cowswap.exchange

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the first trading interface built on top of CoW Protocol.

About cowswap.exchange:

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What is CowSwap?

CowSwap is a trading interface built on top of Gnosis Protocol v2. It allows you to buy and sell tokens using gas-less orders that are settled peer-to-peer among its users or into any on-chain liquidity source while providing MEV protection.

CowSwap is the first trading interface built on top of CoW Protocol.

It allows you to buy and sell tokens using gas-less orders that are settled peer-to-peer among its users or into any on-chain liquidity source while providing MEV protection.

Every time you and another trader each hold an asset the other wants, your trade is settled directly without using an AMM (Automated Market Maker) and therefore without incurring any slippage + fees. Only amounts that can’t be settled with other CowSwap traders are sent to the underlying AMMs.

This economic phenomenon is known as Coincidence Of Wants (CoW).

To what does the term Coincidence of Wants (CoWs) refer?

Coincidence of Wants (CoWs) can be explained as “an economic phenomenon where two parties each hold an item the other wants, so they exchange these items directly.” CowSwap facilitates CoWs among traders and their orders by using batch auctions as a core mechanism.

This means, on CowSwap, when two traders each hold an asset the other wants, a trade can be settled directly between them without an external market maker or liquidity provider. This leads to better prices for the individual traders (because traditionally market makers add a fee — referred to as spread — for their service).

CowSwap allows for coincidence of wants (CoWs) orders to be traded directly against one another. Only the excess order amounts that cannot be settled directly with other CowSwap traders are sent to the underlying AMMs (automated market makers).

Gas Free Transactions

Gas costs are accounted for in your sell token already – no gas costs need to be paid! CowSwap uses an off-chain design for submitting trades:

  1. You sign a trade message which is submitted to CowSwap’s off-chain service
  2. CowSwap’s off-chain service optimizes your trade’s execution by considering:
    • Coincidence Of Wants
    • Best execution route among AMMs (for the remaining amount)
    • Optimized gas price for inclusion in the next mined block
  3. Your trade is submitted and settled on-chain

Why? This helps you to save on gas, slippage & protocol fees. You might receive a larger amount than anticipated.

What is CowSwap’s fee model?

Each executed order has a fee that is captured by the protocol. Part of the fee is paid to solvers (entities that provide order settlement solutions) to incentivize their participation.

The fee consists of the “base cost to execute the trade” and the “protocol fee” (although it is only exposed to the user as one fee). As a user, you are only signing a message to submit your trade and the underlying solver will end up submitting the transaction for you. Essentially you are paying this “base cost to execute the trade”, aka “gas costs”, with your sell token and the cost is already included in your price estimation. The protocol is currently subsidizing a portion of the gas costs, while the protocol fee is currently switched off.

Maximum Extractable Value (MEV)

Heard about Maximum Extractable Value yet? It’s scary. To date more than USD 606 Million in value has been extracted from users by bots frontrunning transactions, exploiting the slippage users allow in a trade.

CowSwap is the first DEX Aggregator offering some protection against it: COWs enable tight slippages and can even avoid settlement on AMMs altogether.

What makes CowSwap a “Meta” DEX aggregator?

Cowswap is built on top of the CoW Protocol which matches trades via batch auctions for a variety of on-chain liquidity sources.

Trades can be settled via underlying on-chain AMMs directly or via DEX Aggregators, depending on which pool/path offers the best price. It is thus essentially acting as a DexAggregator of the DexAggregators.

In addition to that, before finding the best price for a trade from available on-chain liquidity, CoW Protocol first seeks a coincidence of wants within the existing batch to offer an even better price than any pool can.

How does CowSwap determine prices?

CowSwap settles batch auctions in discrete time intervals. In the absence of other traders, CowSwap matches traders against the best available on-chain liquidity (note: currently the solvers have integrated liquidity from Uni v2, Uni v3, Balancer, Balancer v2, Sushiswap and the liquidity that Aggregators such as Paraswap, Matcha and 1inch leverage).

If CoWs (Coincidence of Wants) orders exist in a batch, the “smaller” order is matched fully with the larger order. The excess of the larger order is settled with the best available base liquidity CowSwap integrates with, which is, for now, Uniswap. The clearing price for both orders will be the price of the token with the excess amount on external liquidity sources to which the protocol is connected.

Finding the best settlement for orders is a challenging task, which very soon may have its own decentralized competition.

Is CowSwap secure to use?

As of August 11th, 2021, CowSwap is no longer in alpha and moves to a final, stable version. The underlying CoW Protocol Smart contracts have been upgraded to integrate tightly with Balancer v2.

With this upgrade, CowSwap evolves into its most stable, performant form: the code has been thoroughly and carefully tested, peer-reviewed, and fully audited. Whilst CowSwap has taken a major step forward in terms of security and stability, as with other crypto protocols or dapps, your use is at your own risk.

Are Smart Contract wallets supported?

Yes! Any Smart Contract (be it a wallet or regular contract) can trade in CowSwap by using one signing method called pre-sign.

Pre-sign is a protocol operation that can be invoked by any contract. The operation has a single parameter that is the “orderId” which identifies the order being approved. Pre-signing your order in the settlement contract is equivalent to providing an off-chain signature for the orderId.

In the future, the protocol might provide EIP-1271 support for off-chain signing also for smart contracts, making gasless trading possible also for smart contracts.

What token pairs does CowSwap NOT allow you to trade?

Unfortunately, CowSwap does not support some tokens. While these tokens implement the typical ERC20 interface, when calling the transfer and transfer from methods, the actual amount the receiver will get will be smaller than the specified sent amount. This causes problems with CowSwap’s settlement logic which expects the received amount (e.g., from a Uniswap interaction) to be fully transferable to the trader.

What is the Profile page?

It is a page where you can see the number of trades and volume that you have done with the wallet you have connected with.

Additionally, you will be able to get your own referral/affiliate link, so you can share it with others, and if you do so, you will also be able to see the number of trades and volume that your referral link gets credited from the users who followed your link and interacted with the DEX.

In which networks is it available?

At this time, the affiliate program only works for Ethereum Mainnet.

The affiliate program will initially run as a trial and therefore there are currently no announced rewards. The tracking, however, has already started.

CowSwap’s positive network effect scales exponentially with more people using it, therefore, the affiliate program aims to acknowledge which users are contributing more to the success of the protocol.

We now briefly explain CowSwap’s positive network effect. CowSwap’s name comes from the economic phenomenon “Coincidence of Wants”, where users’ orders can be matched with each other to obtain better prices. When the protocol finds a CoW, trades are directly settled among traders, which allows saving on slippage, gas, and LP fees. The network effect of CoWs increases alongside the number of traders using the protocol; the more users we have sending orders to the protocol, the better the prices and gas savings the protocol is able to offer. Our new CoW-filiate program is aiming to increase this positive network effect.

Everyone can share a link, you only need a valid Ethereum wallet address to create your own personal link.

Everyone! Please share the excitement for the CowSwap protocol & dapp. It would really make a difference for the Cow-mmunity if you share it with your friends, Twitter/YouTube followers, or anyone that would be interested.

Share your referral link with all your friends if you think they can be interested in the qualities Cowswap has to offer. These qualities range from ETH-less trading experience, MEV protection, no fees for failed transactions, and more. 🐮

Note that trades and volume will only be credited to your wallet if the user has not traded in CowSwap with that address before, and their first trade is done after following your link.

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