Why is CoW Protocol different from all other trading protocols?
Two words: batch auctions 💱
Batch auctions make CoWs (Coincidences of Wants) possible – saving traders lots of 🤑
Lets look at batch auctions in action, with 2 txs involving the newly-transferrable $SAFE token 🧵
1️⃣ Intermediate Coincidence of Wants
In the first batched transaction (explorer.cow.fi/tx/0x0e9fba6feaac05b3ef61b151a0c7d9b1f65f16849cda9ea8df435160bc7dd1ae) we see 2 trades match against each other:
→ 1 ETH <> ~1K SAFE
→ ~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 – 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 – ultimately resulting in better prices for all traders.
In this trade, the $SAFE buyer received 4.76% more tokens than initially quoted. 😳😳
2️⃣ Multidimensional (I-B) Coincidence of Wants
In the second batched transaction (explorer.cow.fi/tx/0xae8fc9087b62a9f909ef8a04bc08b81dd82e9fcccb026c086118ec178f5b5500) we see 3 simultaneous trades:
→ 2 ETH <> ~2K SAFE
→ 0.15 ETH <> ~145 SAFE
→ 2.8K SAFE <> 6.8K USDC (partially filled from the same larger limit order we saw in tx 1 ☝️)
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 – including a fat 7.98% and 6.75% for the buy orders! 💪💪
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 👉 blog.cow.fi/what-are-cows-on-cow-swap-e72baaa4678a 🐮
And don't forget to trade on CoW Swap 🐮
swap.cow.fi