963 (injected wallets), reducing the number of default wallets and finally supporting Rabby and all wallets that support the standard
-   Worked on several features that will soon be revealed

## Open Job Positions

### Marketing

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

### Other

[Name Your Role Remote — Lisbon](https://boards.eu.greenhouse.io/cowswap/jobs/4341959101)

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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 May 2024 Highlights


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

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

## 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

## TL;DR

-   During the month of  **January**, CoW Protocol handled a total volume of  **$1.9B**  and generated a surplus of  **$16.1M**
-   In terms of Governance, CoW DAO executed CIPS  [34](https://snapshot.org/#/cow.eth/proposal/0xe358941aa3f3aeaf94d40e6904c9bb530c98f88e363c2f309d9898b0ffb16c1f)  and  [35](https://snapshot.org/#/cow.eth/proposal/0x1ce26799df80625cb8de5e985920b5f50e890290da03776bdd934e8bd03d9014)  and received an important proposal regarding increasing liquidity for the COW token via a programmatic order and an FM-AMM
-   In exciting news, CoW Protocol began officially  [charging fees on out-of-market limit orders](https://x.com/CoWSwap/status/1749858622027301159?s=20), published a  [2023 year in review](https://x.com/CoWSwap/status/1745859971617882529?s=20), and released a brand new  [set of docs](https://x.com/CoWSwap/status/1746916877677596936?s=20)

## Protocol Stats

This month, CoW Protocol settled a total of  **$1.92B.**

![1-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_january_2024_highlights_a7ae839d24.webp)

The top batches worth highlighting are the following:

**Batch with the highest % of CoW trades (**[**Transaction details**](https://explorer.cow.fi/tx/0x72eb3893cbb060ac052b851a013a5b41838f868207ffdc9cb879af0a53e4a28b?tab=graph)**):**  The total batch volume was  **$1,264,508**, and it was created by two traders who were CoWed for  **$1,099,213, (86.3%)**  of the total batch volume. One trader was buying  **$1.2M of PEPE**  and the other trader was selling  **$1M of PEPE.**

![2-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_january_2024_highlights_175d395b5e.webp)

**Batch containing the highest volume (**[**Transaction details**](https://explorer.cow.fi/tx/0xb5f4ca700520d35f8384adcfd895afa33b42d0676d5d210160c4855ebbbb5f7e?tab=orders&vis=transfers)**):**  The total batch volume was  **$10,186,406** and it was created by two traders who were swapping  **USDC**  to  **GEL** and  **sfrxETH**  to  **ETH**.

![3-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_january_2024_highlights_da4efaf710.webp)

**Batch with the highest amount of surplus (**[**Transaction details**](https://explorer.cow.fi/tx/0xf77330676a021051edec058ba6ee36d199182aea5510f40d26309d00351e524d/?tab=graph&vis=transfers)**):**  The total batch volume was  **$118,905** and it was created by a single trader who was swapping  **ETH**  **to**  **stETH**. This trader achieved the largest surplus for the month of  **January** by getting  **48 stETH**  extra, which at the time of trade was roughly **$107K (2% surplus)**.

![4-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_january_2024_highlights_e2c454bff4.webp)

During the month of  **January**, the top 10 traders traded a total of  **$197M.**

![5-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_january_2024_highlights_ddd8c83163.webp)

In the table below you can see the total volume for this month’s biggest trades. The most active trader executed a whopping $**168M**  in trades with CoW Protocol this month.

![6-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_january_2024_highlights_5ed4c8dd69.webp)

## Solvers

In  **January**, solvers generated a total of  **$16M**  in surplus, which is money in the pockets of traders.

![7-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_january_2024_highlights_e6d6600d39.webp)

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

![8-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_january_2024_highlights_29f171bf7e.webp)

## Governance

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

![9-january-2024-highlights.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_january_2024_highlights_0859dafbe7.webp)

## Executed Proposals

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

-   [CIP-34: Testing Fee Models for CoW Protocol](https://snapshot.org/#/cow.eth/proposal/0xe358941aa3f3aeaf94d40e6904c9bb530c98f88e363c2f309d9898b0ffb16c1f)
-   [CIP-35: Renewing the CoW Grants Program](https://snapshot.org/#/cow.eth/proposal/0x1ce26799df80625cb8de5e985920b5f50e890290da03776bdd934e8bd03d9014)

## Draft Proposals

This month,  **there was one new proposal**  asking for feedback before moving into the next phase, a final CIP, in its current form:

-   [CIP draft: Increasing liquidity for COW token via a programmatic order and an FM-AMM](https://forum.cow.fi/t/cip-draft-increasing-liquidity-for-cow-token-via-a-programmatic-order-and-an-fm-amm/2203)

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

-   [Per CIP-34, CoW Protocol is now charging fees on out-of-market limit orders](https://x.com/CoWSwap/status/1749858622027301159?s=20)
-   CoW DAO had a phenomenal 2023. To commemorate it, the team published a  [product recap](https://x.com/CoWSwap/status/1745859971617882529?s=20)  as well as a  [data review](https://x.com/CoWSwap/status/1750199071535718557?s=20)  of all of the year’s important milestones
-   The CoW Protocol documentation received a  [much-welcome facelift](https://x.com/CoWSwap/status/1746916877677596936?s=20)  including a new website ([learn.cow.fi](https://learn.cow.fi/)) that helps anyone play around with CoW Protocol
-   The CoW Swap widget launched [color customization](https://x.com/CoWSwap/status/1742947998894792816?s=20)
-   [Teased the potential launch of CoW AMM](https://x.com/CoWSwap/status/1745500079677694377?s=20), a new MEV capturing AMM that prevents LVR and increases LP returns
-   [Launched a campaign to attract developers to help the CoW Protocol team fix Github PRs](https://x.com/CoWSwap/status/1752370895350538336?s=20)
-   Launched a campaign to help CoW Swap users understand key concepts of the protocol, kicking off with “[Coincidence of Wants](https://x.com/CoWSwap/status/1752686684406436204?s=20)”
-   The CoW team was featured on two podcasts:  [wen building by Antalpha labs](https://x.com/Antalpha_Labs/status/1742159634386071774?s=20)  and  [Steady Lads podcast by Jess Eckel](https://x.com/Jesseeckel/status/1748343775892504816?s=20)
-   Did you know that  [your lending protocol can perform MEV-protected liquidations via CoW Protocol](https://x.com/CoWSwap/status/1742053152978038957?s=20)?
-   One of the solvers participating in the CoW Protocol competition performed a study showing how  [Coincidence of Wants could potentially save Ethereum traders nearly $1.5M a day](https://x.com/CoWSwap/status/1750578345878639090?s=20)
-   The team published the following articles to the blog:  
    –  [Understanding MEV Protection](/learn/understanding-mev-protection)  
    –  [Understanding Batch Auctions](/learn/understanding-batch-auctions)  
    –  [EIP-1271 Explained](/learn/eip-1271-explained)

## Product Updates

**Backend**

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

-   Completed the Sepolia testnet deployment for all backend services
-   Finished protocol fee implementation for limit orders
-   Worked on getting all the backend docs over the finish line
-   Investigated several issues related to the Composable CoW WatchTower
-   Worked on several preparations allowing external contributions to contribute to Github issues
-   Testing efforts for first phase of protocol fee initiative
-   Fixed several PRs for the rollout of verified quotes
-   Worked on indexing simplifications which should allow us to report order fees right after trades
-   Prepared a new interface for the Quasilabs solver

**Frontend**

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

-   Removed the Christmas theme
-   Improved the new  [learn.cow.fi](https://learn.cow.fi/)  website by polishing the interface (changed colors, logo, etc.) and adding a control to connect a wallet
-   Worked on a redesign for the confirmation screen to make displaying fee values more clear
-   Worked on several CoW Swap fixes including:
-   Removing time limits (deadlines) for TWAP orders, adding an option to set max deadline for limit order (6 months), showing price impact warning for Safe App when bundling, and relying on safeInfo and iframe detection to identify Safe wallets
-   Completed the Sepolia testnet deployment for all frontend services
-   Worked on several explorer improvement such as reduced page size (optimized images), cleaned up the codebase and migrated to monorepo
-   Released improvement for the widget with the possibility to add custom token lists

## Open Job Positions

## Engineering

[Backend Engineer with Rust](https://boards.eu.greenhouse.io/cowswap/jobs/4272022101)

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CoW Protocol January 2024 Highlights

Surplus notifications are now live on CoW Swap! Just navigate to your account page to see the total amount of price surplus CoW Swap has generated across all your trades.

Surplus notifications will also pop up after each trade, showing you how much extra you’ve earned for that trade!

![announcing-cow-swap-surplus-notifications-cover-photo.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/announcing_cow_swap_surplus_notifications_cover_photo_dbb7d409c9.webp)

## What is Surplus?

On CoW Swap, we call any improvement over your quoted price “surplus”.

-   **Positive Slippage**: Sometimes the market moves to your advantage and the asset you’re trading becomes cheaper between the time you’re quoted and the time of execution. On CoW Swap, that price savings is passed on to you
-   **Coincidence of Wants (CoWs)**: If your order is matched peer-to-peer with someone else, you save on gas costs and LP fees. That price surplus is also passed along to you
-   **Any other price improvement**: If the solvers can find a better source of liquidity than they originally quoted, or improve the price in any other way, this price improvement is forwarded to you.

## CoW Swap Passes Along the Most Surplus

CoW Swap is the only exchange that passes along all types of price improvements. Positive slippage, gas savings, and other optimizations usually end up in the protocol treasury for most DEXs and DEX aggregators. At CoW, we put our users first, so you can rest assured that if we find a better price, it’ll be you we tell first.

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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Announcing CoW Swap Surplus Notifications

![1-tally-gif.gif](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_tally_gif_0192363076.gif)

DAO trading presents a unique set of challenges when compared to retail trading. While small trades can easily access the liquidity necessary to execute quickly and efficiently, DAOs have to go through a complex proposal and voting process to simply initiate a trade. When actually placing the trade, DAOs also have to worry about optimizing liquidity sources, reducing price impact, avoiding MEV, fine-tuning slippage, and much more.

The DAO governance process ensures that all stakeholders get a say, but when it comes to executing trades, it forces DAOs into a difficult choice:

1.  **Announce and commit to the trade in advance to collect votes**: This exposes the trade to significant MEV risk since the DAO makes the exact trade details known in advance… or,
2.  **Elect a treasury management team to execute the trade**: This keeps trade details private, but bypasses the regular governance process and requires trusted third parties

This choice between losing money to MEV or having to delegate treasury decisions leads many DAOs to avoid making trades unless absolutely necessary. This causes more problems since regular trades are necessary for effective treasury diversification.

Today, [CoW Swap](https://cow.fi/)  and [Tally](https://www.tally.xyz/), two of the most trusted names in the DAO space, are putting an end to this tradeoff once and for all.

We’re excited to announce the launch of the Tally Recipe for CoW Swaps: a combined governance & swap mechanism that eliminates the need for precise trade timing and gives DAOs the best of both worlds.

## CoW Swap & Tally Present: The Tally Recipe for CoW Swaps
![2-cow-swap-and-tally-present.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_cow_swap_and_tally_present_a1c0a92d1d.webp)

**The Tally Recipe for CoW Swaps relies on** [**Milkman**](https://github.com/charlesndalton/milkman)**, a CoW Grants-funded project developed by contributors from** [**Yearn.fi**](https://yearn.fi/)**, to enable easier DAO trading.**

Milkman is a trading mechanism that uses a real-time price checker instead of a fixed slippage tolerance for executing trades. It has quickly become a critical tool for DAOs, as it encodes a guaranteed price on-chain at the time of the trade execution, rather than during the proposal process. The Milkman smart contract uses a bot that places trades on behalf of the DAO based on the parameters encoded in the DAO’s signed message.

Rather than including a fixed price and slippage tolerance in the governance proposal for an upcoming trade, DAOs can instead use a price checker (such as a Uniswap v3 price oracle) to complete the trade based on whatever the price is at the time of execution (within some slippage deviation).

Previously, DAOs had to run Milkman via scripts and code, but  [CoW Swap](https://cow.fi/)  and [Tally](https://www.tally.xyz/)  have created an easy-to-use operational UI interface for Milkman through the Tally Recipe for CoW Swaps.

## How the Tally Recipe for CoW Swaps Works

The Tally Recipe for CoW Swaps makes DAO trading super simple.

![3-how-the-tally-recipe-works.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_how_the_tally_recipe_works_335fcb4e85.webp)

When creating a governance proposal through Tally, DAO managers can add a “swap” action, in which they can specify:

-   The assets that the proposal will trade
-   The price checker that will be used to guarantee that the price at the moment of execution won’t deviate from the market price by more than the specified slippage tolerance
-   The slippage amount that the DAO is willing to accept

Once the governance proposal for the DAO trade passes, the Milkman bot automatically picks up the transaction, checks the signature, and forwards the order to CoW Swap. Thanks to an  [EIP-1271](https://cow-protocol.medium.com/tutorial-creating-smart-orders-on-cow-protocol-683a5f9f4763)  integration, CoW Swap can verify that the attached signature is valid and contains all the necessary trade parameters, even if it comes from a smart contract. The transaction then moves to the CoW orderbook and the solvers compete to find the best price and execution path for the order.

## Tally & CoW Swap for Your DAO

DAOs have lots of options when it comes to governance and treasury management. Tally and CoW Swap are both committed to creating tools for enhancing the DAO trading experience.

### Tally makes DAO governance management a breeze. DAOs can use Tally to:

-   Create a home page for existing members and new visitors
-   Create and manage DAO proposals
-   Allow participants to vote on DAO proposals or delegate their voting power through a personal profile
-   Allow delegates to advocate for receiving more votes by making a profile and showcasing their past voting activity

### CoW Swap offers DAOs:

-   The best prices from all available on-chain liquidity and through peer-to-peer swaps
-   MEV protection through a network of solvers
-   Forwarding of positive price surplus (your quoted price is the worst price you’ll pay)
-   EIP-1271 smart orders that find the best price at the time of execution
-   And  [much more](https://blog.cow.fi/cow-swap-for-daos-8d67831c2a13)

For DAOs large and small, the Tally Recipe for CoW Swaps takes treasury swaps to a whole new level. Enjoy trading with the peace of mind of a retail trader — regardless of how big your trade is.

To use the Tally Recipe for CoW Swaps for your DAO, sign up with Tally through [their website](https://www.tally.xyz/).

Happy trading!

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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Bring your DAO trades to the next level with governance-initiated swaps

Tally Recipe for CoW Swaps

_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.


## About CoW DAO

CoW DAO is an open organization of developers, market makers, and community contributors on a mission to create a fairer, more protective financial system. CoW DAO currently supports  [CoW Swap](http://swap.cow.fi/),  [CoW Protocol](https://cow.fi/), and  [MEV Blocker](https://mevblocker.io/)  — DeFi products that leverage order flow auctions to protect users from MEV attacks and give them more than they ask for.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)


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A DappCon Talk by Olga Fetisova of CoW DAO


MEV Transparency: Ensuring Fairness In DeFi Markets

CoW DAO is an open organization of developers, traders, market makers, and various community members aligned with the vision of providing traders with the best prices and comprehensive MEV protection. CoW DAO is focused on building and maintaining CoW Protocol, a fair and decentralized trading system, and MEV Blocker, an RPC endpoint. CoW Protocol’s technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading through a unique “batch auction” system. This positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum. MEV Blocker is designed to protect transactions from MEV attacks such as front-running and sandwiching. In addition to protecting trades from harmful MEV, MEV Blocker leverages an Order Flow Auction between various searchers and builders to offer rebates to users for certain trades.

[oSnap](https://uma.xyz/osnap)  is a DAO governance tool built and secured by  [UMA](https://uma.xyz/). It allows communities to vote off-chain and automatically execute the successful proposals on-chain. oSnap automatically integrates with the DAO’s  [Snapshot](https://snapshot.org/#/)  space and the Safe wallet holding the DAO’s treasury funds. Transactions approved by the community are validated on-chain and executed without the need for centralized multisig approval.

CoW DAO is looking forward to integrating oSnap, as it will give the DAO several advantages including:

-   A decentralized process to execute successful proposals that no longer requires the involvement of multisig signers → Instead of having the multisig owners push successful proposals on-chain themselves, the oSnap bot will automatically execute them
-   Extra on-chain guarantees through a challenge period → Through oSnap, voters will be able to challenge proposals during a “challenge period” that takes place after the successful passing of a proposal
-   One step closer to a more decentralized and resilient CoW DAO → Integrating oSnap allows CoW DAO to run 100% through on-chain governance without relying on any off-chain infrastructure or trusted parties

## How it works

On a technical level, Snapshot allows users to integrate transaction data into their proposals using its transaction builder tool. Community members can include specific transactions in their proposals for the DAO to execute. Once a proposal is published, Snapshot uses the decentralized hosting service IPFS to store and share this transaction data, assigning it a unique identifier in the process.

Once a proposal is approved, the oSnap system takes charge of submitting the transaction data to UMA’s optimistic oracle. The oracle then verifies that the transaction matches the data stored at the IPFS identifier. If the oracle confirms the match, the transaction is executed using funds from the DAO Safe. However, in the event of an invalid or malicious transaction, the system automatically removes the data before it reaches the blockchain.

This integration is a step forward for CoW DAO’s decentralization. If you are interested in participating in the CoW DAO governance process, you have several options:

-   [Forum](https://forum.cow.fi/)  → CoW DAO’s forum is the main venue for governance-related discussion. Signing up for the forum allows community members to post and participate in discussions.
-   [Snapshot](https://snapshot.org/#/cow.eth)  → CoW DAO’s Snapshot space is a simple voting interface that allows users to vote on proposals. Votes on Snapshot are weighted by the number of vCOW+COW held or delegated to the address used to vote.
-   [Discord](https://discord.gg/cowprotocol)  → The CoW DAO Discord server is currently the main discussion hub for the CoW community and an informal place for governance discussions. The “governance-discussion” channel is where governance matters and proposals are discussed.

## Learn more

[CoW DAO](https://cow.fi/)  is a decentralized organization maintaining CoW Protocol and  [MEV Blocker](https://mevblocker.io/)  for the effective protection of Ethereum traders across DeFi. CoW Protocol leverages batch auctions to find the best prices for user trades, while MEV Blocker maintains a decentralized network of searchers & builders who protect users from MEV and provide them with rebates from profitable backrunning opportunities.

[oSnap](https://uma.xyz/osnap)  is a governance tool secured by UMA and audited by Open Zeppelin. It is free to use and can be integrated in less than 60 seconds.

[UMA](https://uma.xyz/)  is an optimistic oracle that can validate any independently verifiable data on the blockchain. UMA ensures protocol security by incentivizing validators to identify and delete false information passing through the oracle. Since launching in 2020, UMA has secured more than 10,000 critical data assertions. It has never been corrupted.

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

[](https://blog.cow.fi/?source=post_page-----42b8f6c42660--------------------------------)

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CoW DAO has integrated oSnap as a means of directly executing the results of future Snapshot votes on-chain. This integration eliminates the need for multi-signature wallets, creating a more decentralized and efficient execution process.

CoW DAO integrates oSnap for decentralized governance

An MEV blocker is a piece of blockchain infrastructure that protects orders from price exploitation resulting from MEV (Maximal extractable value).

Under the hood, it’s  [RPC endpoints](https://www.quicknode.com/docs/ethereum)  that function as MEV Blockers by routing transactions through specialized mempools which protect them from MEV and even send rebates back to traders when their trades leave money on the table.

There’s a lot of moving parts when it comes to MEV blockers, so let’s break the topic down one step at a time.

## What is MEV?

An MEV blocker is a piece of software that protects user transactions from suffering MEV exploitation… but what is MEV?

MEV (Maximal extractable value) is a hidden tax on all types of Ethereum transactions. Any time you make a large trade, mint a valuable NFT, or even provide liquidity to a liquidity pool, you are at risk of experiencing price exploitation through MEV. To date, MEV has caused over $1 billion in trading losses and continues to increase by the millions each day.

![1-what-does-an-mev-blocker-do.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_does_an_mev_blocker_do_80b9b36ca6.webp)

MEV is carried out by traders known as “searchers” who monitor pending Ethereum transactions and  bribe block builders  to order the transactions in a specific order, extracting profit in the process.

Find out more about the specifics of how MEV attacks work in our  [“Understanding MEV” series](/learn/understanding-mev-protection).

## How do MEV Blockers Work?

Since MEV relies on  [reordering transactions](/learn/understanding-mev-protection)  from the order in which they were submitted to a new, more profitable order, it’s possible to cut the process short by sending transactions to a specialized network of searchers bound by unique rules that ensure favorable execution for users.

These searchers cannot frontrun or sandwich transactions. Rather, they capture value by  [backrunning](/learn/what-is-backrunning-mev-attacks-explained)  large orders and sending a large portion of the backrunning profits back to the users as a rebate. So, as a user, you’re not only protecting yourself from harmful price exploitation in the form of frontrunning and sandwich attacks, you also have someone looking out for you any time you leave money on the table.

## What is an RPC endpoint?

We mentioned earlier that under the hood, MEV blockers run through RPC endpoints. An RPC endpoint is a communication layer between the blockchain and a user’s wallet. RPC endpoints relay messages from the wallet that  [RPC nodes](https://www.alchemy.com/overviews/rpc-node)  use to add orders to the blockchain.

RPC endpoints are the perfect place for MEV protection because they are an intermediary layer between the wallet and the blockchain, safely re-routing transactions towards the specialized network of searchers we mentioned earlier, rather than letting them end up in the public  [mempool](https://www.blocknative.com/blog/mempool-intro)  where malicious searchers lie in wait.

## Order Flow Auctions for MEV Blockers

![2-what-does-an-mev-blocker-do.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_what_does_an_mev_blocker_do_7de134111f.webp)

MEV Blocker RPCs rely on an emerging blockchain mechanism known as  [order flow auctions](/learn/understanding-order-flow-auctions). Order flow auctions are bidding mechanisms used at various levels of the Ethereum stack which pit multiple execution parties against each other to find the one that can provide users with the best value for their transaction.

Currently, block building incentivizes MEV extraction by awarding the privileges of creating the next block to the builder who can extract the most value from the trades. Order flow auctions invert this dynamic — incentivizing auction participants (in the case of MEV blockers, this is the specialized network of searchers) to instead find as large of a rebate as possible for the user submitting the transaction. The searcher who bids the most to backrun a trade wins the auction, capturing some small value of the proceeds for themselves and sending the rest back to the user as a rebate.

## Should you use an MEV Blocker?

While many people have yet to learn about MEV blockers, they’re quickly being adopted by some of the most savvy traders to protect their trades, NFT swaps, LP positions, and more. MEV is an increasingly significant problem for traders of all sizes and MEV blockers are designed to outsmart the searchers with the latest innovations in market mechanics.

You may have heard that MEV is only a problem for large trades, but as searchers get more and more sophisticated, this is becoming less true. Searchers can also extract value from small trades, especially in volatile markets, and beginner traders are especially susceptible to price exploitation as they may not yet know how to protect themselves.

MEV blockers provide robust protection without many downsides. As a user, you install the MEV blocker through your wallet and forget about it, meanwhile it’s quietly protecting you from price exploitation and even forwarding rebates from any money your trades leave on the table.

## MEVBlocker.io — CoW DAO’s Approach to MEV Blocking

![3-what-does-an-mev-blocker-do.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_what_does_an_mev_blocker_do_cc9833e466.webp)

[CoW DAO](https://cow.fi/)  became a first mover in the MEV blocker space when it introduced  [MEV Blocker](https://mevblocker.io/)  (yes, we coined the term) in April of 2023.

MEV Blocker (capital “B”) is an RPC endpoint developed by CoW DAO in collaboration with  [Beaver Build](https://beaverbuild.org/)  and  [Agnostic Relay](https://agnostic-relay.net/)  that’s built to protect Ethereum transactions from frontrunning and sandwich attacks. MEV Blocker sends transactions to a mempool of searchers who bid for the opportunity to backrun the trades, sharing any profits 90/10 with users (90% to users, 10% to searchers.)

To join  [over 600,000 Ethereum users receiving more than 1,000 ETH](https://dune.com/cowprotocol/mev-blocker)  in rebates, add MEV Blocker to your wallet by following the instructions  [here](https://mevblocker.io/).

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MEV blockers have made headlines in the blockchain space, but what are they and how do they work?


What does an MEV Blocker do?

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.

[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.

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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)?

## 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)

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

CoW Protocol July 2023 Highlights

## 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.

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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What is Backrunning? — MEV Attacks Explained


As a pioneer in the field of intents, CoW Swap has consistently brought faster, easier, and safer trading to DAOs and DeFi enthusiasts.

As DeFi grows and transactions become ever-more complex, the friction of having to sign and make orders manually becomes more pronounced. Traders looking to place recurring orders as a part of a complex trading strategy, DAO operators responsible for managing a treasury, and individuals tired of signing repetitive transactions could all benefit from a system that allows for automated order placement.

Today, CoW Protocol is proud to announce the release of two features that take the pain out of order placement and open up a wide range of possibilities for automation.

To start off, we’re introducing a new order primitive to the world of DeFi. We call it “Programmatic Orders”. Programmatic Orders are orders that create more orders. They require just one signature to create, then execute when on-chain conditions (prices, volumes, balances, times, etc.) are met. Programmatic Orders can execute indefinitely into the future, automating everything from complex trading strategies to advanced order types, portfolio management, DAO operations, and more.

Alongside Programmatic Orders, CoW Protocol is launching the Programmatic Order Framework. As the name implies, it’s a framework that allows for the easy creation of Programmatic Orders.

Below, we take a deeper look at Programmatic Orders, the Programmatic Order Framework, and the technical details necessary for implementation. We also call on the DeFi ecosystem to submit proposals for building applications on top of the Programmatic Order Framework through the  [CoW Grants Program](https://grants.cow.fi/).

## The current state of programmatic actions

The DeFi space currently supports very simple programmatic actions — for example, individual limit orders. Unfortunately, users have to trust a centralized operator to execute these actions correctly and fairly.

Despite the rise of autonomous agents in the wake of initiatives like ERC-1271, the vast majority of interactions are performed manually, which means there is a dependency on individuals, and a central point of failure.

Even when orders are executed properly, users still have to sign a transaction every time they want to place a new order. This may not be an issue for one-off transactions, but it starts to become a nuisance for frequent, recurring transactions.

The Programmatic Order Framework is built to address these problems.

## The Programmatic Order Framework: A decentralized solution for automated orders

At its core, the Programmatic Order Framework brings simplicity to order creation by automating the boilerplate code necessary for order placement. This allows DeFi users to programmatically create any set of orders and automatically approve them for execution with just a single signature.

Users can create advanced order types (such as Stop Loss and TWAP orders), automate DAO payrolls, and create or destroy multiple orders with just one on-chain transaction. Thanks to a “WatchTower” relayer, orders built with the Programmatic Order Framework execute automatically whenever certain on-chain conditions are met, eliminating the need for tedious and repetitive signatures for programmatic actions.

The framework is a plug-and-play system that takes in order logic and executes orders in perpetuity based on on-chain conditions. Creating orders only requires coding the order logic itself. The rest of the swap components like order creation, order validation, signature validation, API calls, order placement, and order settlement are provided by the framework itself.

![1-programmatic-order-framework.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_programmatic_order_framework_5ee644e722.webp)

The key unlock of the Programmatic Order Framework is the low cost of deploying, updating, and deleting orders in large quantities. Developers only need to write code specifying the particular type of order they’d like to execute and the framework takes care of everything else — storing the data, validating parameters, and placing orders.

The WatchTower relayer verifies that order conditions are met, validates the order signature, and places the order on behalf of the user’s smart contract. To make deploying Programmatic Orders easy, CoW Protocol runs a default WatchTower that users can route orders through. However, users can also run their own WatchTower instance for maximum privacy.

## The all-in-one order automation kit

With the Programmatic Order Framework, a single signature can create hundreds of Programmatic Orders. The WatchTower monitors on-chain order conditions continuously and places orders whenever these conditions are met.

For example, a DAO with a diverse treasury can set up conditional orders for each token within its treasury. Based on these conditions, the framework may initiate a swap to rotate into stables when the treasury value rises above a certain threshold, or it may initiate a payout for DAO contractors on a given day of the month.

As the treasury receives various tokens, the framework executes trades accordingly, making DAO financial operations simple and automatic.

## Benefits of the Programmatic Order Framework

The Programmatic Order Framework unlocks a world of convenience for individuals and on-chain organizations:

-   **Leverage on-chain conditions**: Build highly complex use-cases that rely on custom conditional order logic through the Programmatic Order Framework. Create orders that get picked up by the WatchTower on a certain date, once the balance of your contract or wallet is above a defined threshold, or based on other on-chain conditions
-   **Deploy orders en masse**: Create hundreds or even thousands of orders with a single on-chain transaction. Developers can also mass-update orders all at once with a single gas payment by simply updating the Merkle root with another transaction
-   **Execute many orders in parallel**: In a traditional smart contract wallet, orders execute sequentially. With the Programmatic Order Framework, the WatchTower monitors your orders and executes them as soon as the on-chain conditions are met, meaning you can execute many orders simultaneously

Most importantly, the framework is  **fully decentralized**, providing 100% trustless execution with no intermediate contracts or centralized parties.

## Examples & use-cases

With the Programmatic Order Framework, you can program a limitless number of use-cases:

-   **Special order types**: Gone are the days of centralized exchanges offering order types you can’t get in DeFi. Program intricate order types like stop-loss, good-after-time, and take-profit orders — plus many more. CoW Swap’s very own  [TWAP feature](https://blog.cow.fi/why-twap-25d9a0f690f4)  is built using the Programmatic Order Framework
-   **Automated DAO operations**: Blockchain-native organizations like DAOs process hundreds or even thousands of transactions every month. Thanks to the Programmatic Order Framework, your DAO can automate payroll, treasury diversification, fee collection, or any other type of repetitive transaction
-   **Portfolio rebalancing**: Set up order logic to programmatically rebalance assets based on a portfolio value. Automatically diversify based on market conditions or use custom logic to manage loan risk, farm yield, or hedge positions
-   **Private conditional orders**:  Thanks to the framework’s support for private WatchTower configurations, traders can place highly complex conditional orders while simultaneously keeping them private. Buy and sell tokens through a recurring strategy while keeping your parameters hidden
-   **Protocol integrations**: The Programmatic Order Framework isn’t  _just_  for Safe! DeFi protocols can leverage its power to assist with recurring protocol-level transactions like loan liquidations
-   **Easy transaction modules**: Program custom functionality into any order type. Companies can build DAO tooling with a fraction of the complexity. Focus on building adoption rather than fiddling with backend tech

With just a few lines of code, the Programmatic Order Framework brings convenience and predictability to all types of DeFi actions.

## What will you build, anon?

CoW Protocol is bringing Programmatic Orders to Ethereum through the Programmatic Order Framework. Create any order type you can imagine and deploy it instantly — all within the security of your own smart contract wallet.

The  [CoW Grants Program](https://grants.cow.fi/)  is also putting out a request for proposals relating to the Programmatic Order Framework. Have an idea for a solution built on top of the framework (especially one that includes a UI)? Submit a grant proposal!

The Programmatic Order Framework is now live. Read the documentation  [here](https://hackmd.io/pmZX_qT2Q1yw59KiiT6TPQ)  to get started.

Have questions? The CoW Protocol team is here to help: join us on  [Discord](https://discord.com/invite/cowprotocol)  or send us a  [Twitter DM](https://twitter.com/CoWSwap).

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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Programmatic Orders enable a world of possibilities in DeFi; they’re now easier to create than ever thanks to CoW Protocol’s Programmatic Order Framework

Introducing the Programmatic Order Framework, from CoW Protocol


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

> _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_](https://blog.cow.fi/all-you-need-to-know-about-cow-swaps-new-safe-fallback-handler-8ef0439925d1)_. 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)

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)


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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

_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


Maximal extractable value, or MEV, is a pernicious form of price exploitation that is responsible for over $1.3 billion in losses for everyday traders. Most MEV takes place on the Ethereum ecosystem and adversely affects transactions across decentralized exchanges, liquidity pools, NFT marketplaces, and more.

MEV is captured by MEV bots programmed  to seek out and exploit price differences. Since blockchain markets are built to be always-on, there are always arbitrage opportunities on networks like Ethereum. MEV bots exploit beginners and seasoned traders alike, so it’s important to understand how they work and how to avoid them.

## What is MEV?

Before diving into the specifics of how to avoid MEV bots, let’s first make sure we understand MEV conceptually.

Maximal Extractable Value is, as the name suggests, a measure of the maximum amount of value that can be extracted from the contents of a given Ethereum block. Ethereum transactions are not all equally valuable, and validators (the parties responsible for creating the blocks) can pick and choose how to order transactions in blocks to maximize their profits.

This means that transactions are not necessarily executed in the order they are received; instead, they are arranged in a way that maximizes the compensation for validators.

![1-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_how_to_avoid_mev_bots_ffb5692931.webp)

_How MEV occurs in an Ethereum block_

Upon order submission, Ethereum transactions get sent to a “mempool” where they wait to be added to a block. In this mempool, MEV bots (also known as “searchers”) can view pending transactions and bribe validators to reorder them, exploiting the little guy and profiting in the process.

## What is an MEV Bot?

An MEV bot is a program designed to monitor decentralized exchanges, NFT marketplaces, lending platforms, and other on-chain venues to spot profit opportunities. There are several distinct types of MEV bots, each targeting different kinds of transactions.

**Trading MEV bots**: The most common type of MEV bots exploit decentralized exchanges that users rely on to swap cryptocurrencies. They specifically take advantage of the mechanisms used by  [automated market makers (AMMs)](/learn/cow-protocol-glossary#:~:text=amm).

When users trade on decentralized exchanges, they set a slippage tolerance to manage the price difference between the time an order is submitted and when it actually executes. Normally, slippage tolerances range from around 0.1% for stable assets like stablecoins, to 1–2% for blue-chip cryptos like Ethereum, and sometimes upwards of 10% for highly volatile cryptocurrencies like memecoins.

![2-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_how_to_avoid_mev_bots_311ef2c62c.webp)

_How a sandwich attack occurs_

DEX MEV bots exploit the slippage tolerance set by users to manipulate trades through a technique called a “sandwich attack.” In a sandwich attack, MEV bots identify a target trade and execute a frontrunning trade just before it, driving up the asset’s price to the slippage tolerance limit. Once the victim’s transaction goes through and raises the price further, the bots dump the token, keeping the profits for themselves.

**LP MEV bots**: Liquidity providers (LPs) on decentralized exchanges can also fall prey to MEV bots. MEV for LPs is known as “[loss versus rebalancing” or LVR](/learn/what-is-loss-versus-rebalancing-lvr). This value extraction arises from the arbitrage between a given LP pool and a reference rebalancing pool that has more up-to-date pricing.

LVR is a problem on decentralized exchanges because price discovery for assets typically occurs off-chain. Centralized exchanges like Binance generally have more liquidity for tokens so they serve as the most accurate source of truth for up-to-the-minute prices.

MEV bots exploit this arbitrage opportunity by continuously trading against DEX pools, capturing upside for themselves at the expense of the LPs.

**NFT MEV bots**: MEV bots can also hijack NFT mints through a process called “frontrunning.” If an MEV bot detects a transaction in the mempool from a user attempting to purchase a valuable NFT, it can submit an order to buy the NFT for itself that executes before the user’s transaction. This is similar to frontrunning swaps on DEXs but applied to NFT mints instead.

## How to Avoid MEV Bots

While MEV is a pervasive problem across all of Ethereum, there are multiple ways to keep yourself safe.

### Use tight slippage when trading

The simplest way to defend against MEV is by setting a low slippage tolerance.

Since MEV exploits slippage for price manipulation, transactions with a lower slippage tolerance provide searchers with less opportunity to exploit trades.

For users not using any other MEV protection tools, setting a lower slippage tolerance can serve as an initial line of defense. However, it’s not a complete solution. Setting the slippage tolerance too low can often result in failed transactions. Even with optimal slippage, MEV bots may still manage to extract value from your trades.

### Trade on pools with large liquidity

Fundamentally, MEV relies on arbitrage opportunities. One way to reduce exposure to such arbitrage is to restrict your trading only to pools with large liquidity. On these pools, individual trades won’t have much  [price impact](/learn/cow-protocol-glossary#:~:text=Price%20impact), so it will be more difficult for MEV bots to extract value.

This strategy limits much of DeFi, of course, as there are constantly new coins launched, and even popular coins may suffer from low liquidity on certain exchanges or during certain times.

### Install an MEV protection RPC

An increasingly popular type of MEV protection that provides a comprehensive solution to the problem is the use of an MEV blocking RPC like  [MEV Blocker](https://mevblocker.io/).

An RPC (Remote procedure call) is a piece of software that sits between a user wallet and the blockchain, transmitting transactions. 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.

The most popular specialized RPC endpoint is  [MEV Blocker](https://mevblocker.io/). As its name suggests, MEV Blocker provides protection against MEV across the entire Ethereum network. This RPC manages a permissionless network of searchers and conceals transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions; instead, they capture value through backrunning. Whenever a searcher backruns a user’s transaction, they keep up to 10% of the value and return the remaining 90% to the user as a rebate. This means that even when a transaction leaves money on the table, MEV Blocker ensures users get most of that value back.

MEV Blocker protects all types of Ethereum transactions, not just swaps, and is compatible with all Ethereum wallets. You can install the MEV Blocker RPC endpoint by following the instructions  [here](https://mevblocker.io/).

### Use intent-based trading solutions

While RPC endpoints provide protection against MEV across many different types of trades, the most comprehensive solutions take place at the application level.

In recent years, there has been a surge in the popularity of intent-based trading solutions like CoW Swap, with leading exchanges like 1inch and Uniswap launching their own intent-based solutions in 1inch Fusion and Uniswap X. Unlike traditional decentralized exchanges, intent-based trading solutions rely on professional execution parties known as “solvers’’ to execute trades on behalf of users.

Delegating execution to professional third parties helps users get the best prices for their trades, as solvers can determine the optimal liquidity sources to tap into. It also means that the risk of MEV gets taken on by the solver themselves, and users are protected from direct price exploitation.

![3-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_how_to_avoid_mev_bots_523b1b6663.webp)

_The flow of a transaction on CoW Swap_

### (For LPs) Use an MEV-capturing AMM

Until recently, there wasn’t a great solution to MEV in the form of loss-versus-rebalancing (LVR). LPs basically had to accept that providing liquidity for tokens comes with a tax paid to the MEV bots that constantly rebalance the pools (at the expense of the liquidity providers themselves).

This all changed, however, with the launch of  [CoW AMM](https://cow.fi/cow-amm) — a first-of-its-kind MEV-capturing AMM that redirects profits from pool rebalancing to liquidity providers. CoW AMM works sort of like MEV Blocker in that it makes the MEV bots work FOR users rather than against them. To trade against the liquidity in CoW AMM pools, solvers must bid to provide the most surplus to the pool, thereby giving the majority of LVR profits to the LPs.

## Why MEV bots are bad for Ethereum

As a permissionless, public platform, Ethereum serves as a battleground of opinions on whether MEV is good, bad, or should even be allowed in the first place.

Those sympathetic to the practice argue that MEV is a natural market mechanism that enhances market efficiency and encourages price discovery. While litigating the specifics of the issue is beyond the scope of this article, there are important arguments to be made for why MEV bots are harmful to individual users.

![4-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_how_to_avoid_mev_bots_c7aafd4451.webp)

_A snapshot of total MEV value extraction_

### Reduce fairness

At its core, value extraction prioritizes sophisticated traders who have the means and know-how to exploit transactions and profit off minute arbitrage opportunities.

Users who may simply be making trades on exchanges or minting NFTs have no way to compete with these value extractors unless they themselves are capable of writing better bots to protect their transactions.

### Disproportionately target beginners

Those new to DeFi are particularly vulnerable to being exploited. The world of decentralized trading is complex for beginners, who may not even understand settings like slippage tolerance, making them easy prey for bots waiting to take advantage of inexperienced traders.

This creates a negative equilibrium for decentralized trading that may drive newcomers away, hurting the ecosystem as a whole.

### Engage in market manipulation

While there are arguments to be made for MEV encouraging market efficiency and price discovery, this is not the case with every type of MEV.

For example, trading MEV bots rely on exploiting slippage tolerances by raising prices up to a threshold and then selling immediately after in a sandwich attack. In this scenario, the AMM does not benefit from price discovery, but instead experiences an artificial pump-and-dump at the expense of a single trader. In traditional markets, such a move could be considered market manipulation as it adds nothing to the market and is designed solely to profit off a market participant.

## CoW DAO: Protecting Ethereum Users from Negative Outcomes

Ultimately, the goal of Ethereum is to serve as a public platform that enables innovation. MEV as a problem emerges from a largely unrestricted marketplace. This benefits innovation by encouraging novel market mechanisms, but it also poses risks to uninformed traders. For this reason, it’s important for users to be aware of the solutions available for protecting themselves.

Regardless of what side of the MEV debate you stand on, most of us agree that we don’t want our trades exploited. To this end, CoW DAO has your back with products that protect you from Ethereum’s dangers and work to ensure positive outcomes.

Install MEV Blocker here:  [www.mevblocker.io](http://www.mevblocker.io/)

LP on CoW AMM:  [https://cow.fi/cow-amm](https://cow.fi/cow-amm)

Swap on CoW Swap:  [www.swap.cow.fi](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=protect-from-mev-bots-article)

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The nasty culprits of MEV lurk in every corner of Ethereum… Find out how to keep yourself safe


How to Avoid MEV Bots

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

**Overview**

-   Many Ethereum traders receive suboptimal prices and face risks from MEV bots when trading on traditional decentralized exchanges (DEXs)
-   CoW Swap is a solution that provides price improvement technology to ensure traders get the best possible prices on their trades while also enjoying MEV Protection
-   CoW Swap uses batch auctions to find the optimal clearing price for all trades in a batch, as well as  [Coincidences of Wants (CoWs](https://blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a)) that enable peer-to-peer transactions, among other types of optimizations
-   CoW Swap improves pricing and increases market depth, providing traders with greater access to liquidity and better overall trading conditions

For far too long, Ethereum traders have been forced to deal with suboptimal pricing when trading tokens.

Unfortunately, many traders are unaware they may receive a bad deal on their trades when using traditional Decentralized Exchanges (DEXs). To make matters worse, some traders may also fall victim to manipulative MEV bots, whose damages total billions of dollars in exploited value. To learn more about MEV, check out  [CoW Swap’s list of articles on MEV.](https://blog.cow.fi/list/understanding-mev-maximal-extractable-value-917614560f75)

## How does CoW Swap work?

![1-price-improvement.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_price_improvement_01d71021ba.webp)

_Figure 1: Showing how Batch Auctions work on CoW Swap_

CoW Swap has introduced a revolutionary approach to trading: A delegated trading model through an Order Flow Auction that runs on “batch auctions” to find the best settlement for all the trades.

When using batch auctions, traders submit their intent to trade a particular token pair without having to settle their raw Ethereum trades directly on-chain, as the  [solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers)  (auction settlers) will be the ones creating the transaction for them. This innovative approach means that traders don’t have to fine-tune their own trading parameters — such as what liquidity pools to use and what slippage to set — all while enjoying better prices and MEV protection.

Unlike traditional DEX orders, intent-based trades protect traders from getting MEV’ed. This ensures that traders can execute their trades with greater confidence, security, and efficiency while getting the best possible price. With CoW Swap, users can trade without worrying about the typical pitfalls of trading on a DEX, and rest assured that any price improvement is forwarded to them (not kept by the protocol.)

### What is price improvement?

CoW Swap is revolutionizing how traders approach decentralized exchanges by providing price improvement technology (in the form of “surplus”) that ensures they get the best possible price on every trade.

Once a trader submits an intent to trade by submitting a signed order, it gets sent to an off-chain orderbook and inserted into a batch auction where solvers can search all available on-chain liquidity to find the optimal order clearing price. CoW Swap’s batch auction mechanism helps improve pricing by batching orders together and establishing a uniform clearing price. By doing this, CoW Swap creates a more liquid trading environment that matches  [Coincidences of Wants (CoWs)](https://blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a)  and finds other optimizations which improve the trader’s price.

CoWs enable traders to conduct peer-to-peer transactions directly with each other, eliminating the need for intermediary AMM pools and providing a more efficient trading price.

Many times, CoWs allow traders to entirely bypass any on-chain liquidity and directly exchange tokens, avoiding slippage and any fees they might incur. In the trading UI, CoW Swap quotes the minimum price the trader will receive whenever the trade executes. In most cases, CoW Swap forwards price surplus to traders by giving them more of their purchase tokens.

![2-price-improvement.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_price_improvement_5d98d04842.webp)

_Figure 2: Showing CoW Swap’s UI_

To illustrate the power of CoW Swap, let’s take a look at  [this CoW Swap Batch Auction Settlement](https://explorer.cow.fi/tx/0x0e9877bff7c9f9fb8516afc857d5bc986f8116bbf6972899c3eb65af4445901e?tab=orders).

In this settlement, 8 different trades were executed in a single batch, forming a CoW and also leveraging the best possible on-chain liquidity for all traders involved. If we take a close look at the settlement, we can see that some USDC-ETH traders are overlapping meaning a portion of their trade can be matched directly in a CoW instead of tapping into an AMM. For the rest of the trades, the settlement tapped into the best on-chain liquidity available.

Thanks to the batch auction mechanism, CoW Swap provided all traders with a surplus on top of their quoted price, maximizing their returns and minimizing their exposure to risks. In this example, the average surplus was 1.66%, giving traders a bunch of extra tokens than no other DEX can give since these price improvements are only possible by leveraging batch auctions as a trading mechanism.

![3-price-improvement.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_price_improvement_ed5d2db540.webp)

![4-price-improvement.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_price_improvement_6cb916a682.webp)

_Figure 3: Showing a Coincidence of Wants_

## Find the most price improvement on CoW Swap

In an ever-evolving DeFi landscape, CoW Swap redefines the trading experience on decentralized platforms. By integrating the innovative batch auction mechanism and leveraging Coincidences of Wants, the mooo-st efficient DEX offers traders price improvement not found anywhere else, all while protecting you from MEV-related threats.

[Place your first order](https://swap.cow.fi/#/1/swap/WETH?utm_source=medium&utm_campaign=price-improvement)  on CoW Swap and start getting more for your trades!

## About CoW DAO

CoW DAO is an open organization of developers, traders, market makers and many more community members aligned with its vision. CoW DAO is focused on fair and decentralized trading systems — in particular, building, maintaining and advancing the CoW Protocol. CoW Protocol technology powers a network of traders and solvers, enabling trustless and efficient peer-to-peer trading. Leveraging batch auctions as a key concept uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.

🐦 [Twitter](https://twitter.com/CoWSwap)| 📒 [Documentation](https://docs.cow.fi/)| 💬  [Forum](https://forum.cow.fi/)  | 📊  [Analytics](https://dune.com/cowprotocol)  | 📸 [Snapshot](https://snapshot.org/#/cow.eth)

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CoW Swap’s innovative approach to finding optimal prices while providing MEV protection


What is price improvement and why is it unique to CoW Swap?

[MEV bots](https://www.blocknative.com/blog/mev-and-creating-a-basic-arbitrage-bot-on-ethereum-mainnet)  monitor pending transactions in the mempool and place their transaction ahead of others, capitalizing on the order of transactions within a block. This approach allows them to gain a significant edge, profiting from traders placing transactions. Frontrunning occurs when an MEV bot monitors the mempool for a trader’s pending transaction. Spotting a potential trade, the bot quickly duplicates the users transaction so that they can be the one to get the tokens or the opportunity that the user detected.

This issue permeates various blockchain ecosystems — from decentralized exchanges to non-fungible token (NFT) marketplaces.

According to recent  [data](https://dune.com/jhackworth/mevmevmev), over 2.7 million MEV transactions have been processed on Uniswap alone. This alarming statistic underscores the widespread and high-stakes nature of MEV exploitation.

## How frontrunning works

Frontrunning takes advantage of the open nature of the blockchain mempool, as anyone can view transactions. MEV Bots exploit this transparency to hijack trades. Here’s a basic rundown of the process:

1.  **Monitoring Pending Transactions:**  The first step involves monitoring the blockchain network’s mempool, a holding area for pending transactions. Here, frontrunners, who are often sophisticated bots, scan the mempool to identify transactions that can carry significant value that they want to snatch away or that could influence the price of a particular asset
2.  **Selecting Profitable Transactions:**  The frontrunner will analyze the potential market impact once such a transaction is identified. For instance, if a large buy order for a specific token is detected, the frontrunner knows that this transaction could increase the asset’s price once processed
3.  **Placing a New Transaction:** The frontrunner will initiate their buy order for the same asset, intending to get their transaction processed before the initially detected transaction. They typically give the validators a higher “tip” to execute their transaction first in the block in comparison to the target transaction

### Frontrunning examples

A notable example of DeFi frontrunning involves the notorious MEV bot named “[jaredfromsubway.eth](https://www.theblock.co/post/230218/jaredfromsubway-mev-bot).” In one case, a user,  [0x3a7822](https://zeromev.org/block?num=17508508), intended to trade 2 ETH for another token, $BOB. This trade was noticed by the bot jaredfromsubway.eth, which continuously monitors the mempool for transactions it could take advantage of.

Once the transaction entered the mempool, Jaredfromsubway.eth quickly executed its own transaction to buy $BOB with ETH, strategically placing it as the first in the block, and knowing that he would get the assets at a discount as the transactions behind will pamp the pricer. MEV allows validators to prioritize transactions that are of the most value to them. Consequently, the bot’s transaction, being the first one in the block, was confirmed ahead of the user’s transaction.

![1-frontrunning.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_frontrunning_6077287d3c.webp)

The frontrunning attack triggered an increase in the price of $BOB tokens due to the additional demand created before the user’s transaction was processed. When the user’s original order of 145M $BOB was executed, it was conducted at this now-inflated price, leading to user 0x3a7822 receiving way fewer $BOB tokens, hence losing out on the value they could have otherwise captured.

Jaredfromsubway.eth completed its MEV attack by  [selling](https://etherscan.io/tx/0xff31ba1a8a61933e0093bc4afba95018929e9e1599fec204a3f503c6b7851cb1)  its $BOB tokens at an increased price, resulting in a profit, a second move that made this MEV attack a  [sandwich attack](https://blog.cow.fi/what-is-a-sandwich-attack-and-how-can-you-protect-yourself-b101c9a9b9b3). In this scenario, the price slippage triggered by the frontrunning bot meant that user 0x3a7822 encountered a worse trade-off, ultimately making a loss while the MEV bot profited — an estimated gain of 0.1 ETH.

Another form of frontrunning would have been for example, if user, 0x3a7822 identified an liquidation opportunity faster than anyone else and sent its transaction to the mempool to get the discounted assets from the liquidation in the first place, then Jaredfromsubway.eth would have seen this and would have replaced the users transactions with the transaction of its own, but with a higher gas fee, and thus more likelyhood to get processed faster, and effectively stealing the opportunity of capturing value away from the user.

### How Harmful is Frontrunning?

While frontrunning may seem harmless or even clever to some, it can adversely affect individual traders and compromise the overall integrity of the Ethereum network. Here’s how:

1.  **Impact on Traders**: Frontrunning disrupts the fair operation of financial markets. By exploiting pending transactions, frontrunners manipulate market conditions to their benefit. This can lead to distorted prices, impacting regular traders who abide by market rules. What’s more, these traders miss out on the value they would have otherwise derived from their trades. But most importantly, frontrunning attacks prevent users from receiving the value of the trading opportunity they identified
2.  **Long-term Market Consequences**: Over time, persistent frontrunning can erode market confidence. As traders realize they are consistently at a disadvantage due to frontrunning, they may lose faith in the integrity of the market and choose to leave. This could result in diminished market participation and liquidity, both of which are critical for overall market health and efficiency
3.  **Network Effects**: Frontrunning can also have wider implications for the underlying network. It can cause network congestion, since unnecessary transactions in a block slow down transaction processing times

CoW Swap takes a firm stance against all forms of Maximal Extractable Value (MEV), including frontrunning, as they are detrimental to traders and the wider Ethereum ecosystem. CoW Swap was built to cultivate a fair and transparent trading environment that best serves the interests of all market participants.

### How to protect against frontrunning?

Mitigating frontrunning and other forms of MEV can pose a challenge, given the transparent and permissionless nature of the Ethereum blockchain. However, CoW Swap gives traders the necessary tools to outsmart the MEV bots:

1.  **Batch Auctions**: Instead of executing orders immediately, CoW Swap orders are gathered and grouped into collections known as “batches.”  [Solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers), or the algorithms that provide an order settlement solution for a batch, compete to deliver optimized solutions. This batch auction method ensures all trades within a batch share the same uniform clearing price, preventing MEV Bots from reordering trades. Through batch auctions, CoW Swap affords traders the opportunity to pool liquidity among their orders, enabling users to trade directly with each other or access specialized markets to complete transactions that would otherwise be impossible to do in a peer-to-peer manner — this is known as  [Coincidence of Wants](https://blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a)  (CoW)
2.  **MEV Blocker**:  [MEV Blocker](https://mevblocker.io/)  is a straightforward solution to the MEV problem. It is an RPC endpoint that protects all types of transactions from MEV. MEV Blocker organizes an auction among searchers, who are given the chance to backrun your transactions and forward up to 90% of the backrun value to the user. In exchange, they protect you from both frontrunning and sandwich attacks
3.  [**Use CoW Swap**](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=frontrunning-article)**:** CoW Swap is a meta DEX aggregator that uses batch auctions and facilitates an efficient trading process, preventing all forms of MEV, including frontrunning

### The CoW approach to frontrunning

CoW Swap distinguishes itself in the trading ecosystem with its innovative and comprehensive approach to combating frontrunning and other MEV tactics, thereby creating a safer trading environment for users. The platform has meticulously crafted multiple layers of protection, each targeting a distinct aspect of the MEV issue.

The initial line of defense is  **Delegated Trade Execution**. In conventional DeFi platforms, every transaction a user initiates is instantaneously visible in the public mempool, providing an opportunity for searchers to exploit it. As opposed to other exchanges, on CoW Swap, users sign an “intent to trade” which protects them from directly interacting with the mempool. CoW Swap directs all intents through a network of decentralized ‘[solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers).’ These solvers are responsible for securing the best execution price for your trades, while also shielding you from direct exposure to the public mempool, effectively making you undetectable to MEV bots. Moreover, CoW Swap harnesses the power of  [‘Coincidence of Wants](https://blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a)’ (CoW). This allows the platform to match orders off-chain, fostering peer-to-peer trades that not only save on gas and liquidity provider fees but also substantially reduce the risk of MEV attacks by circumventing public liquidity pools. CoWs that don’t rely on on-chain liquidity pools eliminate a key opportunity for MEV exploits.

The platform also introduces a  **Uniform Clearing Price**  for all orders in a batch. In a typical decentralized exchange, simultaneous trades clear at marginally different prices in the same block due to sequential transaction processing. This provides an opening for MEV attacks. CoW Swap counters this by ensuring all orders within the same batch auction are settled at the same clearing price within a block. As a result, the order of transactions within a batch becomes irrelevant, effectively preventing MEV attacks and giving users in the batch a fair price.

CoW Swap’s strategy to tackle frontrunning hinges on eliminating opportunities for searchers to exploit trades. This helps maintain the integrity of user transactions and safeguards user value. By leveraging its unique batching technology, CoW Swap remains resilient against frontrunning and other MEV attacks.

### Trade safe from MEV on CoW Swap

Given the severity and frequency of MEV attacks, protecting your trades from MEV should be a top priority. CoW Swap offers unparalleled protection with its pioneering anti-MEV features, making it an invaluable tool for every trader.

Get started with CoW Swap by  [placing your first trade](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=frontrunning-article)  and enjoy the freedom and peace of mind of the best prices and the best MEV protection!

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Frontrunning is a crypto strategy exploiting blockchain’s transparency to extract value from a transaction.


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