Why is CoW Protocol different from all other trading protocols?
Two words: batch auctions ๐ฑ
Batch auctions make CoWs (Coincidences of Wants) possible โ saving traders lots of ๐ค
Lets look at batch auctions in action, with 2 txs involving the newly-transferrable $SAFE token ๐งต
1๏ธโฃ Intermediate Coincidence of Wants
In the first batched transaction (explorer.cow.fi/tx/0x0e9fba6feaac05b3ef61b151a0c7d9b1f65f16849cda9ea8df435160bc7dd1ae) we see 2 trades match against each other:
โ 1 ETH <> ~1K SAFE
โ ~1K SAFE <> 3.1K USDC (partially filled from a larger limit order of 4.5K SAFE <> 13.5K USDC)
The user buying $SAFE was matched with the user selling $SAFE, and the CoW Protocol settlement contract tapped Uniswap v3 to transfer $ETH to $USDC โ effectively filling the 3rd side of a ring trade.
Re-aggregation of liquidity through Coincidences of Wants is only possible because of batch auctions and intents โ ultimately resulting in better prices for all traders.
In this trade, the $SAFE buyer received 4.76% more tokens than initially quoted. ๐ณ๐ณ
2๏ธโฃ Multidimensional (I-B) Coincidence of Wants
In the second batched transaction (explorer.cow.fi/tx/0xae8fc9087b62a9f909ef8a04bc08b81dd82e9fcccb026c086118ec178f5b5500) we see 3 simultaneous trades:
โ 2 ETH <> ~2K SAFE
โ 0.15 ETH <> ~145 SAFE
โ 2.8K SAFE <> 6.8K USDC (partially filled from the same larger limit order we saw in tx 1 โ๏ธ)
The user selling $SAFE provided liquidity for the two users buying $SAFE, and CoW Protocol tapped Uniswap v3 to get $USDC for the buy part of the order.
Multidimensional Coincidences of Wants are only possible with batch auctions.
They protect all traders from paying full AMM fees, resulting in better prices and more surplus for all traders involved โ including a fat 7.98% and 6.75% for the buy orders! ๐ช๐ช
These type of optimizations are only possible through CoW Protocol. No other DEX fills trade intents through a robust and continual batch auction competition.
Want to learn more about Coincidences of Wants?
Read about the many types of CoWs here ๐ blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a ๐ฎ
And don't forget to trade on CoW Swap ๐ฎ
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User-protective products for DeFi: ๐ฎ CoW Swap ๐ฎ CoW Protocol ๐ฎ CoW AMM โฑ๏ธ MEV Blocker Don't get milked โข๏ธ ๐ CoW.fi
