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George Hristov

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This article summarizes the “Order Flow Auctions on the MEV Supply Chain” talk presented by CoW Swap at the Prague DeFi Summit

Understanding Order Flow Auctions

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

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

## The LVR Problem

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

Research suggests that:

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

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

## How CoW AMM Works

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

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

CoW AMM, therefore, works as follows:

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

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

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

## Expected Outcomes

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

## Why is CoW DAO launching CoW AMM?

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

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

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

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

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


CoW DAO launches the first MEV-capturing AMM

_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

_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

On CoW Protocol, rather than sending on-chain transactions with predefined swap instructions, users submit signed  [intent-to-trade messages](/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade). These messages contain some order details, like which assets to trade in which amounts, but leave other details to be optimized by  [solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers).

One important parameter of these intents is min_out — the minimum amount of buy tokens a user is willing to receive for their sell tokens (or the buy amount, minus the maximum allowable slippage set by the user). Min_out works really well when a trade is intended for immediate or near-immediate execution, because it allows solvers to improve prices for users while protecting them from unfavorable price movements. However, when prices fluctuate a lot, min_out can be overly-restricting.

## **What is delayed execution trading?**

Simply put, delayed execution trades are trades intended to execute at some point far in the near future.

Many smart contract wallet users, such as DAOs, frequently need to create these types of orders. Take the following examples:

-   DAOs that need trades to execute after passing a governance process
-   Groups that need hours to collect signatures to execute trades from a multisig wallet
-   Applications that process automated swaps years in the future (e.g. for payroll or treasury management)

With extra time, prices can fluctuate wildly — and this creates a dilemma for traders:

If the buy token price falls and the min_out is too high, the order might not execute. But if the min_out is too low, the trader risks getting an unnecessarily poor execution price. (CoW Protocol solvers compete against each other to give users better prices, but placing such a high level of trust in solvers can be undesirable for very high-volume traders.)

![1-what-is-milkman.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_is_milkman_0518ebe1f4.webp)

If a user signs an intent to swap 1 ETH for a “min out” of 2000 USDC, there is no way for the trade to return any less than 2000 USDC

![2-what-is-milkman.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_what_is_milkman_08ab1cbaac.webp)

But setting a low “min out” risks leaving money on the table

## **What is Milkman?**

Milkman is a smart contract that solves the above dilemma for smart contract wallets.

It does this by allowing smart contracts to specify an on-chain data source (such as an oracle) to use as a reference for min_out — effectively turning min_out into a dynamic price backstop for their trade.

Let’s say you want to sell 1000 ETH for USDC, but you want to do it far in the future. To protect yourself from volatile price movements, you can supply Milkman to create the order based on with the Chainlink price feed for ETH/USDC, and Milkman at the time of order placement will dynamically adjust the minimum amount you’ll receive based on that price feed.

When the time comes to execute your trade, CoW Protocol will receive it with a min_out that accurately reflects prices at that point in time; and solvers will compete to improve the price on top of that, as they always do.

![3-what-is-milkman.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_what_is_milkman_7f4ab32979.webp)

## **Milkman for DAOs**

Milkman is particularly well-suited to many DAO-related use cases, because DAO governance processes often delay trades and because amounts traded by DAOs can be very large.

Several well-known DAOs, including  [Aave](/learn/aave-trade-breakdown)  and  [ENS](/learn/ens-trade-breakdown), have already used Milkman to trade over $20M worth of tokens. Beyond allowing these DAOs to count on reliable prices, Milkman lets them reduce their overall number of governance votes and gives them standard CoW Swap benefits like best price execution and  [best-in-class](https://eigenphi.substack.com/p/sandwich-mevs-impact-on-cow-swap)  MEV protection — critical for large trades.

Milkman is also natively integrated as a  [recipe on Tally](/learn/tally-recipe-for-cow-swaps), the widely-used DAO management platform — removing even more trading friction for DAOs.

## **Technical details**

Milkman follows a UniV2-style interface. To interact with Milkman, smart contracts need only to call the following function:

> _function requestSwapExactTokensForTokens(_
> 
> _uint256 amountIn,_
> 
> _IERC20 fromToken,_
> 
> _IERC20 toToken,_
> 
> _address to,_
> 
> _address priceChecker,_
> 
> _bytes calldata priceCheckerData_
> 
> _)_

The priceChecker is the data feed provider, and priceCheckerData is an array of arbitrary bytes that the function passes to the price checker (e.g. the desired slippage tolerance).

Price checkers have been deployed for Chainlink, Curve, SushiSwap, Uniswap V2, Uniswap V3, and combinations of these. The core Milkman code can be found  [here](https://github.com/cowdao-grants/milkman). Anyone can run a  Milkman bot, which simply functions as a hook that watches for new swap requests and surfaces them to CoW Protocol. Running a bot is fairly easy if you have a Kubernetes cluster; the instructions are in the repo.

Milkman was developed by  [Yearn Finance](https://yearn.fi/)  in partnership with CoW Protocol, through the  [CoW Grants Program](https://grants.cow.fi/).

Long live Milkman! And may you benefit from his commitment to bringing you favorable prices!

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Milkman is a simple contract that lets DAOs and other smart contract wallet users set dynamic price backstops for orders that will execute in the future!


What is Milkman? CoW Swap’s Solution for Delayed Execution Trading

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

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


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

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

## Benefits of TWAP orders

### Dollar-Cost Averaging (DCA)

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

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

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

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

### Reduce your price impact

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

### Reduce your slippage

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

## Why TWAP with CoW Swap?

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

### Always receive 100% of your order surplus

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

In our tests, selling 1,000 ETH in four parts of 250 ETH each allowed us to get a price for the order that was 3.5% better than selling the 1,000 ETH all at once! This was in large part thanks to CoW Swap’s batch auctions that include finding  [Coincidence of Wants](https://blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a)  and other price improvements.

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

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

## Get started with CoW TWAP

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

Don’t have a Safe? No problem! Create one  [here](https://app.safe.global/share/safe-app?appUrl=https%3A%2F%2Fswap.cow.fi&chain=eth). After you make a Safe, you’ll also need to upgrade your fallback handler. Learn what this means and how to do it  [here](https://blog.cow.fi/all-you-need-to-know-about-cow-swaps-new-safe-fallback-handler-8ef0439925d1).

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

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

You can find the full how-to guide on CoW TWAP orders  [here](https://blog.cow.fi/how-to-use-cow-swaps-twap-orders-via-safe-wallet-1a0854484dfb).

As always, on CoW Swap:

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

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

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


Why TWAP?

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

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

## Trade Details

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

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

## Why CoW Swap?

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

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

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

## Milkman

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

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

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

## CoW Swap: The leader in DAO trading

The largest DAO trades take place on CoW Swap, and the exchange is single-handedly responsible for more than 30% of all DAO trades. Check out  [CoW Swap for DAOs](https://blog.cow.fi/cow-swap-for-daos-8d67831c2a13)  to learn why DAOs such as  [Aave](https://blog.cow.fi/aave-trade-breakdown-e17a7563d7ba),  [Nexus Mutual](https://blog.cow.fi/nexus-mutual-trade-breakdown-4aacc6a94be8), and more trust CoW Swap with their large trades.

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

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


ENS Trade Breakdown

**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?

A cow is a large, domesticated animal that’s been used as livestock for centuries…

But a CoW — now that’s a totally different thing!

The acronym “CoW” stands for “Coincidence of Wants” and it’s the founding mechanism behind the creation of CoW Swap, as well as the inspiration for our cow theme! A Coincidence of Wants is an economic phenomenon where two parties swap assets with one another peer-to-peer. On CoW Swap, a Coincidence of Wants occurs when two (or more) traders swap cryptocurrencies with each other without having to use on-chain liquidity.

To illustrate the concept better, let’s look at an example.

## How to Have a CoW

Let’s say Meredith wants to buy 0.5 ETH in exchange for $1,000 DAI. At the same time, another trader, Eli, wants to swap 0.75 ETh for $1,500 DAI.

On a traditional exchange such as Uniswap, Meredith and Eli would both tap an ETH / DAI liquidity pool in order to make their trades.

![1-how-to-have-a-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_how_to_have_a_cow_40e7bc1ad9.webp)

On CoW Swap, however, there’s another possibility. CoW Swap orders start out as signed “intent to trade” messages that get batched together before getting sent to on-chain liquidity sources like Uniswap. As a result, CoW Swap can match orders peer-to-peer when the opportunity arises.

If you notice, Meredith and Eli each have what the other wants. This means that Meredith can give her ETH to Eli directly, and he can give his DAI to her in return as a peer-to-peer trade that does not need to go through a liquidity pool. In this way, Meredith can have her trade fully filled without having to ever use on-chain liquidity! This saves on liquidity provider fees and gas costs, avoids slippage, and prevents MEV attacks.

![2-how-to-have-a-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_how_to_have_a_cow_80b25b7aea.webp)

So Meredith walks away with $1,000 of Eli’s DAI, and she gives him her 0.5 ETH.

You’ll notice here that Eli is seeking $1,500 DAI — which is $500 more than what Meredith gave him. In this case, assuming there is no one else in Eli’s batch who can do a second CoW trade with him, Eli’s trade will have to be routed to an on-chain liquidity pool through a service like Uniswap or Balancer in order to fill the remainder of his trade.

CoW Swap automatically matches Coincidences of Wants and routes unfilled orders through the most optimal on-chain liquidity. CoWs are possible due to CoW Swap’s delegated trading model that uses  [solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers)  to execute your trades through the most optimal trading path.

## The Benefits of CoWs

CoWs do a lot: they protect you from MEV, and you save on all kinds of fees including liquidity provider fees, gas fees, and slippage …all with no methane released into the atmosphere ;)

### Lower Fees

The main advantage of CoWs is that they bypass liquidity provider fees and save on gas fees, meaning you get a better price for your trades. When you’re swapping an asset directly with another trader, you are not tapping into on-chain liquidity from a protocol like Uniswap, so you do not have to pay their LP fees and your peer-to-peer trade costs less in gas than interacting with smart contracts. Additionally, certain types of CoWs bundle orders together in order to send them to an on-chain liquidity source, meaning that your gas is also cheaper.

On CoW Swap, these savings get passed on to you in the form of lower prices for your trades!

### MEV Protection

MEV, or “maximally extractable value” is a hidden tax on Ethereum trades that can result in failed transactions and unfavorable prices. Any time you submit a transaction to the blockchain, it may get re-ordered and hijacked by opportunistic traders looking to make a buck off your alpha (learn more about how CoW Swap solves MEV  [here](https://medium.com/@cow-protocol/how-cow-swap-solves-the-mev-problem-fd35b0127390)).

CoWs protect you from MEV because they are peer-to-peer swaps that don’t rely on on-chain liquidity. This means that there are no opportunities for your trade to get hijacked, since you’re interacting with another trader, rather than going through a liquidity pool. In other words, CoWs make transaction ordering irrelevant when interacting with AMMs as they are simple, peer-to-peer trades among traders themselves.

### Less Price Impact

Price impact is a major concern for large trades or for assets with relatively low liquidity. Whenever a trade impacts a liquidity pool enough to change the prices of the assets in the pool, it causes a “price impact”.

If you attempt to purchase $5,000 worth of BNB tokens, for example, but there isn’t enough liquidity to fill your entire order at a fixed market price, you may experience a price impact that causes you to get $4,950 worth of BNB tokens for the $5,000 that you pay.

CoWs alleviate price impact for large trades. If part of your trade is matched peer-to-peer with another trade, you will need to use less on-chain liquidity, thus reducing the impact that your trade will have on asset prices.

## Types of CoWs

CoWs are possible thanks to CoW Swap’s delegated trading model. On CoW Swap, users sign an “intent to trade” message, rather than submitting a transaction, when initiating a trade. This signed message allows for all sorts of order optimizations including CoWs, price improvements, gas optimizations, and much more that’s not possible when directly submitting transactions.

There are several different types of CoWs, each with varying complexity and levels of price savings.

### Simple CoW

![3-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_benefits_of_cow_150c8f788e.webp)

The example of Meredith and Eli at the beginning of this article is an instance of a simple CoW. In a simple CoW, two traders that each have an asset the other wants come together to execute a peer-to-peer swap.

In contrast, on Uniswap this trade would require using a liquidity pool:

![4-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_benefits_of_cow_281b830815.webp)

### Batching CoW

![5-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_benefits_of_cow_68a360bd82.webp)

Another type of CoW is the “batching” CoW trade that occurs whenever two traders are trading the same asset. For example, if two traders are looking to buy ETH in exchange for USDC, CoW Swap batches their trade together and executes a single on-chain transaction from a liquidity pool like Uniswap for the combined amount of ETH for both trades.

This saves on fees since, instead of having to execute the transactions individually and spend gas twice, the protocol batches the trades together into a single transaction, reducing the overall gas cost.

Here is what this trade would look like on a traditional liquidity pool through Uniswap. As you can see, there is a redundancy that’s saved when trading on CoW Swap.

![6-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_benefits_of_cow_3391fc0925.webp)

### Intermediate CoW

![7-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_benefits_of_cow_79e8dd4812.webp)

CoW Swap’s delegated trading model allows for gas optimizations through “intermediate CoWs.”

An intermediate CoW is similar to a simple CoW, but with the caveat that it is not a perfect A-B and B-A settlement. This type of CoW uses intermediate “hops” that both trades have to do in order to complete.

For example, in order to exchange COW for USDT, your trade might first have to go COW to ETH and then ETH to USDT. If, at the same time, another trader is trading USDT for CRV, they will go through the opposite trading route: USDT to ETH and then ETH to CRV. In both cases, there is an opportunity for a Coincidence of Wants in the intermediate leg (ETH to USDT and USDT to ETH).

Here is what this trade would look like on a traditional liquidity pool through Uniswap.

![8-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_benefits_of_cow_2e078ec2ef.webp)

### Multidimensional CoW, AKA a “Ring Trade”

In some batches, there are multiple orders which can all combine together in multiple Coincidences of Wants. In fact, one of the most interesting use cases of CoWs is what’s known as a “ring trade”. Ring trades enable a true barter-economy style of swapping. Traders can swap unrelated assets without relying on external liquidity.

Let’s take a look at an example of a Ring Trade:

![9-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_benefits_of_cow_96c53012be.webp)

In the above scenario, we have four parties:

-   Eli
-   Edith
-   Lily
-   Chow

Trading four assets

-   ETH
-   USDT
-   COW
-   DAI

As you can see, each party wants to swap one of their assets for one of the others in the batch. In this case, however, there is no “perfect” Coincidence of Wants — where one party has exactly what the other party needs — instead, we can get everyone what they want by trading around the “ring”.

Eli wants to trade his ETH for DAI. He sends his ETH to Edith, who gives her USDT to Lily who gives her COW to Chow, and finally, Chow gives his DAI to Eli. In this way, Eli’s trade is filled by going through a three-party Coincidence of Wants ring trade. This logic holds for the other three participants as well:

1.  Edith gets her ETH from Eli, even though she has no DAI (the asset he really wants) to give him in return
2.  Lily trades COW for USDT using Chow, Eli, and Edit as proxies
3.  Chow does the same thing for his DAI to COW trade

Ring trades are a powerful use-case of CoWs that can occur whenever a batch of orders gets large enough.

On Uniswap, this trade would be much more complicated (and expensive!)

![10-benefits-of-cow.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/10_benefits_of_cow_924199f399.webp)

## CoWs: Your Ticket to Better Prices

CoW Swap turns economic theory into reality by utilizing CoWs (Coincidences of Wants) to optimize prices and enable safer trades.

The protocol relies on Order Flow Auctions which allow users to sign composable intents to trade rather than committing to a specific transaction. Through intents,  [solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers)  can use multiple sources of liquidity, compose trades together, and perform all sorts of optimizations. This is what makes CoWs possible!

Give CoWs a shot by  [using CoW Swap for your next trade](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=cow-article). Happy trading!

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An overview of Coincidences of Wants (CoWs) & the benefits they bring to CoW Swap traders — it’s not just a meme!


What are CoWs on CoW Swap?

A Decentralized Autonomous Organization (DAO) treasury refers to the pool of funds that a DAO holds and manages. These funds are often collected through token sales and other fundraising efforts and are used to finance the operations, initiatives, and goals of the DAO.

![1-effective-treasury-management.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_effective_treasury_management_56fa5ee9f9.webp)

### What is a DAO treasury?

The treasury within a DAO is a critical component of its ecosystem, acting as a financial backbone to its operations. It provides the resources necessary for the DAO to function effectively and to fund its projects, grants, rewards, and other expenditures. The management of these funds, therefore, is of utmost importance to the overall health and sustainability of the DAO.

An ideal DAO treasury is expertly managed, with its features and functions geared towards efficient utilization of resources, risk management, and alignment with the DAO’s objectives. This entails strategic budget allocation, effective governance mechanisms, robust risk management protocols, and transparent operations. Through these features, a well-managed treasury supports the resilience and longevity of a DAO, while promoting trust and accountability within its ecosystem.

### DAO treasury management tasks

The management of a DAO treasury involves various tasks, each essential to its effective operation:

-   **Budget Allocation**: This involves the strategic distribution of funds towards activities and initiatives that align with the DAO’s objectives, ensuring the efficient and effective use of resources
-   **Governance**: Treasury governance involves the establishment and implementation of decision-making processes related to the treasury’s operations, ensuring that tokenholders are able to vote on proposals and have a hand in the operation of the DAO
-   **Risk Management:**  This involves the identification, assessment, and mitigation of financial risks that could impact the treasury’s holdings, such as market volatility, regulatory changes, and security threats

### Challenges for DAO treasuries

Managing a DAO treasury comes with unique challenges. Qualities that help tackle these challenges include diversity, liquidity, and transparency.

-   **Diversity**: A diverse treasury portfolio reduces risk by spreading exposure across a variety of assets. Diverse portfolios are more resiliant to market volatility and therefore more protective of the DAO’s holdings. Failure to achieve a diversified portfolio may expose the DAO to heightened risks associated with specific asset classes or market trends
-   **Liquidity**: Ensuring sufficient liquidity is key for the smooth functioning of a DAO, enabling it to quickly mobilize funds for operations, projects, and emergency situations. A lack of liquidity can hinder the DAO’s ability to meet immediate financial obligations, potentially jeopardizing its operations and credibility
-   **Transparency**: Transparency in treasury operations fosters trust and accountability within the DAO’s community. It allows members to monitor the DAO’s financial health and decision-making processes, promoting engagement and participation. Without transparency, a DAO risks eroding trust and participation, which could ultimately undermine its sustainability and success

### How to allocate budgets for DAO treasuries

The allocation of budgets for a DAO treasury is a complex task that requires a solid understanding of the DAO’s goals and strategic planning. Goals may include a diverse set of objectives, such as profit generation, public goods funding, development of a protocol or product, and grant provision. In this context, budget allocation serves four primary goals:

-   **Aligning DAO Expenses with DAO Objectives**: Resources must be directed efficiently to achieve specific goals related to the DAO’s overall mission. This process involves prioritization of expenditures according to their relevance to the DAO’s objectives
-   **Ensuring Efficient Use of Resources**: Regular budgeting and expense control form a feedback loop, which allows for constant review and improvement of resource allocation. This process helps in identifying and correcting issues such as over-spending or under-spending
-   **Promoting Transparency and Accountability**: In DAOs, transparency is of utmost importance. The traceability of expenses fosters a sense of accountability for fund allocation and results. This, in turn, generates public information and reinforces trust in the DAO’s operations
-   **Risk Management:**  In treasury management, thoughtful asset allocation is a key factor in determining the amount of systemic risk taken on by the portfolio. Properly planned asset allocation can reduce overall treasury financial risk

The core tasks of budget allocation include identifying the overall mission and objectives, building financial statements, forecasting financials, and allocating funds:

-   **Identifying Overall Mission and Objectives**: These dictate the needs to be satisfied and serve as the foundation for all further steps in the budget allocation process
-   **Building Financial Statements**: An understanding of the DAO’s operations, financial position, and cash flows needs to be established. Though formal financial statements may not be required, special focus should be given to revenues and expenses as these determine the viability of the operations along with treasury composition and management
-   **Forecasting Financials**: This task can be tricky due to the impact of market cycles and sentiment. However, historical data and past experiences can be valuable resources in this process
-   **Allocating Funds**: Funds available should be distributed to activities or objectives that align with the DAO’s objectives, prioritizing by importance. The expected availability of funds is dictated by financial forecasts

The elements and factors of budget allocation depend largely on the nature of the DAO. Whether it’s for profit, a public good, or any other purpose, the DAO’s specific value proposition should guide budget allocation. In general terms, key categories to consider may include development (in-house or contracted), maintenance, marketing, audits, and governance. This list, however, is not exhaustive and can vary significantly depending on the DAO’s objectives and operational context.

### How to manage governance for DAO treasuries

Core tasks of treasury governance include understanding the DAO’s goals and objectives, defining asset allocation and strategies, risk management, performance reviewing/reporting, and updates:

-   **Understanding DAO Goals and Objectives**: Effective treasury governance starts with a comprehensive understanding of the DAO’s mission, activities, organizational structure, processes, and desired risk/return profile. Knowing the DAO’s risk tolerance, unique circumstances, and constraints helps tailor the treasury governance to the specific context of the DAO
-   **Defining Asset Allocation and Strategies**: After acquiring a deep understanding of the DAO’s context, needs and desires can be translated into specific asset allocations and yield generation strategies. These should be designed to fulfill the DAO’s requirements and align with its risk tolerance
-   **Risk Management**: Risks associated with treasury management in DAOs include market risk, protocol risk, technical risk, governance risk, among others. Effective risk management involves identifying, measuring, and mitigating these risks. Regular monitoring ensures that the DAO’s treasury remains within its risk tolerance
-   **Performance Reviewing/Reporting**: Regular reviews of treasury performance against desired metrics facilitate accountability. Performance reporting also allows for adjustments in the DAO’s strategies to improve future performance
-   **Updates**: The blockchain and cryptocurrency landscapes evolve rapidly. Regular reviews and updates are essential to ensure that treasury management practices remain aligned with the current environment. Changes in governance, regulations, market conditions, and technology are just some factors that necessitate regular updates in treasury management practices

DAO governance management is a cornerstone of effective DAO operations and should include all DAO stakeholders working together towards the common good of the DAO.

### How to manage risk for DAO treasuries

Risk management is a crucial part of DAO treasury management, and risk assessment in DAO treasuries typically encompasses several factors:

-   **Market Risk**: This includes price/asset risk, where changes in the value of assets held in the treasury can impact its wealth, and interest rate risk, which refers to the potential impact of changes in interest rates on the treasury’s assets or liabilities
-   **Counterparty Risk**: This pertains to the risk that a counterparty fails to fulfill their contractual obligations, potentially leading to a loss for the treasury
-   **Liquidity Risk:**  Liquidity risk involves the possibility that the treasury may not be able to quickly convert its assets into cash without incurring significant losses
-   **Protocol Risk**: DAOs often rely on blockchain protocols, which can sometimes be vulnerable to various issues such as bugs or governance disputes
-   **Technical (Smart Contract) Risk**: DAO treasuries usually interact with smart contracts. These can be vulnerable to bugs, hacks, or failures, potentially leading to substantial losses
-   **Legal/Regulatory Risk**: Lastly, changes in legal or regulatory environments can also present a risk to DAO treasuries. These can arise from changes in laws related to cryptocurrencies or DAOs or from broader changes such as shifts in tax laws or regulations governing financial transactions

DAO managers have a duty to their stakeholders to be aware of and to carefully manage all risks relating to the DAO using the above outlined strategies.

### How Karpatkey manages DAO treasuries

Many DAOs, including CoW DAO, have partnered with  [Karpatkey](https://www.karpatkey.com/)  for their treasury management needs. Karpatkey retains a team of web3 professionals who provide financial, risk management, business development, legal, and other services to DAOs, with a focus on treasury management.

Karpatkey helps DAOs make the most out of their treasury funds in several ways:

-   **Generating Yield**: An idle treasury comes with significant opportunity cost. Karpatkey regularly rotates DAO treasury funds into yield-bearing crypto assets to maximize earnings
-   **Risk Management**: While generating yield is important, treasury funds must, above all, stay secure and protected from risk exposure. Karpatkey’s team of risk experts helps DAOs make smart fund allocation decisions
-   **Training a Core Treasury Team**: Karpatkey mentors internal DAO team members on best practices around treasury management including wallet signature decentralization, liquidity providing, and more
-   **Facilitating Liquidity**: Karpatkey sometimes helps provide liquidity for DAO tokens to be traded easily at any time

Karpatkey counts some of the most well-respected DAOs among their clients, including Gnosis, Balancer, ENS, and CoW Protocol. Their non-custodial assets under management total close to $400,000,000, so they know how to take care of large treasuries. To learn more about Karpatkey, check out their  [official website](https://www.karpatkey.com/).

## How CoW Swap can help your DAO

![2-how-cow-swap-can-help-your-dao.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_how_cow_swap_can_help_your_dao_f3be5b2caf.webp)

Managing a treasury is a complex task with lots of moving parts. When it comes to making trades using DAO funds, many DAOs go straight to AMMs like Uniswap. This can cause problems as liquidity pools expose trades to MEV bots, experience significant price impact, and are generally sub-optimal for the needs of DAOs — resulting in worse prices overall. CoW Swap, on the other hand, is  [optimized for DAO trading](https://cow-protocol.medium.com/cow-swap-for-daos-8d67831c2a13).

On CoW Swap, DAOs can:

-   **Forget about timing trades**: Rather than locking your price in when you first sign your multi-sig, CoW Swap actually finds you the best price at the time of execution, so you get the best deal without having to worry about timing your trade
-   **Automatically manage price impact**: CoW Swap spreads your order across different liquidity sources including peer-to-peer swaps and multiple on-chain liquidity pools
-   **Outsmart the MEV bots**: On CoW Swap, all of your trades are always protected against MEV through  [sophisticated trading algorithms](https://cow-protocol.medium.com/how-cow-swap-solves-the-mev-problem-fd35b0127390)
-   **Enjoy more price surplus than anywhere else**: On CoW Swap, your quoted price is the worst price you’ll have to pay. Between Coincidence of Wants matches, gas optimizations, and MEV protection, there’s lots of room for CoW Swap to find price surplus on your trade to forward to you
-   **Custom-tailor every order**: Support for EIP-1271 signatures is now live on CoW Swap, meaning that any DAO with engineering resources can code any custom order type they’d like
-   **And more**: DAOs can enjoy a range of advanced order types for streamlining token launches, buyback programs, or any other special types of transactions

CoW Swap is a top choice for DAOs making trades. In fact, one out of every three DAO trades in DeFi takes place on CoW Swap.

To learn more about how your DAO can trade on CoW Swap,  [join our Discord](https://discord.com/invite/cowprotocol)  or  [check out CoW Swap for yourself](https://cow.fi/).

## 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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Analyzing DAO treasury management strategies and challenges


Effective Treasury Management for DAOs

CoW Swap allows all types of traders to make secure trades that are price-optimized and MEV-resistant, but the benefits of the exchange really shine when it comes to DAOs.

Decentralized autonomous organizations (DAOs) are blockchain-based collectives of individuals who come together to create a product, service, or social community. Many DAOs mint their own governance tokens and are responsible for allocating treasury funds. But when it’s time to make trades with these funds,  **DAOs face unique challenges not encountered by other types of traders**.

These issues stem from a variety of factors:

-   Placing and executing trades takes time
-   Trade details are public, and announced well in advance
-   Large trades create large price impact
-   Large trades sizes call for large slippage tolerances
-   DAOs need the best prices
-   DAOs need special order types

CoW Swap’s unique trading model addresses each of these concerns, making DAO trades easier, safer, and cheaper. Here’s how:

### Placing and executing trades takes time

Most DAOs rely on multi-signature wallets (like  [Safe](https://www.google.com/url?q=https%3A%2F%2Fsafe.global%2F&sa=D&ust=1685041403328994&usg=AOvVaw2CHqh-9PmNof96z8hOlGKi), which has a CoW Swap native app) to keep their treasury funds secure. This is a great idea, but collecting signatures can be a slow and tedious process when it’s time to make a trade. In the time needed to collect signatures, prices can fluctuate — meaning that DAOs must set a high slippage tolerance for their trade (thereby opening themselves up to MEV attacks) or risk their trade reverting. Whether it’s signing the multi-sig or waiting for governance votes, delaying a trade by even a little bit can alter the best-priced execution path for the trade quite substantially.

DAOs that trade on CoW Swap don’t need to worry as much about tight signature coordination, though. This is because CoW Swap trades are optimized at the time of execution, completing for the quoted price or better.

Here’s how it works: when a user submits an order on CoW Swap, they do not actually initiate a blockchain transaction with a fixed execution path (like they do on Uniswap or 1inch, for example). Instead, traders submit orders as signed “intent to trade” messages which include trade details like the amount and type of tokens to be traded. CoW Swap’s  [solvers](https://www.google.com/url?q=https%3A%2F%2Fdocs.cow.fi%2Foff-chain-services%2Fsolvers&sa=D&ust=1685041403329957&usg=AOvVaw1DHsGa_y-PwEFgEKC3IDp-)  then find the best execution path for the trade and execute it on-chain for the user using this optimal path.

This means that DAOs can take their time collecting signatures, knowing that they will receive the best price for their trade once the last wallet has signed (and knowing that an artificially-high slippage tolerance will not be exploited by MEV bots).

### Trade details are public, and announced well in advance

The governance process is one of the more innovative aspects of DAOs. Unfortunately, public proposals that reveal the details of large trades are a gold mine for MEV bots.

![1-trade-details-are-public.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_trade_details_are_public_7d602bae01.webp)

DAO trades usually begin as forum proposals discussing the specifics of the trade such as how big the trade will be, what assets will be traded, what exchange will be used, when the trade will take place, and more. Exposing this information publicly allows opportunistic traders and MEV bots to intercept and exploit the transaction.

Fortunately, CoW Swap protects every trade from MEV in several ways:

-   **Delegated Trade Execution**: When traders submit an order to CoW Swap, algorithms known as “[solvers](https://www.google.com/url?q=https%3A%2F%2Fdocs.cow.fi%2Foff-chain-services%2Fsolvers&sa=D&ust=1685041403331334&usg=AOvVaw3grj40A6m2CgrYC9cHOP-m)” execute the trade on behalf of the trader. Solvers have sophisticated methods of fighting MEV and they take on the MEV risk themselves — so traders have nothing to worry about
-   **Batch Auctions**: CoW Swap batches trades together, providing an opportunity for peer-to-peer order matching through Coincidence of Wants (CoWs). If two traders in the same batch swap assets with each other, they don’t have to use on-chain liquidity sources to fill their order, meaning they save on protocol fees and bypass MEV bots lurking in the mempool
-   **Uniform Clearing Prices**: CoW Swap settles all trades in a batch at the same clearing price, so MEV bots cannot exploit the transactions by reordering them

These factors ensure that DAO transactions are routed in a way that prevents MEV bots from exploiting them, even if they know the trade details in advance.

### Large trades create large price impact

DAO trades are usually large transactions that move the market, leading to worse prices for the DAO overall. On CoW Swap, price impact is mitigated through several factors:

-   When CoW Swap finds a Coincidence of Wants opportunity, the order may be filled without accessing on-chain liquidity at all, and thus without creating a price impact
-   For trades that are not fully filled by a CoW, CoW Swap makes use of multiple on-chain liquidity sources and quotes from market makers to spread out the price impact
-   Special order types like partially fillable limit orders and TWAP orders spread trades out over time, further reducing price impact

The CoW Swap  [solvers](https://www.google.com/url?q=https%3A%2F%2Fdocs.cow.fi%2Foff-chain-services%2Fsolvers&sa=D&ust=1685041403333067&usg=AOvVaw1a_T4FLwxz-fBYMye6sKMV)  automatically search for Coincidences of Wants and optimize the routing of each order to on-chain liquidity. All DAOs have to do is simply place their order. Special order types have to be selected in the CoW Swap UI, however, it just takes a few clicks to add them to a trade as well.

### Large trades sizes call for large slippage tolerances

When it comes to DAOs, setting the right slippage for a large trade can be a complex problem.

The gap in timing between deciding on an order and actually placing it often requires DAOs to set a large slippage tolerance in order to anticipate and account for price movements. This, however, leaves room for exploitation by MEV bots.

Existing solutions like Uniswap and 1inch require DAOs to either:

1.  Set a tight slippage for their trades, making it likely that transactions will fail and potentially leading to a DAO re-vote.
2.  Set a large slippage, which leaves room for MEV attacks.

DAOs can lose thousands of dollars to MEV in a single transaction. Some real-world examples that we can look at using on-chain data include  [this 1,000 ETH to USDC swap from Gitcoin](https://www.google.com/url?q=https%3A%2F%2Fetherscan.io%2Ftx%2F0x0e3a1da511c715f1c2451da10086cffb93dfab461ea99786cacfadfe306a7b36&sa=D&ust=1685041403334196&usg=AOvVaw1uRdeO5tkSmJJD7iGgSUCL)  where the DAO lost  [over $10,000 to a sandwich attack](https://www.google.com/url?q=https%3A%2F%2Fzeromev.org%2Fblock%3Ftxh%3D0x0e3a1da511c715f1c2451da10086cffb93dfab461ea99786cacfadfe306a7b36&sa=D&ust=1685041403334457&usg=AOvVaw10EoaSCFsVJMKQLut6txix), as well as  [this swap from Rarible](https://www.google.com/url?q=https%3A%2F%2Fetherscan.io%2Ftx%2F0x7ed5ae69f16e01230884f0c6c7641cd135d8a2cf03169c9630d28309037c6495&sa=D&ust=1685041403334704&usg=AOvVaw3-Ss0Mrzi4_hW1w0yO5Ghw)  where the MEV damage  [totaled over $8,000](https://www.google.com/url?q=https%3A%2F%2Fzeromev.org%2Fblock%3Ftxh%3D0x7ed5ae69f16e01230884f0c6c7641cd135d8a2cf03169c9630d28309037c6495&sa=D&ust=1685041403334925&usg=AOvVaw0jvtZYYtQX6_It39kSVJ7j).

![2-large-trade-sizes.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_large_trade_sizes_c44fe851bf.webp)

As a part of delegated trade execution, CoW Swap’s  [solvers](https://www.google.com/url?q=https%3A%2F%2Fdocs.cow.fi%2Foff-chain-services%2Fsolvers&sa=D&ust=1685041403335479&usg=AOvVaw0qUT_t75RfA40G3vwclzPq)  automatically optimize the user-defined slippage tolerance during execution time to ensure that each trade completes without leaving money on the table (or any juicy arbitrage for those greedy MEV bots).

![2-1-large-trade-sizes.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_1_large_trade_sizes_644eb6a84f.webp)

[_Do CoWs slip-age less?_](https://www.google.com/url?q=https%3A%2F%2Fcow-protocol.medium.com%2Fdo-cows-slip-age-less-389150154f84&sa=D&ust=1685041403336018&usg=AOvVaw2KyS16CNfZYWrm4-LXg4Fd)

### DAOs need the best prices

DAO treasury managers have a duty to their stakeholders to execute trades at the best possible prices.  **According to** [**karpatkey**](https://www.karpatkey.com/)**, who works with ENS, Balancer, Gnosis, Lido and CoW treasuries,** fulfilling this obligation is easy on CoW Swap because all trades, whether large or small, almost always receive better prices than they would through individual liquidity pools or DEX aggregators. On CoW Swap, the  [solver](https://www.google.com/url?q=https%3A%2F%2Fdocs.cow.fi%2Foff-chain-services%2Fsolvers&sa=D&ust=1685041403336458&usg=AOvVaw3DpY3ndTh-JXcldfP_Rnlo)  that provides the most value to the user wins the right to settle the trade; this is in contrast to the default Ethereum model where the searcher that provides the most MEV profits to the validator decides how transactions should be ordered.

Coincidences of Wants bring down the overall fee cost of any trade. This is because CoWs bypass on-chain protocols that usually charge a fee, and also because a peer-to-peer swap costs less in gas than an on-chain liquidity pool swap. For retail traders, this is an added convenience, but for large DAO trades, this can mean thousands or tens of thousands of dollars in savings thanks to price improvements.

Additionally, when a CoW Swap trade completes at a different price than the original quote, the traders always come out on top. There are several reasons why a trade might execute for a different price than the quote including MEV (which CoW Swap protects against) and asset price movement in the time between the quote and execution.

### DAOs need special order types

Not only is CoW Swap well-suited to DAOs at the protocol layer, but it also offers several special order types that DAOs may find useful:

-   **Partially Fillable Limit Orders**: CoW Swap’s surplus-capturing limit orders allow traders to place an order for a limit price that gets filled over time. This helps spread out price impact, avoids MEV, and captures liquidity at a predictable price
-   **TWAP Orders (Coming Soon)**: Time-weighted average price orders split trades up into several equal transactions that get executed over time. This reduces price impact, allows for a lower slippage tolerance, and smooths out the effects of market volatility on each trade
-   **Milkman**: The  [Milkman](https://www.google.com/url?q=https%3A%2F%2Fgithub.com%2Fcharlesndalton%2Fmilkman&sa=D&ust=1685041403337684&usg=AOvVaw2l-9RQ3mIJakUQjnJ8pdd_)  bot ensures trades are executed for the real-time price or better by utilizing a price checker, such as a Uniswap v3 pool. Instead of setting a slippage tolerance, DAOs can utilize Milkman to determine a maximum percentage deviation from a price checker, guaranteeing that their trade will finalize at a fair market price. If a trade can’t be executed within the defined price window or better, the order is postponed until the market shifts within the set range.
-   **Dump Services**: CoW Swap and  [yearn.fi](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Fyearnfi&sa=D&ust=1685041403338056&usg=AOvVaw0tRHH_iWJYOanV9u0bOifG)  have collaborated on  [Dump.services](https://www.google.com/url?q=https%3A%2F%2Fdump.services%2F&sa=D&ust=1685041403338225&usg=AOvVaw2pXYXEjLIkryn0N8oT1xV-), a tool that allows traders to sell (dump) multiple tokens from a wallet in a single transaction

What’s more: CoW Swap’s ERC-1271 support allows DAOs to  [create any special order type they would like and use CoW Swap to execute it](https://www.google.com/url?q=https%3A%2F%2Fcow-protocol.medium.com%2Ftutorial-creating-smart-orders-on-cow-protocol-683a5f9f4763&sa=D&ust=1685041403338647&usg=AOvVaw1NaprSNyxDuDV-a7rDyhR5).

## CoW Swap: The Best DEX for DAOs & Multi-Sigs

CoW Swap’s obsession with providing the best trade execution has earned the platform the loyalty of some of the largest DAOs and projects in web3 today — including ENS DAO, who  [received an $80k surplus for a $16.5 million trade on CoW Swap](https://www.google.com/url?q=https%3A%2F%2Fwww.theblock.co%2Fpost%2F209222%2Fens-dao-votes-to-sell-16-5-million-of-eth-for-usdc-via-cow-swap&sa=D&ust=1685041403339194&usg=AOvVaw3ZT8FWqfkzrTuVne3jTPAq).

![3-cow-swap-best-dex.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_cow_swap_best_dex_1341750c1f.webp)

[GnosisDAO](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FGnosisDAO&sa=D&ust=1685041403339535&usg=AOvVaw2KdD9CG-9Hqw-VgxS-Wf-U),  [ENS DAO](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Fensdomains&sa=D&ust=1685041403339709&usg=AOvVaw37h4EyPo2Oa3sNhJTfq-ib),  [dxDao](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FDXdao_&sa=D&ust=1685041403339880&usg=AOvVaw0RRaXCUBeoW9lP3-8KCOlS),  [Yearn Finance](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Fyearnfi&sa=D&ust=1685041403340050&usg=AOvVaw3vF-CQXjeNmHZLoG8GXqC5),  [Safe](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Fsafe&sa=D&ust=1685041403340207&usg=AOvVaw0Xn8wJEuhgODhR7LNNEtTE),  [Frax](https://www.google.com/url?q=https%3A%2F%2Ffrax.finance%2F&sa=D&ust=1685041403340361&usg=AOvVaw1vM8In7BosL_x3_96QCxNd),  [Olympus DAO](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FOlympusDAO&sa=D&ust=1685041403340522&usg=AOvVaw3KxzCmAUO7qKjSXXRiMFhr),  [Synthetix](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Fsynthetix_io&sa=D&ust=1685041403340682&usg=AOvVaw2rhjkW_VWsk5kN18nXMWjL),  [Balancer](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FBalancer&sa=D&ust=1685041403340879&usg=AOvVaw0qx7dZnQ1wS9_FjBl6yNbU),  [Aura](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FAuraFinance&sa=D&ust=1685041403341064&usg=AOvVaw2GydDVXvBxVz9K1Ug_6adw),  [Gnosis Guild](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FGnosisGuild&sa=D&ust=1685041403341225&usg=AOvVaw3z7NSFqmSVlxcFuvyAanrg),  [Badger DAO](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FBadgerDAO&sa=D&ust=1685041403341383&usg=AOvVaw3LPAvlq6uuoiVxjpsLhXNY),  [Aave](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FAaveAave&sa=D&ust=1685041403341539&usg=AOvVaw1TpZZUKHQPc9mA-g_aESsz),  [Tally DAO](https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Ftallyxyz&sa=D&ust=1685041403341695&usg=AOvVaw2PhOKqGRwu8B3z8kyzo0Eb)  and  [Karpatkey](https://twitter.com/karpatkey).

All trades, whether for DAOs or retail traders, will usually receive better prices on CoW Swap than on individual liquidity pools or DEX aggregators. DAOs can count on CoW Swap for:

-   Easy trade timing with less pressure for stakeholders to coordinate
-   MEV-protected trades even when trade details are publicly announced
-   The best prices through slippage-capturing trade execution
-   Special order types custom-tailored for DAOs

**If you are a DAO interested in learning more about how CoW Swap can optimize your trades,** [**join our Discord**](https://www.google.com/url?q=https%3A%2F%2Fdiscord.com%2Finvite%2Fcowprotocol&sa=D&ust=1685041403342608&usg=AOvVaw2H2w662pRhWywMr1iewDqq) **and give us a shout, or leave a comment in our** [**forum**](https://www.google.com/url?q=https%3A%2F%2Fforum.cow.fi%2F&sa=D&ust=1685041403342786&usg=AOvVaw3elEWASQu1sxf3wVDPf9tS)**.**

## 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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One-third of all DAO trading volume goes through CoW Swap


CoW Swap for DAOs

On July 21st, 2023, After a successful  [governance vote](https://app.nexusmutual.io/governance/view?proposalId=197)  from Nexus Mutual, CoW Swap processed a  [large trade for the insurance protocol](https://twitter.com/CoWSwap/status/1682450015237857280?s=20)  using the exchange’s signature intent-based trading design and MEV protection.

## Trade Details

Nexus Mutual swapped 14,390 ETH from its capital pool for an equivalent amount in rETH. They did so in two separate orders, the first order swapped  [250 ETH for 231.8 rETH](https://explorer.cow.fi/orders/0x29a83c4990db493b7fbf47ed821288340b4e9394524b1da151251d274d64e150cafea5c050e74a21c11af78c927e17853153097d64baae44?tab=overview)  and the second order swapped  [14,140 ETH for 13,117.148 rETH](https://explorer.cow.fi/orders/0x5e84d3e19341b77c362f37e706b153e460deb929d850bec7d9697a631fe4596fcafea5c050e74a21c11af78c927e17853153097d64bab666?tab=overview).

The overall order stats:

-   **USD value of the trade**: $27.3 million
-   **Minimum asset amount**: 13,362 rETH
-   **Maximum asset amount**: 13,400 rETH
-   **Amount the DAO received**: 13,409.04 rETH

## Why CoW Swap?

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

CoW Swap provided several benefits for this trade:

1.  Protection from attack vectors caused by the delayed execution
2.  A limit order that guarantees some minimum amount for the assets
3.  Minting rETH through CoW Swap directly, instead of swapping for the liquidity on the market

For this swap, Nexus Mutual chose the Chainlink oracle as their price checker, guaranteeing that they would receive no less than the minimum specified in the governance proposal.

## CoW Swap: The leader in DAO trading

The largest DAO trades take place on CoW Swap, and the exchange is single-handedly responsible for more than 30% of all DAO trades. Check out  [CoW Swap for DAOs](https://blog.cow.fi/cow-swap-for-daos-8d67831c2a13)  to learn why DAOs such as  [Aave](https://blog.cow.fi/aave-trade-breakdown-e17a7563d7ba),  [ENS](https://blog.cow.fi/ens-trade-breakdown-a8eb00ddd8c0), and more trust CoW Swap with their large trades.

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

## 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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Nexus Mutual Trade Breakdown

On July 10th, 2023, After a successful  [governance vote](https://app.aave.com/governance/proposal/?proposalId=267)  from Aave DAO, CoW Swap processed a large LP position trade for Aave using the exchange’s signature intent-based trading design and Milkman contract.

Since then, Aave completed another trade totaling $1,948,000 with the goal of  [treasury diversification](https://app.aave.com/governance/proposal/282/).

## 1st Trade Details

Aave DAO acquired a direct position in the B-80BAL-20WETH Balancer pool by swapping their entire aBAL & aWETH balances. The trade occurred over two transactions ([Transaction 1](https://explorer.cow.fi/orders/0xb8534a7890442f38394224acea0b894e734175f9dbb17130d444ffcf3c096f438a2e3cef438049b4176186468d3a095d9e24973b64ac2280?tab=overview)) ([Transaction 2](https://explorer.cow.fi/orders/0x825de9ff6963afd5a6e1ab63712f60a749b8750a023e2e49089003d9fee9128b176f00c370f77bdc6c3079296ff89391ccb26bca64ac625e?tab=overview)).

-   **USD value of the trade**: $2,026,573.69
-   **Amount the DAO received**:  [157,169.86 B-80BAL-20WETH](https://governance.aave.com/t/analysis-of-b-80bal-20weth-acquisition/14005), with an average BPT price of $12.89
-   **Slippage tolerance:** 1.5%
-   **Actual slippage**: 1%
-   **Positive difference compared to direct deposit**: 1,918.72 units of B-80BAL-20WETH
-   **Positive difference due to slippage**: 556 units of B-80BAL-20WETH

## 2nd Trade Details

Aave DAO swapped DAI to USDC for treasury diversification purposes. This trade also occurred over two transactions ([Transaction 1](https://explorer.cow.fi/orders/0x03a16efc858c41dd476b8270ed7cdeac00718dd72902493e13c4ec4931a8543d944ea54ae648ceebbdc3e643e8a993a0c4e8dae564ca6b2a?tab=overview)) ([Transaction 2](https://explorer.cow.fi/orders/0xffa61ae864eeaa228ca19195887303d278bbd40f75a9c70493737eb3dbcd0280264fe3292fc2a05500d638093d88adbca487e36864ca6b31?tab=overview)).

-   **USD value of the trade**: $1,937,476
-   **Amount the DAO received**: 1,937,476 USDC
-   **Price Surplus**: $9,699.15

## Why CoW Swap?

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

Compared to a direct deposit, CoW Swap provided several benefits for this trade:

1.  Protection from attack vectors caused by the delayed execution
2.  The minimum amount in a direct deposit proposal would have been uncertain, requiring a high slippage tolerance to successfully execute the trade, which in turn would expose the trade to MEV bots
3.  Use of the Milkman bot for protection against MEV, slippage, and re-entrancy risk

## Milkman

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

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

For this swap, Aave DAO chose the Chainlink oracle as their price checker, guaranteeing that they would receive no less than the minimum specified in the governance proposal.

## CoW Swap: The leader in DAO trading

The largest DAO trades take place on CoW Swap, and the exchange is single-handedly responsible for more than 30% of all DAO trades. Check out  [CoW Swap for DAOs](https://blog.cow.fi/cow-swap-for-daos-8d67831c2a13)  to learn why DAOs such as  [ENS](https://medium.com/@cow-protocol/ens-trade-breakdown-a8eb00ddd8c0),  [Nexus Mutual](https://medium.com/@cow-protocol/nexus-mutual-trade-breakdown-4aacc6a94be8), and more trust CoW Swap with their large trades.

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