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George Hristov

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](/learn/cow-swap-for-daos)  to learn why DAOs such as  [Aave](/learn/aave-trade-breakdown),  [Nexus Mutual](/learn/nexus-mutual-trade-breakdown), 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).



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


ENS Trade Breakdown

Don’t worry, trade happy! CoW Swap has been busy cooking up Conditional Orders, an architecture that allows developers (and their users) to create sophisticated orders of all kinds. At the core of this system is a flexible smart contract wallet that allows the protocol to implement its unique logic. What’s better than standing on the shoulders of giants in the ecosystem and within the Gnosis family  [Safe](https://safe.global/)?

Wait? Smart contract wallet?

That’s right: CoW Swap pioneered intents across the Ethereum space for EOAs (think MetaMask, Trezor, Trust Wallet, etc.), but what’s less well-known is that the protocol can actually work in a similar way for smart contracts by relying on a flexible intents system with the ERC-1271 integration. It sounds technical, but this standard is basically designed to allow smart contracts to “Sign” a message like any other EOAs. This is a familiar procedure for the seasoned CoWmunity, but Conditional Orders now allow anyone to define a set of conditions and have the smart contract wallet do the clicking for you.

Incubated through the  [CoW Grants Program](https://grants.cow.fi/), and supported by the Safe team throughout the testing/auditing process, the ExtensibleFallbackHandler is now live. Sounds complicated, we know! Put simply, this is a way to add extra powers to your Safe, while preserving the strong security guarantees that the Safe is well known for.

Upgrading your Safe’s fallback handler is a secure process, all you have to do is tick a box when placing an order, and your Safe upgrade will be batched with your order, making for a single-transaction order placement and upgrade. The contracts that implement this system have been audited both by an independent auditor, and an external auditor from Ackee Blockchain (You can read the final audit reports  [here](https://github.com/cowprotocol/composable-cow/tree/ab3addad9bc05acdbf5fb040eb5c336209b58e31/audits)).

The owl-eyed among you would be aware that smart contracts have always been able to use CoW Protocol, though this required both a transaction on chain to signal your intent, and that the orders be fixed (not conditional). Wave goodbye to these limitations!

With an ExtensibleFallbackHandler+ComposableCoW-enabled Safe you now benefit from all the CoW Swap features directly from your smart contract wallet: MEV protection, no failed swap transactions, at-execution path discovery, conditional orders, and batching if you need to do pesky things like approve or wrap ETH.

If you’re technically inclined, check out how you can  [start building with conditional orders using ComposableCoW](https://hackmd.io/@mfw78/HyuvoGt9h#), or drop into  [#tech-talk on our discord](https://discord.gg/cowprotocol)! While you’re busy reading up on how to write the latest and greatest conditional order, you could also be gradually buying up more of your favorite token using TWAP!

## What is a Safe fallback handler?

Long story short, Safe is designed to have strong security guarantees over basic operations (think executing transactions, spending your precious tokens, etc.), but there’s not enough time to program all functionality that a user may require. Therefore, the Safe can “forward” all function requests that it doesn’t recognize to another contract (the fallback handler).

**CRITICALLY**: Fallback handlers do  **NOT**  have the same authority as the Safe from which they were called. Due to the security architecture of Safe, it is not possible for the fallback handler to execute transactions on behalf of the Safe.

OK, the fallback handler can’t execute a transaction for you, so why should you care? Safe doesn’t by default (without a fallback handler) support ERC-1271 signatures. The standard deployment of a Safe deploys with CompatibilityFallbackHandler as the fallback handler, which has limited ERC-1271 support (meaning: it cannot read and thus, cannot be automated). CoW Swap intents super-charge this by allowing a Safe to also specify a smart contract that can sign messages for a particular application on its behalf.

This is where ComposableCoW takes over! 🐮🎶 You can think of ComposableCoW as an autonomous agent, signing orders that meet whatever conditions you have specified. After you create your first conditional order, the second transaction you see in the batch will enable ComposableCoW, which tells your Safe “I want ComposableCoW to be able to sign orders from CoW Protocol”. TWAP is just a conditional order type that works with ComposableCoW.

**CRITICALLY**: Due to the design of ERC-1271, all signature verification is  **read-only**  which means it is  **impossible**  for a ComposableCoW or any conditional order to directly access user funds (the movement of funds during a swap is initiated by the settlement contract  **ONLY**).

In summary, to make CoW Swap’s new TWAP order feature work:

-   Safe users need to upgrade their fallback handler(enables conditional signing)
-   Conditional orders are automatically placed in the CoW Protocol order book (now signed with the new handler)
-   Automated signing of orders means you may hear less of CoW’s trademark moo. Feel free to set  [this](https://github.com/cowprotocol/cowswap/blob/develop/apps/cowswap-frontend/public/audio/success.mp3)  as your phone’s notification tone if suffering withdrawal symptoms 🐄

CoW Swap takes security very seriously. The underlying Safe fallback handler code has been fully audited by both the Safe and CoW teams as well as by two independent external auditors, G0 and Ackee Blockchain. You can find all the audit final reports  [here](https://github.com/cowprotocol/composable-cow/tree/ab3addad9bc05acdbf5fb040eb5c336209b58e31/audits).

The solution presented follows Safe’s high security standards. What’s more, the fallback handler isn’t just about placing orders. It allows limitless and, as of yet, unknown functionality. Maybe you want to:

-   Define a custom method handler for any non-standard method (if you really want you can turn your Safe into an ERC-20 token)
-   Define a custom EIP-712 domain verifier, whereby a contract implementing ISafeSignatureVerifier can do your menial signing automatically (it is this interface that ComposableCoW implements to power the shiny new TWAP orders)
-   Define a set of methods (interfaceId) that your Safe supports, and report such using ERC-165

The architecture for the ExtensibleFallbackHandler can be viewed  [here](https://hackmd.io/@mfw78/HyuvoGt9h).

**NOTE**: Audits are not a guarantee that code is free from error. Use with caution.

We wish you much surplus and happy  [TWAP order trading](https://swap.cow.fi/swap?utm_source=medium&utm_campaign=fallback-handler)! Give  [TWAP orders a try](https://swap.cow.fi/swap?utm_source=medium&utm_campaign=fallback-handler)  today and let us know what you think by reaching out on  [Twitter](https://twitter.com/CoWSwap)  or  [Discord](https://discord.com/invite/cowprotocol)!



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Don’t worry, trade happy! Upgrading your Safe fallback handler is a secure process. This Safe fallback handler extension has been developed by the CoW Swap team in collaboration with the Safe team, and has undergone a successful audit.

All you need to know about CoW Swap’s new Safe fallback handler

On-chain user activity evaluation begins with identifying key performance indicators that reflect genuine engagement rather than superficial metrics. Active users represent individuals who perform transactions within specific timeframes, but this metric alone provides limited insight. More sophisticated analysis examines transaction frequency, value transferred, smart contract interactions, and cross-protocol activity patterns.

Dune Analytics, a comprehensive blockchain data platform, captures transaction-level data that allows analysts to distinguish between different types of user behavior. A user who performs ten high-value decentralized finance (DeFi) transactions demonstrates different engagement patterns than someone executing hundreds of low-value transfers. These distinctions become crucial when evaluating ecosystem health or protocol adoption.

Transaction volume provides another fundamental metric, but raw volume figures can be misleading without proper context. A protocol showing $10 million in daily volume might appear successful, yet further analysis could reveal that 90% of this volume comes from automated bots or wash trading activities—artificial transactions designed to inflate apparent demand. Dune's comprehensive data enables analysts to identify such patterns through detailed address analysis and behavioral clustering.

User retention represents a critical metric that indicates protocol sustainability. Dune enables analysts to track user cohorts over time, examining how many users return after their first interaction. For instance, an analyst might examine users who first interacted with a DeFi protocol in January and determine what percentage remained active three months later.

Consider a scenario where a non-fungible token (NFT) marketplace launches with 50,000 users in its first month. Initial metrics appear promising, but cohort analysis reveals that only 5% of users return in month two, with retention dropping to 1% by month three. This pattern suggests fundamental issues with user experience or value proposition that raw user counts fail to reveal.

Geographic and temporal patterns provide additional insights into user behavior. Dune's timestamp data allows analysts to identify peak usage hours, which can indicate the primary geographic regions driving adoption. A protocol showing consistent activity during Asian business hours likely has strong adoption in that region, while activity concentrated during US market hours suggests different user demographics.

Sophisticated user activity evaluation requires segmentation based on multiple behavioral dimensions. Dune's comprehensive dataset enables analysts to create detailed user profiles based on transaction history, interaction patterns, and value metrics. These segments reveal distinct user archetypes that require different strategic approaches.

Power users typically represent a small percentage of total users but generate disproportionate activity and value. These users might interact with multiple protocols daily, participate in governance activities, and maintain significant token holdings. Identifying and understanding power user behavior patterns helps protocol teams optimize for their most valuable participants.

Casual users form the largest segment in most ecosystems but exhibit sporadic engagement patterns. These users might interact with protocols monthly or quarterly, often driven by specific events or incentives. Understanding casual user triggers enables protocol teams to design targeted engagement strategies.

Inactive users represent those who have stopped engaging with a protocol after initial activity. Analyzing the final interactions of churned users often reveals friction points or competitive pressures that drive user attrition. This analysis helps identify areas requiring improvement or features that might re-engage dormant users.

Modern blockchain ecosystems operate across multiple networks, making cross-chain user analysis increasingly important. Dune's multi-chain coverage enables analysts to track user behavior across different blockchain networks, revealing migration patterns and multi-chain strategies.

Users who bridge assets between networks—transferring cryptocurrency from one blockchain to another—demonstrate sophisticated blockchain knowledge and often represent valuable protocol participants. An analyst might examine users who bridge significant value from Ethereum to Polygon, tracking their subsequent activity patterns to understand layer-2 adoption drivers. Layer-2 solutions are secondary networks built on top of primary blockchains to improve transaction speed and reduce costs.

Cross-chain activity analysis also reveals protocol stickiness and competitive dynamics. Users who maintain activity on Ethereum while exploring alternatives on Arbitrum or Optimism exhibit different risk profiles compared to those who completely migrate to new networks. These patterns help protocols understand competitive positioning and user loyalty factors.

User activity evaluation requires temporal context to identify meaningful trends versus temporary fluctuations. Dune's historical data enables analysts to examine user behavior across different market cycles, protocol upgrades, and external events.

Daily active user trends provide insights into protocol momentum, but weekly and monthly patterns offer better signal-to-noise ratios. A protocol showing consistent week-over-week growth in unique users demonstrates healthier adoption than one with volatile daily metrics but flat weekly trends.

Seasonal patterns affect many blockchain protocols, particularly those related to DeFi yield farming or NFT trading. Understanding these cycles helps distinguish between fundamental growth and cyclical variations. For example, increased DeFi activity during market volatility periods reflects utility-driven engagement rather than speculative interest.

Transaction count metrics fail to capture user activity quality without corresponding value analysis. Dune enables analysts to examine both transaction frequency and economic value, providing comprehensive activity assessments.

Average transaction values reveal user sophistication and protocol utility. A decentralized exchange (DEX) with declining transaction counts but increasing average trade sizes might be evolving toward institutional usage patterns. Conversely, increasing transaction counts with declining average values could indicate growing retail adoption or potential spam activity.

Value retention analysis examines how much economic value users maintain within protocols over time. Users who consistently hold significant balances demonstrate stronger commitment than those who immediately withdraw funds after interactions. This metric proves particularly valuable for assessing DeFi protocol health and user confidence levels.

Dune's comprehensive datasets enable analysts to identify unusual behavioral patterns that might indicate manipulation, exploits, or emerging trends. Sudden spikes in user activity, particularly when concentrated among new addresses, often warrant detailed investigation.

Coordinated activity patterns suggest potential manipulation or bot networks. Multiple addresses exhibiting identical interaction sequences or timing patterns typically indicate non-organic behavior. Identifying these patterns helps distinguish genuine user growth from artificial inflation.

Conversely, organic growth patterns typically show natural distribution curves in user behavior metrics. New user onboarding follows predictable patterns, with gradual adoption curves and normal retention distributions. Deviations from these patterns often signal either exceptional product-market fit or artificial manipulation.

Effective user activity evaluation requires systematic approaches to data collection, analysis, and interpretation. Dune's query capabilities enable analysts to create automated monitoring systems that track key metrics over time.

Regular monitoring dashboards should include core metrics like daily active users, transaction volumes, new user acquisition, and retention rates. These baseline metrics provide context for deeper analysis when unusual patterns emerge.

Comparative analysis across similar protocols provides valuable benchmarking opportunities. Understanding how user activity patterns differ between competing DeFi protocols or NFT marketplaces reveals relative strengths and weaknesses that inform strategic decisions.

On-chain user activity evaluation through Dune requires combining multiple analytical approaches to develop comprehensive understanding. Simple metrics like transaction counts provide starting points, but meaningful insights emerge from examining user behavior patterns, cross-chain activity, temporal trends, and value-based assessments. Successful analysis identifies both organic growth patterns and potential manipulation while providing actionable insights for protocol development and strategic planning. The foundation lies in maintaining analytical rigor while adapting methodologies to specific protocol characteristics and ecosystem dynamics.

## Frequently asked questions

### How to do chain analysis in crypto?

Chain analysis in crypto involves examining on-chain data to understand user behavior, transaction patterns, and protocol health. Start by identifying key performance indicators like active users, transaction frequency, and value transferred. Use comprehensive datasets to distinguish between different user behaviors - for example, analyzing whether high transaction volumes come from genuine users or automated bots. Focus on transaction-level data to track smart contract interactions, cross-protocol activity, and user retention patterns. Create user segments based on behavioral dimensions like power users, casual users, and inactive users. Monitor temporal trends to distinguish between fundamental growth and temporary fluctuations, and always combine multiple analytical approaches rather than relying on single metrics.

### What is the valuation of Dune crypto?

Dune Analytics is not a cryptocurrency but rather a blockchain analytics platform that provides tools for querying and analyzing on-chain data. Dune doesn't have its own native token or crypto valuation. Instead, it operates as a data analytics service that helps users create dashboards, run queries, and analyze blockchain activity across multiple networks. The platform generates revenue through subscription services for advanced features rather than through a cryptocurrency token model.

### What chains does Dune support?

Dune Analytics provides multi-chain coverage that enables comprehensive cross-chain user analysis. The platform supports major blockchain networks including Ethereum, Polygon, Arbitrum, and Optimism, among others. This multi-chain support allows analysts to track user behavior across different networks, examine migration patterns between chains, and understand layer-2 adoption drivers. Users can analyze cross-chain activity to see how participants bridge assets between networks and maintain activity across multiple blockchain ecosystems, providing insights into protocol stickiness and competitive dynamics in the multi-chain landscape.

### How to check crypto activity?

To check crypto activity, examine multiple metrics beyond simple transaction counts. Monitor daily, weekly, and monthly active users to understand engagement patterns and protocol momentum. Analyze transaction volumes alongside frequency to assess activity quality - look at average transaction values to gauge user sophistication and protocol utility. Track user retention through cohort analysis to see how many users return after their first interaction. Examine geographic and temporal patterns to identify peak usage hours and regional adoption. Use value-based assessments by analyzing how much economic value users maintain within protocols over time. Watch for behavioral anomalies like coordinated activity patterns that might indicate manipulation, and always compare metrics across similar protocols for proper benchmarking context.

Learn how to evaluate on-chain user activity using blockchain analytics platforms like Dune. Discover key metrics, user segmentation strategies, cross-chain analysis, and behavioral pattern identification for comprehensive crypto protocol assessment.

How to evaluate on-chain user activity with Dune

![MEV bot.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/MEV_bot_3057653da1.png)
Maximal Extracable Value is a hidden tax on all types of Ethereum transactions.

  

That means any time you want to transact in DeFi: from buying or selling an NFT, lending tokens to a liquidity pool, or swapping one token for another, a group of opportunistic users known as “searchers” have the opportunity to see your trade, and manipulate the criteria surrounding your trade to ensure they make profit, at your expense.

  

The workhorses of MEV are MEV bots, programs designed to look for certain types of transactions that can be exploited to make money.

  

In this article, we’re going to be exploring MEV Bots in more detail, looking at how they work and the different types.

  

First, let’s take a look at what MEV is first, before jumping into bots.

### What is MEV?

  

At its simplest, Maximal Extracable Value is a hidden tax on all types of Ethereum transactions. That means any time you want to transact in DeFi: from buying or selling an NFT, lending tokens to a liquidity pool, or swapping one token for another, a group of opportunistic users known as “searchers” have the opportunity to see your trade, and manipulate the criteria surrounding your trade to ensure they make profit, at your expense.

  

There are lots of different ways MEV can take place on Ethereum, which we’ll explore further down in the article. But for now, it’s important to understand the mechanics of MEV, and how Ethereum makes this all possible.

### What is a MEV Bot?

  

MEV bots are programs designed to maximize profits by exploiting opportunities within blockchain transactions.

  

They operate on Ethereum, but also on chains where transaction ordering and gas price bidding are a feature.

  

By analyzing mempool data (pending transactions) and executing precise strategies, MEV bots can extract significant value from transactions across the DeFi space.

### How Does a MEV Bot Work?

  

On Ethereum, validators, the entities responsible for verifying transactions, are allowed to re-arrange the order of transactions as they see fit. Validators typically do this if there are opportunities to improve the profit they receive from validating transactions.

  

Let’s take a closer look at this concept. When you submit a transaction on Ethereum, it does not immediately get added to the next block.

  

Instead, it first goes into the “mempool” which is the collection of all pending transactions. This pool is visible to anyone. You can see a screenshot of this below. And if you’re curious to see what it looks like, [here’s a live feed.](https://www.blockchain.com/explorer/mempool/eth)

  ![Screenshot 2025-02-21 at 10.25.29.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_21_at_10_25_29_7b8f7f2374.png)

Here is where MEV bots come in.

  

Because validators are not required to add transactions to the block in the same order that they were submitted by users, anyone can pay those validators to re-arrange transactions in a certain way.

  

This manipulation of the order of things allows MEV to happen. An MEV bot sometimes referred to as ‘searchers’ look for trades they can make money from.

  

In the next section we’ll look at what types of bots are there and what they are looking for.

### What are the different types of MEV Bots?

  

Now we understand what an MEV bot does, let’s take a look at the different types of MEV Bot.

  

-   **Frontrunning Bots** - Frontrunning bots place transactions ahead of others by outbidding them in gas fees. They look for high-value trades in the mempool with certain features inh high slippage or lo typically focus on high-value transactions where their execution priority can yield significant profits. [Learn more about frontrunning](https://cow.fi/learn/what-is-frontrunning).
    

-   **Backrunning Bots** - Backrunning is a specific type of MEV (Maximal Extractable Value) which causes some traders to miss out on potential profit opportunities from their trades. In practice, backrunning involves strategically executing a transaction immediately after another, high-value transaction. By doing this, the backrunning transaction capitalizes on the arbitrage opportunity left over from the [price impact](https://cow.fi/learn/cow-protocol-glossary#:~:text=Price%20impact) of the initial transaction. [Learn more about backrunning.](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained)
    
-   **Sandwich Bots** - Sandwich attacks occur when a user’s transaction gets trapped, or “sandwiched,” between two hostile transactions — one before and one after. As a result, the original transaction executes at a much higher price than necessary, leading to an inflated price for the original trader and a profit for the malicious trader placing the two extra trades (known as a “searcher”). [Learn more about sandwich attacks.](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself)
    
-   **Arbitrage/LVR Bots** - MEV arbitrage bots identify and exploit price differences for the same asset across different decentralized exchanges or DEXes. This is also known as loss versus rebalancing. These bots look for a token price to be higher or lower on different exchanges, and then exploit the price difference between the two. Many liquidity providers haven’t even heard of LVR, but it costs them 5–7% of their liquidity, resulting in hundreds of millions lost each year. In fact, when accounting for LVR, many of the largest liquidity pools are not profitable for LPs at all. [Learn more about LVR.](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr)
    
-   **Liquidation Bots** - Liquidation bots specialise in monitoring lending platforms looking for undercollateralized loans. If a borrower’s collateral falls below a required threshold, these bots execute liquidation transactions to claim rewards.
    
-   **Flash Loan Bots** - Technically not an MEV bot in the strictest sense, flash loan bots work to finance and facilitate MEV by utilizing flash loans. Flash loans are unsecured loans that must be repaid within a single transaction block. Flash Loan bots are often paired with bots above to facilitate the execution of MEV.
    

## The key features of MEV Bots

There are a number of crucial features that make up how an MEV bot operates. Below are

### Gas Fee Optimization

  

When bots are looking for potential trades to exploit, they also need to calculate how much gas is required to position its trade in a way that optimizes profits.

  

If the bot uses too much gas, it eats into potential profitability. Too little gas however, and it risks been gazumped by a rival bot. Bots are always trying to find a balance between profitability and efficiency.

### The ability to analyse smart contracts

  

As MEV bots have become more sophisticated they are able to not only look at single trades, but often multiple ones, too.

  

Advanced MEV bots leverage algorithms to dive into smart contracts looking for exploitable patterns or lucrative opportunities.

  

MEV bots now have the capability to assess different conditions around a potential trade. They can look at liquidity pools - and how easily they can facilitate the trade - the tokens inside the contracts, and the arbitrage possibilities within these contracts.

### Trading autonomy

  

For bots to be effective, they need to act quickly. Which is why MEV bots are designed to execute precise transactions just at the right time to maximise profits.

  

To do that, many MEV bots are trade on their own, looking for the right sort of trades and the right conditions and then executing on behalf of its owner.

### Mempool Monitoring

  

MEV bots are designed to constantly monitor the mempool, looking for transactions that it can make profits from.

  

Because transactions aren’t executed straight away, these bots have time to analyse vast amounts of transactions, identifying which ones can be exploited. Depending on the bot, it will look for trades it can either frontrun, backrun, sandwich, or liquidate, as we explored in an earlier section.

## How to beat MEV bots?

Beating MEV bots on your own can be tricky, but there are many avenues you can use to protect yourself from MEV Bots.

### Reduce Slippage on Ethereum

  

The most basic defense against MEV is setting a low slippage tolerance. Slippage tolerance is essentially how much variation in the final price you receive you are willing to accept.

  

Transactions with a lower slippage tolerance give MEV bots less room to exploit trades.

  

For users who aren’t utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it’s by no means a complete solution.

  

Setting the slippage tolerance too low often results in failed transactions. Even with optimal slippage, MEV bots may still be able to extract value from your trades.

  

So sometimes we need to do more than adjust our slippage.

  

### Use a Custom RPC Endpoint on Ethereum

  

A better protection method is to install an MEV protection RPC endpoint. A Remote Procedure Call (RPC) endpoint is an intermediate layer that routes transactions from a user’s wallet to the blockchain itself.

  

One of the most popular specialized RPC endpoints is [MEV Blocker](https://cow.fi/mev-blocker). As the name suggests, MEV Blocker provides protection against MEV across all of Ethereum. The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool.

  

These searchers cannot frontrun or sandwich user transactions.

Instead, they capture value through backrunning. Anytime a searcher backruns a user’s transaction, the searcher keeps up to 10% of the value and sends the other 90% back to the user as a rebate.

  

[Install MEV Blocker.](https://cow.fi/mev-blocker)

  

### The best solution? Use an MEV-Protected DEX

  

[CoW Swap](https://swap.cow.fi/#/) is a meta DEX aggregator that finds the best prices for trades and provides comprehensive MEV protection. The protocol uses a unique trading mechanism that relies on batch auctions and intents to achieve the best outcomes for users.

  

Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Swap users benefit from thorough MEV protection on all trades.

  

[Try CoW Swap.](https://swap.cow.fi/#/)

### In summary

  

MEV bots are pieces of software that have become embedded into the fabric of the DeFi ecosystem.

  

While there is an argument that they can help make markets run more efficiently, more often than not, they create an unfair advantage, helping sophisticated actors exploit those with less knowledge and expertise.

  

But that doesn’t mean you have to just accept MEV’s role in DeFi. There are plenty of tools and services which can help you live free from MEV bots.

  

You just have to know where to look. 👀

large_MEV bot.png

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small_MEV bot.png

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MEV bot.png

In this article, we’re going to be exploring MEV Bots in more detail, looking at how they work and the different types. 


What is an MEV Bot?

Token flows represent the movement of cryptocurrencies between different addresses, exchanges, and protocols. These movements can indicate buying pressure, selling activity, or strategic positioning by major market participants. Nansen categorizes token flows into several key areas: fresh wallet activity, smart money movements, exchange flows, and general transfer patterns.

Fresh wallet activity tracks newly created addresses that receive significant token amounts. When a new wallet suddenly receives $2 million worth of ETH from multiple sources within 24 hours, this could signal institutional accumulation or preparation for a large trade. The platform filters out noise by focusing on wallets with substantial balances or high-volume transactions.

Smart money flows monitor addresses labeled as highly profitable or institutional. These wallets often demonstrate superior market timing and token selection. When smart money addresses collectively accumulate a specific token, it frequently precedes positive price movements. Conversely, mass selling by these addresses can signal impending market corrections.

# Fresh wallet dashboard analysis

The Fresh Wallet dashboard serves as a primary tool for identifying newly funded addresses and their token activities. This feature helps users discover emerging patterns before they become widely recognized. The dashboard displays fresh wallets by token balance, inflow value, and transaction frequency across multiple timeframes.

Consider a scenario where the dashboard shows 50 fresh wallets receiving LINK tokens worth $5 million collectively over seven days. Further analysis reveals that 80% of these wallets have not sold their positions, suggesting accumulation behavior. Cross-referencing this data with price charts and decentralized exchange trading volumes provides additional context for investment decisions.

The system allows filtering by wallet age, minimum transaction values, and inclusion or exclusion of centralized exchange addresses. Setting a seven-day wallet age filter with a $100,000 minimum transaction threshold focuses attention on the most significant new market participants.

# Smart money movement tracking

Smart Money Token Flows represent one of Nansen's most actionable features. These alerts track token movements involving addresses with proven track records of profitable trading or institutional status. The platform identifies these addresses through various criteria including transaction history, profit ratios, and association with known entities.

A practical application involves monitoring smart money flows for mid-cap tokens. Setting parameters for tokens with market caps between $10 million and $250 million, minimum daily inflows of $10,000, and maximum token age of 365 days creates a focused alert system. This configuration helps identify emerging opportunities while filtering out established tokens and insignificant movements.

Portfolio defense represents another crucial use case. Creating alerts for tokens in your watchlist with smart money flow thresholds of $150,000 provides early warnings of significant position changes by sophisticated traders. If smart money addresses begin selling tokens you hold, this may indicate undisclosed negative developments requiring immediate attention.

# Token and NFT signal implementation

Nansen's Signals feature automatically identifies extraordinary on-chain activity across multiple categories. Centralized exchange token flow signals highlight unusual inflows or outflows to major exchanges, often indicating buying or selling pressure. Decentralized exchange token flow signals track similar activity on automated market makers and order book exchanges.

Fresh Wallet Flow signals identify new addresses acquiring specific tokens, potentially revealing large entities attempting to obscure their activities through address rotation. Top Balance Change signals monitor whether major holders are increasing or decreasing their positions.

Creating a signal alert for all decentralized exchange token flows on Arbitrum with minimum values of $500,000 helps identify significant trading activity on that network. When tokens show large outflows from exchanges, it often indicates buying pressure as traders move tokens from exchanges to personal wallets for long-term holding.

# Exchange flow interpretation

Exchange flow monitoring provides insights into market sentiment and potential price movements. Large inflows to exchanges typically suggest selling pressure, while significant outflows indicate accumulation or withdrawal to cold storage.

Setting up exchange flow alerts with parameters of $100,000 minimum flow over 24 hours for tokens with market caps under $300 million creates a system for identifying extreme movements. When a token shows $5 million in unexpected exchange inflows, it may signal major holders preparing to sell, potentially causing price declines.

The platform distinguishes between different types of exchanges and provides context about whether movements represent genuine trading activity or routine operational transfers. This distinction proves crucial for accurate interpretation, as some large transfers represent normal business operations rather than market positioning.

# Smart contract activity monitoring

Smart Contract Call alerts enable monitoring of specific protocol interactions. This proves particularly valuable for tracking activity in protocols where you have significant funds deposited. Setting alerts for unusual transaction volumes or patterns can provide early warnings of potential security issues or market events.

Monitoring a stablecoin liquidity pool where you have funds deposited with alerts set for transactions exceeding $50 million helps identify de-pegging events or large-scale withdrawals that might affect your position. These alerts can provide crucial early warning before broader market recognition of developing issues.

# Comprehensive system integration

Effective token flow tracking requires combining multiple alert types and data sources. A comprehensive monitoring system might include fresh wallet alerts for discovery, smart money flows for validation, exchange flows for timing, and signals for confirmation.

When tracking a specific token across all these dimensions, fresh wallet alerts reveal new accumulation, smart money flows confirm sophisticated trader interest, exchange flows indicate market direction, and signals provide automated detection of unusual activity. This multi-layered approach provides robust market intelligence that no single metric could deliver alone.

# Implementation best practices

When implementing token flow tracking, start with broad parameters and gradually refine based on results. Begin with higher minimum values to reduce noise, then adjust thresholds based on the tokens and markets you monitor. Different token categories require different parameter settings—high-capitalization tokens need higher thresholds than emerging tokens to filter meaningful activity.

Geographic and temporal considerations also matter. Monitoring flows across different blockchain networks and time zones provides comprehensive coverage. Setting alerts for multiple timeframes captures both immediate opportunities and longer-term trends.

Regular review and adjustment of alert parameters ensures continued relevance as market conditions evolve. What constitutes significant flow values changes with overall market volatility and individual token characteristics.

Token flow tracking transforms raw blockchain data into actionable intelligence. By systematically monitoring fresh wallet activity, smart money movements, exchange flows, and automated signals, users gain comprehensive market insight. Success lies in proper parameter configuration, multi-dimensional analysis, and consistent refinement of monitoring systems. This approach enables early identification of market trends, validation of investment decisions, and protection of existing positions through real-time awareness of significant token movements.

## Frequently asked questions
### How to track money flow in crypto?

Track crypto money flows by monitoring token movements between addresses, exchanges, and protocols using specialized analytics platforms. Focus on fresh wallet activity that shows newly created addresses receiving significant token amounts, exchange flows indicating buying or selling pressure, and general transfer patterns. Set up alerts for different flow categories including minimum transaction thresholds (like $100,000) and specific timeframes to filter out noise and focus on meaningful movements. Combine multiple data sources including fresh wallet alerts for discovery, exchange flows for market timing, and automated signals for comprehensive market intelligence.

### How can you track crypto transactions?

Crypto transactions can be tracked through blockchain explorers and analytics platforms that monitor on-chain activity. Use tools that categorize transactions into key areas like smart money movements, exchange flows, and fresh wallet activity. Set up monitoring systems with specific parameters such as minimum transaction values, wallet age filters, and timeframe restrictions. For comprehensive tracking, monitor transactions across multiple dimensions including DEX and CEX flows, smart contract interactions, and unusual activity patterns. Geographic and temporal considerations are important, so track flows across different chains and time zones with alerts set for multiple timeframes.

### How to track liquidity in crypto?

Track crypto liquidity by monitoring exchange flows, DEX token movements, and smart contract interactions within liquidity pools. Large inflows to exchanges typically indicate selling pressure and reduced liquidity, while significant outflows suggest accumulation. Set up alerts for exchange flows with parameters like $100,000 minimum flow over 24 hours for tokens under $300 million market cap. Monitor DEX token flows to identify significant trading activity, and use smart contract call alerts to track protocol interactions, especially for pools where you have funds deposited. Watch for unusual transaction volumes or patterns that might indicate liquidity events or market movements.

### How to track smart wallets in crypto?

Track smart wallets by monitoring addresses with proven track records of profitable trading or institutional status, identified through transaction history, profit ratios, and association with known entities. Set up smart money flow alerts with specific parameters like tokens with market caps between $10 million and $250 million, minimum daily inflows of $10,000, and maximum token age filters. Focus on wallets that demonstrate superior market timing and token selection. When smart money addresses collectively accumulate specific tokens, it often precedes positive price movements. Create portfolio defense alerts with thresholds around $150,000 to get early warnings when sophisticated traders change positions in tokens you're monitoring.

Track cryptocurrency token flows and smart money movements to identify market opportunities and protect investments. Learn how to monitor fresh wallet activity, exchange flows, and institutional trading patterns using advanced analytics platforms for bett

How to track token flows with Nansen

![guide to MEV.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/guide_to_MEV_c2b1a7eecf.png)
Ethereum is one, if not the largest blockchain ecosystem in the crypto space. There are [thousands of tokens](https://cryptoslate.com/blockchain/ethereum/), projects, DAOs, and communities all built on top of Ethereum thanks to its customizable token standards, and a host of other features.

  

But one of the lesser-known features of Ethereum is something called MEV, or “maximal extractable value”. In this article, we’re going to be exploring this idea in more detail, and how it impacts the buying and selling of tokens on Ethereum.

## What is MEV?

  

At its simplest, Maximal Extracable Value is a hidden tax on all types of Ethereum transactions. That means any time you want to transact in DeFi: from buying or selling an NFT, lending tokens to a liquidity pool, or swapping one token for another, a group of opportunistic users known as “searchers” have the opportunity to see your trade, and manipulate the criteria surrounding your trade to ensure they make profit, at your expense.

  

There are lots of different ways MEV can take place on Ethereum, which we’ll explore further down in the article. But for now, it’s important to understand the mechanics of MEV, and how Ethereum makes this all possible.

## How Does MEV Work?

  

On Ethereum, validators, the entities responsible for verifying transactions, are allowed to re-arrange the order of transactions as they see fit. Validators typically do this if there are opportunities to improve the profit they receive from validating transactions.

  

Let’s take a closer look at this concept. When you submit a transaction on Ethereum, it does not immediately get added to the next block.

  

Instead, it first goes into the “mempool” which is the collection of all pending transactions. This pool is visible to anyone. You can see a screenshot of this below. And if you’re curious to see what it looks like, [here’s a live feed.](https://www.blockchain.com/explorer/mempool/eth)
![Screenshot 2025-02-21 at 10.25.29.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_21_at_10_25_29_7b8f7f2374.png)

Here is where the opportunity to extract value through MEV comes in. Because validators are not required to add transactions to the block in the same order that they were submitted by users, anyone can pay those validators to re-arrange transactions in a certain way.

  

This manipulation of the order of things allows MEV to happen. A person and or entity, sometimes referred to as ‘searchers’ look for trades they can make money from.

  

In the next section we’ll look at the specific ways at how MEV can take place.

## The Different Types of MEV on Ethereum

  

There are broadly four types of MEV on Ethereum. They are:

-   **Frontrunning**
    
-   **Backrunning**
    
-   **Sandwich attacks**
    
-   **Loss versus rebalancing (LVR)**
    

  

We’ll look at each one of these in turn.

## Frontrunning on Ethereum

  

Frontrunning is a particular type of MEV that affects all forms of Ethereum transactions including trades, NFT mints, and more.

  

Frontrunning takes place when a user makes a transaction but gets “front run” by an MEV bot who makes the same transactions ahead of them.

  

This happens in three distinct steps:

1.  **A searcher goes looking for potential trades in the Ethereum mempool:** The first step involves monitoring the blockchain network’s mempool, a holding area for pending transactions. Here, frontrunners, who are often sophisticated bots, scan the mempool to identify transactions that can carry significant value that they want to snatch away or that could influence the price of a particular asset.
    
2.  **A searcher picks a transaction it can make profit from:** The frontrunner will analyze the potential market impact once such a transaction is identified. For instance, if a large buy order for a specific token is detected, the frontrunner knows that this transaction could increase the asset’s price once processed.
    
3.  **The searcher places a new transaction BEFORE the transaction in question:** The frontrunner will place their buy order for the same asset, intending to get their transaction processed before the initially detected transaction. They typically give the validators a higher “tip” to execute their transaction first in the block in comparison to the target transaction.
    

  

This feature on Ethereum costs users billions of dollars in lost value, benefitting more sophisticated actors working on Ethereum.

  

**We have a longer article on “[What is Frontrunning](https://cow.fi/learn/what-is-frontrunning)”.**

## Backrunning on Ethereum

Backrunning is another form of MEV that affects various Ethereum transactions, including trades, NFT mints, and more. Unlike frontrunning, backrunning takes advantage of transactions after they have been executed.

Backrunning occurs when a user makes a transaction that gets followed by an MEV bot executing a strategic transaction right after theirs in order to capture a price movement.

1.  **Monitoring Pending Transactions:** Like frontrunning, backrunning attacks begin with searchers monitoring the mempool for profitable opportunities. In particular, they are looking for transactions that cause a large price impact, as the backrunning attack involves capturing the arbitrage opportunity left behind after a large trade.
    
2.  **Finding a Transaction with a Large Price Impact:** Once a valuable transaction is identified, the searcher analyzes its impact. For instance, if a large sell order for a specific token is detected, the backrunner knows that this transaction could decrease the asset’s price once processed.
    
3.  **Capturing the Price Impact:** By placing a transaction directly after a previous, large transaction, the MEV bot can capture the price movement that the transaction causes on the AMM. The backrunner makes a transaction correcting this price impact and collecting the arbitrage in the process.
    

Backrunning is considered the least harmful type of MEV. While it still captures value, it does not do it at the expense of the trader. When done in isolation, it only captures leftover arbitrage after a large transaction moves an asset’s price.

  

We have a longer article on “[What is Backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained)” if you’d like to know more.

## Sandwich Attacks on Ethereum

  

A sandwich attack combines both frontrunning and backrunning to extract the most value from a transaction.

  

This is when a transaction gets sandwiched between two hostile transactions,  one before and one after. As a result, the original transaction executes at a much higher price than necessary, leading to an inflated price for the original trader and a profit for the searcher placing the two extra trades.

  

This happens in four distinct stages.

  

1.  **A searcher looks through the public mempool:** Like all other types of MEV, sandwich attacks begin with searchers monitoring the mempool for profitable opportunities. What they are looking for is large trades where they can capture value before the transaction, and afterwards.
    
2.  **A searcher inserts a frontrunning transaction:** When a trade is identified, the searcher will duplicate it and place their own transaction right before the victim’s — in essence frontrunning. The searcher gauges the size of their transaction to cause just enough price impact to push the asset’s price up to the precise slippage tolerance the victim has set.
    
3.  **Re-order the transactions:** Since a sandwich attack is a 2-part process, the searcher orders transactions so that the victim’s transaction executes right after the seracher’s frontrunning transaction, but just before their backrunning transaction.
    
4.  **Complete the attack by inserting a backrunning transaction:** After the victim transaction executes, its price impact pushes the price of the asset even further (remember it was already raised as a result of the searcher’s frontrunning transaction). Once this takes place, the searcher executes a backrunning transaction, selling the asset and profiting from the arbitrage.
    

  

Sandwich attacks are the most common types of swap-related MEV, taking advantage of a user’s slippage tolerance to cause maximum pain for the trader and maximum profit for the searcher.

  

**If you’d like to know more, we have an article dedicated to understanding “[What is a Sandwich Attack](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself)”.**

## Loss-Versus-Rebalancing (LVR) on Ethereum

  

The last form of MEV on Ethereum is loss-versus-rebalancing (LVR). This is a distinct type of MEV that affects liquidity providers (LPs) and accounts for more value loss than all other types of MEV combined. LPs typically lose 5-7% of the total liquidity per year to this phenomenon.

  

This is because liquidity providers - who facilitate trades in DeFi by providing liquidity to certain trading pairs - can be exploited when the price of an asset is not universal across all markets. Let’s take a closer look at how LVR.

  

LVR is a form of arbitrage that occurs whenever an AMM has an outdated (stale) price in comparison to some other trading venue.

  

Arbitrageurs exploit this price difference by trading from the AMM to the more liquid exchange (usually a centralized exchange like Binance), correcting the arbitrage and extracting value from LPs in the process.

  

It sounds complicated, but essentially it’s the buying and selling of assets done in a way that takes advantage of prices not being universal. Learn more about LVR in our article: “[What is Loss-Versus-Rebalancing (LVR)?](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr)”

## Is MEV on Ethereum a bad thing?

  

Like many things in crypto, the easiest answer is, “it’s complicated.” MEV is no different.

  

Some argue MEV is a natural part of the Ethereum market mechanism and it helps to find the most efficient prices. Others believe that MEV can be harmful, but only if it’s concentrated in the hands of a few validators — therefore they work to “democratize” MEV and allow anyone to extract value from on-chain transactions.

  

Whatever side of the fence you sit on, if you don’t want prying eyes spying on your trades, there are a number of strategies and tools you can use to prevent MEV from happening to you.

## How to Protect Yourself from MEV on Ethereum

  

There are multiple ways to avoid MEV. Some you can do yourself but others offer a more comprehensive form of defense that mean you can set and forget. Below are a list of the most effective tools you can start using today.

## Reduce Slippage on Ethereum

  

The most basic defense against MEV is setting a low slippage tolerance. Slippage tolerance is essentially how much variation in the final price you receive you are willing to accept.

Transactions with a lower slippage tolerance give searchers less room to exploit trades.

For users who aren’t utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it’s by no means a complete solution.

  

Setting the slippage tolerance too low often results in failed transactions. Even with optimal slippage, MEV bots may still be able to extract value from your trades.

  

So sometimes we need to do more than adjust our slippage.

## Use a Custom RPC Endpoint on Ethereum

  

A better protection method is to install an MEV protection RPC endpoint. A Remote Procedure Call (RPC) endpoint is an intermediate layer that routes transactions from a user’s wallet to the blockchain itself.

  

One of the most popular specialized RPC endpoints is [MEV Blocker](https://cow.fi/mev-blocker). As the name suggests, MEV Blocker provides protection against MEV across all of Ethereum. The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions.

  

Instead, they capture value through backrunning. Anytime a searcher backruns a user’s transaction, the searcher keeps up to 10% of the value and sends the other 90% back to the user as a rebate.

  

Install MEV Blocker here: [https://cow.fi/mev-blocker](https://cow.fi/mev-blocker)

## The best solution? Use an MEV-Protected DEX

  

[CoW Swap](https://swap.cow.fi/#/) is a meta DEX aggregator that finds the best prices for trades and provides comprehensive MEV protection. The protocol uses a unique trading mechanism that relies on batch auctions and intents to achieve the best outcomes for users.

  

Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Swap users benefit from thorough MEV protection on all trades.

  

Try CoW Swap here: [https://swap.cow.fi/#/](https://swap.cow.fi/#/)

## In summary

  

MEV is a critical problem for the Ethereum ecosystem because it undermines the fundamental principles of fairness and transparency that blockchain technology aims to uphold. The ability of sophisticated actors to extract value from everyday traders pushes users away and discourages the broad adoption of decentralized technologies.

  

Addressing — and eventually solving — MEV is essential to keeping Ethereum a robust, innovative, and user-friendly platform for all participants. To this end, CoW DAO is working hard to secure a decentralized future by creating products that ensure a fair and protective decentralized financial system.

  

Learn more about CoW DAO, its mission, and its various products here: [https://cow.fi/](https://cow.fi/).

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One of the lesser-known features of Ethereum is something called MEV, or “maximal extractable value”. In this article, we’re going to be exploring this idea in more detail, and how it impacts the buying and selling of tokens on Ethereum. 

A guide to MEV on Ethereum

Messari Diligence Reports organize cryptocurrency evaluation into four essential categories: general information, token economics, technology, and legal and regulatory considerations. This structured methodology ensures thorough analysis while maintaining consistency across different digital assets and protocols.

The platform maintains over 200 detailed reports covering major cryptocurrencies and emerging tokens across sectors including decentralized finance (DeFi), Web3, non-fungible tokens (NFTs), smart contract platforms, and scaling solutions. Reports receive regular updates, with the top 25 most relevant assets refreshed quarterly and additional reports updated as needed.

<h2>Fundamental analysis and background research</h2>

Effective token evaluation begins with understanding a project's core purpose and development history. Messari reports examine the specific problems a protocol addresses, mapping critical moments in its evolution including launch dates, major partnerships, funding rounds, and technological milestones.

When analyzing a DeFi lending protocol, for instance, researchers investigate its launch timeline, how lending mechanisms have evolved, and which market conditions drove specific feature developments. The analysis identifies key contributors, development teams, and supporting entities, revealing the project's governance structure and decision-making processes.

Team analysis extends beyond founder profiles to examine the broader contributor ecosystem, including advisors and institutional supporters. This evaluation considers leadership experience, previous projects, and the depth of technical expertise within the organization.

<h2>Token economics and utility assessment</h2>

Token economics represent perhaps the most crucial element of due diligence, determining how value flows through protocols and what drives fundamental token demand. Messari reports analyze all token use cases, from governance voting and staking rewards to transaction fee payments and protocol access rights.

For a layer-1 blockchain token, analysis examines its role as native currency for transaction fees, its function in validator staking mechanisms, governance participation, and additional utilities like premium feature access or protocol reward participation. Reports quantify these use cases through transaction volumes, staking participation rates, and governance activity levels.

Distribution analysis provides insights into token concentration and potential centralization risks. This includes examining top wallet holdings, determining whether large concentrations represent exchanges, institutional investors, or protocol treasuries, and analyzing validator distribution in proof-of-stake networks.

Governance evaluation assesses how token holders participate in protocol decisions, the effectiveness of governance mechanisms, and community engagement levels. For protocols with active governance, this includes voting participation rates, proposal success rates, and large token holder influence on decisions.

<h2>Technical infrastructure and integration review</h2>

Technical analysis examines the underlying infrastructure supporting tokens and their protocols. This includes comprehensive coverage of supported blockchain networks, particularly for tokens existing across multiple chains or layer-2 solutions. A token originally launched on Ethereum might also operate on Polygon, Arbitrum, or other networks, each with distinct technical implementations and security considerations.

Smart contract analysis forms a critical component of technical due diligence. Reports examine audit histories, identifying which security firms have reviewed protocol smart contracts and what vulnerabilities were discovered and addressed. This includes evaluating ongoing security maintenance approaches and bug bounty programs.

Integration analysis evaluates protocol connections with other DeFi protocols, exchanges, and blockchain infrastructure. For a yield farming protocol, this might include integrations with major decentralized exchanges, lending protocols, and yield aggregators. Analysis considers both integration benefits for user experience and potential risks from interconnected protocol dependencies.

<h2>Legal and regulatory considerations</h2>

Legal and regulatory analysis has gained importance as regulatory frameworks evolve globally. Reports examine key legal considerations surrounding token listings, including securities law implications, compliance requirements, and regulatory risks across major jurisdictions.

Compliance analysis evaluates how protocols handle identity verification and anti-money laundering requirements. This includes examining regulatory compliance approaches, licenses held by associated entities, and navigation of different jurisdictional requirements.

Risk analysis encompasses technical risks like smart contract vulnerabilities and broader regulatory risks including potential enforcement actions or regulatory changes affecting protocol operations. A stablecoin project, for example, would face analysis of regulatory risks around banking partnerships, reserve management, and evolving stablecoin regulations.

<h2>Implementation in investment processes</h2>

Organizations typically integrate Messari Diligence Reports at multiple stages, from initial asset screening through ongoing position monitoring. For initial screening, investors use reports to understand token value propositions, major risks, and technical implementations. The structured format enables rapid comparison across similar sector projects.

Integration decisions benefit from technical analysis sections detailing smart contract addresses, audit results, and network support. Development teams evaluating protocol integrations can assess technical compatibility and security considerations using this information.

<h2>Platform access and features</h2>

Messari offers multiple access tiers for Diligence Reports. Enterprise subscribers receive access to five reports within their subscription, while organizations with greater research needs can purchase library access or individual reports. The platform delivers reports in PDF format for traditional distribution and Notion format for collaborative research workflows.

Recent enhancements include Diligence Alerts, notifying users of tracked asset report updates, and dynamic sections aggregating relevant developments since report publication. These features maintain current awareness without requiring constant manual monitoring.

<h2>Research limitations and supplementary analysis</h2>

Messari Diligence Reports provide comprehensive structured analysis but focus on publicly available information. They may not capture private fundraising details, upcoming partnership announcements, or confidential development plans. The crypto market's rapid evolution means even recently updated reports may not reflect the latest developments.

Effective due diligence combines Messari's structured analysis with additional research including project documentation, community discussions, on-chain metrics, and direct team engagement. Reports serve as a comprehensive foundation enabling more targeted additional research rather than replacing all due diligence activities.

<h2>Systematic approach to cryptocurrency evaluation</h2>

Messari Diligence Reports transform token due diligence from ad-hoc processes into systematic methodology covering all critical cryptocurrency evaluation aspects. By providing structured analysis across general information, token economics, technology, and legal considerations, the platform enables more consistent and comprehensive investment decision-making.

The platform's value extends beyond information provision to the standardized framework enabling project comparison and systematic evaluation of different asset types. As cryptocurrency markets mature and institutional adoption grows, systematic due diligence processes become increasingly important for managing risk and identifying opportunities in this rapidly evolving landscape.

<h2>Frequently asked questions</h2>

<h3>How to do good due diligence for crypto coins?</h3>

Good crypto due diligence should follow a systematic four-part framework. First, analyze the project's general information including its core purpose, development timeline, team structure, and key milestones. Second, thoroughly examine token economics by understanding all use cases (governance, staking, fees), wallet concentration, and governance mechanisms. Third, assess the technology including blockchain networks supported, smart contract audit histories, security measures, and protocol integrations. Finally, evaluate legal and regulatory considerations including compliance requirements, KYC/AML procedures, and jurisdictional risks. Combine this structured analysis with additional research from project documentation, community discussions, on-chain metrics, and direct team engagement for comprehensive evaluation.

<h3>What is Messari crypto?</h3>

Messari is a crypto research platform that provides systematic due diligence reports for digital assets. The platform houses over 200 detailed reports covering major cryptocurrencies and emerging tokens across DeFi, Web3, NFTs, smart contract platforms, and scaling solutions. Their reports organize token evaluation into four primary categories: general information, token economics, technology, and legal/regulatory considerations. The platform offers different access tiers, with enterprise subscribers receiving access to five reports and options to purchase individual reports or the entire library. Reports are updated regularly, with top assets receiving quarterly refreshes.

<h3>What does Coinbase do regarding the due diligence of crypto assets listed on its platform?</h3>

Coinbase conducts comprehensive due diligence before listing crypto assets, though their specific process isn't detailed in the provided information. Generally, major exchanges like Coinbase evaluate projects across multiple dimensions including regulatory compliance, technical security, token economics, and legal considerations. They typically require projects to meet strict compliance standards, undergo security audits, demonstrate sufficient liquidity and trading volume, and comply with applicable securities laws. Coinbase also considers factors like the project's development team, governance structure, and long-term viability. The exchange maintains listing standards that align with regulatory requirements and continuously monitors listed assets for ongoing compliance.

Discover how Messari Diligence Reports provide systematic cryptocurrency evaluation through four essential categories: general information, token economics, technology, and legal considerations. Learn structured crypto due diligence methodology.

How to conduct token due diligence with Messari

Messari provides a comprehensive suite of portfolio tracking tools that extend far beyond simple price monitoring. The platform aggregates data from hundreds of exchanges and protocols, offering real-time valuation of digital assets including tokens, NFTs, and decentralized finance (DeFi) positions. Users can connect multiple wallets and exchange accounts to create a unified view of their entire cryptocurrency portfolio.

The platform's particular strength lies in its ability to handle complex DeFi positions. Unlike basic portfolio trackers that only monitor spot holdings, Messari can track liquidity pool positions, staked assets, lending positions, and yield farming rewards. This comprehensive approach ensures complete visibility into cryptocurrency investments across the entire ecosystem.

# Core performance metrics

Messari offers several critical metrics for portfolio evaluation. Total portfolio value represents the current dollar value of all holdings, updated in real-time based on current market prices. The platform calculates both absolute and percentage-based returns over various time periods, including daily, weekly, monthly, quarterly, and yearly performance.

Asset allocation analysis displays the percentage breakdown of portfolio holdings by individual tokens, sectors, or blockchain networks. This feature helps investors understand their exposure to different market segments and identify potential concentration risks. For example, an investor might discover that 60% of their portfolio consists of Ethereum-based assets, indicating significant exposure to Ethereum network-specific risks.

Risk-adjusted returns provide insight into portfolio performance relative to volatility. Messari calculates metrics such as the Sharpe ratio, which measures excess returns per unit of risk taken. A portfolio with a Sharpe ratio of 1.5 indicates that the investor earned 1.5 units of return for each unit of risk assumed—a meaningful measure of efficiency in cryptocurrency markets where volatility is typically high.

# Account integration and setup

Establishing effective portfolio tracking on Messari begins with connecting all relevant accounts and wallets. The platform supports integration with major exchanges including Coinbase, Binance, Kraken, and dozens of others. Users can also connect hardware wallets and DeFi protocols to capture the complete picture of their holdings.

When connecting accounts, users should ensure they grant appropriate read-only permissions. This allows Messari to track balances and transactions without compromising security. The platform uses industry-standard API connections that cannot execute trades or withdraw funds—a crucial security consideration for cryptocurrency holders.

For privacy-conscious users, Messari offers manual portfolio entry options. Users can input holdings without connecting accounts, though this requires regular manual updates to maintain accuracy. This approach works well for investors who prefer to maintain complete control over their data while still accessing Messari's analytical capabilities.

# Historical performance analysis

Historical performance analysis forms the foundation of effective portfolio evaluation. Messari provides detailed historical charts showing portfolio value over time, with the ability to overlay market benchmarks for comparison. Users can compare their portfolio performance against major cryptocurrencies like Bitcoin and Ethereum, or against broader market indices.

Consider a portfolio that began the year with $100,000 invested across ten different cryptocurrencies. By examining Messari's historical performance charts, the investor can observe that their portfolio reached a peak value of $180,000 in March before declining to $120,000 by year-end. This analysis reveals both the portfolio's volatility characteristics and its overall positive performance despite market fluctuations.

The platform's attribution analysis breaks down performance by individual holdings, showing which assets contributed most significantly to portfolio gains or losses. In the previous example, the analysis might reveal that a 15% allocation to Solana contributed 40% of the portfolio's gains, while a 10% allocation to a declining altcoin accounted for 25% of losses. This granular insight proves invaluable for future allocation decisions.

# Market benchmarking

Effective portfolio evaluation requires comparison against relevant benchmarks. Messari offers several cryptocurrency market indices that serve as performance benchmarks. The Messari 10 Index tracks the ten largest cryptocurrencies by market capitalization, while sector-specific indices focus on areas like DeFi, gaming, or infrastructure tokens.

Benchmark comparison reveals whether a portfolio is generating alpha—returns above what would be expected given the risk taken—or simply tracking broader market movements. A portfolio that returned 50% during a period when Bitcoin gained 40% demonstrates modest outperformance. However, if the broader cryptocurrency market gained 60% during the same period, the portfolio actually underperformed despite positive absolute returns.

Risk-adjusted benchmark comparisons provide additional insight. A portfolio might match the returns of a benchmark index while exhibiting lower volatility, indicating superior risk-adjusted performance. Messari's tools calculate these metrics automatically, allowing users to quickly assess whether their investment strategy is adding measurable value.

# Asset allocation insights

Asset allocation analysis helps investors understand their portfolio's composition and identify potential improvements. Messari categorizes holdings by various criteria including market capitalization, sector, blockchain network, and token type. This multi-dimensional analysis reveals concentration risks and diversification opportunities.

A well-diversified cryptocurrency portfolio might allocate 40% to large-cap assets like Bitcoin and Ethereum, 35% to mid-cap tokens across various sectors, and 25% to smaller, higher-risk investments. Messari's allocation analysis clearly displays these percentages and tracks how they change over time due to price movements and trading activity.

Sector allocation analysis proves particularly valuable for identifying thematic exposure. An investor focused on decentralized finance might discover that 70% of their portfolio consists of DeFi tokens, indicating high correlation risk during sector-specific downturns. This insight might prompt diversification into other cryptocurrency sectors like gaming, infrastructure, or Web3 applications.

# Risk assessment tools

Messari provides comprehensive risk assessment tools that help investors understand their portfolio's risk profile. Volatility metrics show how much portfolio values fluctuate over different time periods. A portfolio with 30-day volatility of 15% can expect daily value swings of approximately 15% in either direction under normal market conditions—though cryptocurrency markets can certainly exceed normal parameters.

Correlation analysis reveals how closely portfolio holdings move together. High correlation between assets reduces effective diversification and increases portfolio risk. For example, a portfolio heavily weighted toward Ethereum and Ethereum-based DeFi tokens might show correlation coefficients above 0.8, indicating that most holdings will decline simultaneously during Ethereum-specific negative events.

Value-at-Risk calculations estimate potential losses under adverse market conditions. A 95% Value-at-Risk of $15,000 indicates that the portfolio has a 5% probability of losing more than $15,000 over the specified time horizon. These metrics help investors understand their downside exposure and adjust position sizes accordingly.

# Yield and staking tracking

Modern cryptocurrency portfolios often include yield-generating activities such as staking, liquidity provision, and lending. Messari tracks these income streams separately from capital appreciation, providing a complete picture of portfolio returns. This distinction proves crucial for tax reporting and comprehensive performance evaluation.

Consider an investor who stakes 32 Ethereum to operate a validator node. Messari tracks both the appreciation of the underlying ETH holdings and the additional ETH rewards earned through staking. If Ethereum appreciates 25% while generating 4% staking rewards, the total return combines both components for a comprehensive performance measure that reflects the full investment outcome.

DeFi yield tracking presents additional complexity due to multiple token rewards and changing yields. A liquidity provider in a decentralized exchange pool might receive trading fees, liquidity mining rewards, and experience impermanent loss—the temporary loss of value compared to simply holding the underlying tokens. Messari's tools aggregate these various components to calculate net returns from DeFi activities.

# Performance reporting

Messari generates comprehensive performance reports that summarize portfolio activity over specified periods. These reports include total returns, asset allocation changes, transaction summaries, and comparative analysis against benchmarks. The institutional-grade reporting makes Messari suitable for both individual investors and professional fund managers.

Monthly performance reports might show that a portfolio gained 8% during the period, driven primarily by a 25% increase in Layer 1 blockchain tokens that comprised 40% of holdings. The report details which specific transactions contributed to performance and how asset allocation shifted due to price movements and trading activity.

Tax reporting features help users track cost basis and calculate gains or losses for tax purposes. Messari maintains detailed transaction histories and can generate reports compatible with major cryptocurrency tax software. This functionality proves invaluable during tax season when investors need comprehensive records of their trading activity across multiple platforms and protocols.

# Advanced analytics

Beyond basic performance tracking, Messari offers advanced analytics that provide deeper portfolio insights. Alpha and beta calculations show how much excess return a portfolio generates relative to market risk. A portfolio with a beta of 1.2 tends to move 20% more than the broader market in both directions, indicating higher systematic risk.

Messari's research integration provides context for portfolio holdings through fundamental analysis reports. Users can access detailed research on their portfolio assets, helping them make informed decisions about position sizing and holding periods. This integration of quantitative performance data with qualitative research analysis distinguishes Messari from simpler portfolio tracking tools.

The platform's institutional features include custom benchmark creation, multi-manager tracking, and compliance reporting. These capabilities make Messari suitable for cryptocurrency funds, family offices, and other sophisticated investors who require professional-grade portfolio management tools with the transparency and reporting standards expected in traditional finance.

Messari provides a sophisticated platform for evaluating cryptocurrency portfolio performance through comprehensive tracking, analysis, and reporting capabilities. The platform's ability to handle complex DeFi positions, provide risk-adjusted performance metrics, and offer institutional-grade reporting makes it an essential tool for serious cryptocurrency investors. By leveraging Messari's full suite of features, investors can gain actionable insights into their portfolio performance and make data-driven investment decisions in the dynamic cryptocurrency market.

## Frequently asked questions

### How to track crypto portfolio performance?

To effectively track crypto portfolio performance, connect all your wallets and exchange accounts to create a unified view of your entire cryptocurrency holdings. Use portfolio tracking platforms that support major exchanges like Coinbase, Binance, and Kraken, and ensure they can handle complex DeFi positions including liquidity pools, staked assets, and yield farming rewards. Monitor key metrics such as total portfolio value, absolute and percentage-based returns over various time periods, and risk-adjusted returns like the Sharpe ratio. For privacy-conscious users, manual portfolio entry is an option, though it requires regular updates to maintain accuracy.

### What does a good crypto portfolio look like?

A well-diversified cryptocurrency portfolio typically allocates 40% to large-cap assets like Bitcoin and Ethereum, 35% to mid-cap tokens across various sectors, and 25% to smaller, higher-risk investments. Good portfolios maintain diversification across different blockchain networks, sectors (DeFi, gaming, infrastructure), and token types to minimize concentration risk. The portfolio should have reasonable correlation between assets - avoiding over-concentration in highly correlated positions like having 70% in DeFi tokens that move together. Risk management is crucial, with investors understanding their volatility exposure and Value-at-Risk calculations to assess potential downside.

### How much percentage of my portfolio should be crypto?

The percentage of your overall investment portfolio allocated to crypto depends on your risk tolerance, investment goals, and financial situation. Crypto is considered a high-risk, high-reward asset class with significant volatility. Conservative investors might allocate 5-10% to crypto, while more aggressive investors comfortable with volatility might go up to 20-30%. It's generally recommended not to invest more than you can afford to lose, given crypto's volatile nature. Consider your age, income stability, other investments, and risk tolerance when determining your crypto allocation within a broader investment portfolio that includes traditional assets.

### How to read a crypto portfolio?

Reading a crypto portfolio involves analyzing multiple layers of information. Start with total portfolio value and overall returns across different time periods (daily, weekly, monthly, yearly). Examine asset allocation breakdowns by individual tokens, sectors, and blockchain networks to understand your exposure and concentration risks. Review performance attribution to see which assets contributed most to gains or losses. Compare your portfolio performance against relevant benchmarks like Bitcoin, Ethereum, or crypto market indices to determine if you're generating alpha. Monitor risk metrics including volatility, correlation between holdings, and Value-at-Risk calculations. For DeFi positions, track yield generation separately from capital appreciation, including staking rewards, trading fees, and liquidity mining rewards.

Discover how to evaluate your cryptocurrency portfolio performance with Messari's comprehensive tracking tools. Learn to analyze returns, manage risk, track DeFi positions, and benchmark against market indices for data-driven investment decisions.

How to evaluate portfolio performance with Messari

![Multisig.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Multisig_9f8fbbe062.png)
Large traders, which can often include DAOs and other types of organisations, typically require transactions to be signed by more than one wallet for security purposes. On many DEXes that can be a time-consuming experience. But not on CoW Swap!

  

In this article we explain why CoW Swap is the best choice for multisig wallets and explore some of the features that make it also great for regular users too.

## What are multisig wallets?

  

A multisig wallet, also known as a multi-signature wallet or shared wallet, is a cryptocurrency wallet that requires multiple signatures to send a transaction.

These wallets are most useful when cryptocurrency or other digital assets are owned by multiple individuals or are held in custody by a company or a DAO.

  

Typically multisig wallets require more technical know-how to set up and use than a traditional crypto wallet, which only needs one signature. However, the added security benefits make the additional technical requirements a benefit rather than a drawback for those with more complex security needs.

## Why would you use a multisig wallet?

There are many reasons why you would use a multi-sig wallet. The first and most obvious is there are more than one person required to sign a transaction.

  

If five users need to approve a transaction, it makes sense that five would need to sign it. Multisig wallets provide that flexibility. The second reason why you might use a multisig wallet is security. Many cryptocurrency wallets rely on a single public address and private key.

  

If each person uses their own software or hardware wallet to conduct a transaction, it requires five distinct transactions to enable the signing of the main key. This adds an extra layer of protection. In the example above, if we have five individuals, there will be five separate transactions required to enact the multisig wallet.

## Why is CoW Swap the best solution for multi-sig wallets?

  

Multi-sig wallet users face a number of challenges when it comes to efficiently signing and transacting on chain. Multi-sig wallets are commonly found in DAOs and other organisations, who use multi-sig wallets to do large transactions for things like payroll and other expenses.

  

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 and other multi-sig wallet users face unique challenges not encountered by other types of traders.

  

These issues stem from a variety of factors:

-   Placing and executing trades takes time
    
-   For DAO, trade details can be public, and announced well in advance
    
-   Large trades create large price impact
    
-   Large trades sizes call for large slippage tolerances
    

  

CoW Swap’s unique design addresses each of these concerns, making DAO trades easier, safer, and cheaper.

  

Below we explore how CoW Swap can alleviate these issues.

## Using CoW Swap helps multi-sig wallets get the price they want

  

That’s because traders using CoW Swap get the price at the time of execution instead of at the time of submission. What does that mean?

  

Let’s say you have to gather the signatures of five different wallets to execute a trade. Meanwhile, prices are constantly moving. By the time you have gathered your signatures, the price might have changed significantly enough to either lead to a transaction failing, or it being exploited by MEV bots. Not on CoW Swap.

  

Because it uses a solver system, the price of the trade is only confirmed when the trade is completed, not when it is started. Because solvers are working on your behalf, the user experience means you’re less likely to experience a failed transaction because you’ve missed your price.

## CoW Swap can help mitigate the impacts of large trades

  

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://docs.cow.fi/off-chain-services/solvers) 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.

## Gasless approvals make multi-sig wallets more efficient

Gasless approvals allow traders to swap over 150 tokens completely gaslessly through CoW Swap.

  

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.

  

This brings a host of benefits to multisig wallets, including:

  

-   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
    

## CoW Swap helps multi-sig wallets get the best prices

  

DAO and other multi-sig 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://docs.cow.fi/off-chain-services/solvers) 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.

## Milkman, CoW Swap’s secret UX sauce for multi-sig wallets

For traders looking to trade at some point in the future, on traditional DEXes that’s a challenge. That’s why CoW DAO built [Milkman](https://cow.fi/learn/what-is-milkman-cow-swaps-solution-for-delayed-execution-trading). Milkman is a specialized smart contract for advanced traders that lets them set their slippage tolerance for trades in the 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).
    

  

Milkman is a smart contract that solves all of this. Let’s take a look at an example.

  

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 ask Milkman to create the order and specify a minimum amount you’re willing to accept for the trade. Milkman tracks prices using oracles.

  

When the time comes to execute your trade, CoW Protocol will receive it and solvers will compete to improve the price on top of that, as they always do.

It’s why DAOs like [Aave](https://cow.fi/learn/aave-trade-breakdown) and [ENS](https://cow.fi/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.

## Programmatic Orders let’s multi-sig wallets set and forget

  

When trades are submitted directly to CoW Protocol, via CoW Swap, traders can take advantage of programmatic orders: or orders with certain conditions that have to be met before they are executed.

  

For example, if a trader wants to set and forget a trade like a stop loss or trailing stop, they can on CoW Swap. But there’s more.

  

Wallets of all sizes can automate recurring actions using programmatic orders. DAOs can automate payroll, diversify their treasuries, collect fees and more. Individuals, meanwhile, can automate portfolio rebalancing, yield farming, and hedge market positions.

  

Users can even bundle multiple actions together into one single order. For example, if a trader wanted to withdraw and swap a token for another in the future, it can do so using programmatic orders. No need to create multiple transactions, thanks to [Hooks](https://docs.cow.fi/cow-protocol/concepts/order-types/cow-hooks).

  

How does it work? They allow any user to to pair multiple steps together into a single transaction. Let’s say you want to unstake tokens to take advantage of a price movement, sell a token and swap it for another. With Hooks that can be created and executed in one single transaction. No more multiple transactions, no more multiple fees.

  

Find out more about how to [use Hooks here](https://docs.cow.fi/cow-protocol/concepts/order-types/cow-hooks).

## In summary: Why CoW Swap is great for multi-sig wallets.

  

When making large transactions in crypto, there are a number of things users need to be aware of. Whether it’s slippage, what order type you’re looking to execute, MEV attacks, to the user experience of different platforms.

  

CoW Swap is designed to do the hard work for you. It combines class-leading protection from MEV attacks, alongside its unique solver system which helps find you the best prices, and also gives you the chance to earn a surplus from every trade.

  

No wonder [GnosisDAO](https://twitter.com/GnosisDAO), [ENS DAO](https://twitter.com/ensdomains), [dxDao](https://twitter.com/DXdao_), [Yearn Finance](https://twitter.com/yearnfi), [Safe](https://twitter.com/safe), [Frax](https://frax.finance/), [Olympus DAO](https://twitter.com/OlympusDAO), [Synthetix](https://twitter.com/synthetix_io), [Balancer](https://twitter.com/Balancer), [Aura](https://twitter.com/AuraFinance), [Gnosis Guild](https://twitter.com/GnosisGuild), [Badger DAO](https://twitter.com/BadgerDAO), [Aave](https://twitter.com/AaveAave), [Tally DAO](https://twitter.com/tallyxyz) and [Karpatkey](https://twitter.com/karpatkey) all use CoW Swap to manage their multi-sig wallets.

  

Multi-sig wallet owners can count on CoW Swap to help them:

-   Trade in a way that takes the press out of coordinating key holders.
    
-   MEV-protected trades even when trade details are publicly announced.
    
-   Provide the best prices through slippage-capturing trade execution.
    
-   Allow special order types custom-tailored for DAOs
    

If you are a interested in learning more about how CoW Swap can optimize your trades, [join our Discord](https://discord.com/invite/cowprotocol) and give us a shout, or leave a comment in our [forum](https://forum.cow.fi/).

large_Multisig.png

medium_Multisig.png

small_Multisig.png

thumbnail_Multisig.png

Multisig.png

Large traders, which can often include DAOs and other types of organisations, typically require transactions to be signed by more than one wallet for security purposes. On many DEXes that can be a time-consuming experience. But not on CoW Swap! 


Why is CoW Swap the best choice for multisig wallets?

Contract size metering introduces a gas-based pricing model that allows developers to deploy larger smart contracts while ensuring network participants pay proportional costs for the additional resources these contracts consume. Currently, Ethereum enforces a hard 24KB limit on contract code size—a restriction that forces developers into workarounds that increase complexity and costs.

EIP-7907 changes this paradigm by:
- **Doubling the hard limit** from 24KB to 48KB for deployed contracts
- **Adding gas metering** that charges 4 gas per 32-byte word for code exceeding the original 24KB threshold
- **Implementing warm/cold code states** similar to storage access patterns introduced in EIP-2929
- **Doubling the initialization code limit** from 48KB to 96KB to maintain the established 2:1 ratio

The system works by tracking whether contract code has been loaded during transaction execution. When you call a contract larger than 24KB for the first time in a transaction, you pay additional gas proportional to the excess size. Subsequent calls to the same contract within that transaction avoid this cost because the code is already "warm."

## How contract size metering works in practice

Consider three scenarios that demonstrate the practical impact of this change:

**Scenario 1: Current 20KB Contract**
A developer deploys a decentralized exchange contract that's 20KB in size. Under both the current system and EIP-7907, calling this contract costs the standard gas amounts with no additional fees. The result is identical behavior for existing contracts.

**Scenario 2: New 35KB Contract**
A developer wants to deploy a comprehensive DeFi protocol that would naturally fit in 35KB but currently requires splitting across multiple contracts. Under the current system, this deployment fails entirely. With EIP-7907, the deployment succeeds, and calling this contract incurs an additional cost of `ceil32(35KB - 24KB) * 4 / 32 = 1,376 gas` for the first call in each transaction.

**Scenario 3: Complex Multi-Contract System**
A developer currently deploys a system across four 20KB contracts connected by proxy patterns. Users pay gas for multiple external calls between contracts. With EIP-7907, the same functionality could be deployed as a single 45KB contract, where users pay `ceil32(45KB - 24KB) * 4 / 32 = 2,624 gas` for the first call, but avoid the overhead of multiple external calls and proxy complexity.

## Benefits of expanded contract limits

### Simplified development experience
The primary advantage is architectural simplicity. Developers can focus on building functionality rather than engineering around size constraints. This means fewer proxy contracts, reduced delegatecall complexity, and elimination of artificial contract splitting. For example, a comprehensive token contract with built-in staking, governance, and liquidity features can now exist as a single, auditable unit rather than a complex system of interconnected contracts.

### Reduced gas costs for complex operations
While larger contracts pay additional loading costs, they often reduce overall gas consumption by eliminating expensive external calls. A cross-contract function call costs at least 2,600 gas for account access plus the execution cost. By consolidating related functionality, developers can replace multiple external calls with internal function calls, which cost significantly less.

### Enhanced security and auditability
Single-contract systems are easier to audit and reason about than multi-contract architectures. When related functionality exists in one contract, auditors can more easily trace execution paths and identify potential vulnerabilities. This reduces the attack surface that complex proxy patterns can introduce.

### Future-proof architecture
The gas metering system automatically scales with network capacity. If Ethereum's gas limits increase, larger contracts become more economical to deploy and use. This creates a sustainable path for supporting increasingly sophisticated smart contract applications without requiring additional protocol changes.

## Technical implementation

The implementation introduces a new warm/cold state specifically for contract code, separate from the existing account warming mechanism. When a transaction accesses a contract for the first time, the system:

1. **Checks if the account is warm** (previously accessed balance, storage, or included in access lists)
2. **Determines if the code is warm** (previously loaded during this transaction)
3. **Calculates excess code costs** using the formula: `ceil32(max(0, code_size - 24KB)) * 4 / 32`

The gas schedule becomes:
- **Cold account and code**: Add 2,600 + 2,100 + excess code costs
- **Warm account, cold code**: Add 100 + 2,100 + excess code costs  
- **Warm account and code**: Add 100 (standard warm access cost)

The system also updates specific opcodes to reflect these costs:
- `CALL`, `STATICCALL`, `DELEGATECALL`, `CALLCODE`: Apply full metering when loading code
- `EXTCODECOPY`: Includes metering since full code loading is required for block witnesses
- `EXTCODESIZE`: Adds 2,100 gas for cold code access to prevent DOS attacks through codesize queries

## Implementation considerations

### Block size and network impact
Including larger contracts affects block propagation and storage requirements. Analysis shows that worst-case scenarios remain manageable. A block filled with maximum-sized contracts would create approximately 1.5MB of additional data, which falls within acceptable parameters for current network infrastructure. The devp2p protocol supports up to 10MB packets, providing substantial headroom.

### Validation performance
The gas pricing reflects real computational costs. Benchmarks show that JUMPDEST analysis—the primary computational overhead for large contracts—scales linearly with code size. The 4 gas per word cost accounts for additional disk I/O, preprocessing overhead, and increased Merkle proof sizes that large contracts impose on the network.

### Client implementation requirements
Clients must implement efficient code size determination without loading entire contracts during gas calculation. The specification recommends maintaining a separate table keyed by code hash to store code sizes, enabling accurate gas charging before physical code loading occurs.

## Future implications

### Enabling higher gas limits
More efficient contract architecture could support future gas limit increases. When contracts can consolidate functionality more effectively, the same gas budget supports more complex operations, potentially enabling higher throughput without compromising network security.

### Simplifying development tools
Development frameworks like Foundry and Hardhat can eliminate size-optimization features focused on staying under the 24KB limit. This allows tooling to focus on functionality and security rather than artificial size constraints.

### Foundation for advanced features
Larger contracts enable more sophisticated on-chain applications. Features like comprehensive governance systems, advanced DeFi protocols, and complex gaming logic become feasible as single-contract deployments rather than requiring complex multi-contract architectures.

### Potential access list evolution
As block-level access lists (EIP-7928) potentially replace transaction-level access lists, the code warming mechanisms in EIP-7907 could evolve to integrate with block-level optimization, further improving performance for large contract systems.

## Conclusion

EIP-7907 represents a fundamental improvement to Ethereum's contract deployment capabilities by intelligently balancing developer needs with network security. By doubling the contract size limit to 48KB and implementing proportional gas metering, this upgrade eliminates artificial constraints that force developers into complex architectural patterns.

The gas metering system ensures that larger contracts pay proportional costs for the additional resources they consume, maintaining network security while enabling more sophisticated applications. According to the technical analysis, the 4 gas per word cost accurately reflects the computational overhead of processing larger contracts, from disk I/O to JUMPDEST analysis.

This enhancement positions Ethereum to support increasingly complex smart contract applications while maintaining the security and decentralization that define the platform. As blockchain applications grow more sophisticated, EIP-7907 provides the foundation for sustainable contract development that scales with developer needs and network capacity.

## Frequently asked questions

**What is an EIP in Ethereum?**
EIP stands for Ethereum Improvement Proposal. These are technical documents that describe proposed changes to the Ethereum protocol, including new features, processes, or standards. EIPs serve as the primary mechanism for proposing protocol improvements and collecting community feedback before implementation.

**How does EIP-7907 affect existing contracts?**
Existing contracts under 24KB experience no changes in gas costs or functionality. The additional metering only applies to new contracts exceeding the original 24KB limit, ensuring full backward compatibility.

**What happens if I deploy a contract larger than 48KB?**
Deployment will fail. While the gas metering system could theoretically support contracts of any size, EIP-7907 maintains a hard 48KB limit to prevent unexpected interactions with network infrastructure, particularly the peer-to-peer protocol layer.

**Why is the gas cost 4 per word for excess code?**
The 4 gas per word cost derives from current network economics: the existing cold account access cost (2,600 gas) divided by the maximum current contract size in words (24KB/32 = 768 words) equals approximately 4 gas per word. This ensures proportional pricing based on actual resource consumption.

**How does this relate to Layer 2 scaling solutions?**
EIP-7907 complements Layer 2 scaling by improving the efficiency of the base layer. More efficient contract architecture on Layer 1 benefits Layer 2 systems that inherit security from the main chain, while larger contracts enable more sophisticated applications across both layers.

### Why was 2 gas per word selected, and is that the same constant as INITCODE_WORD_COST from EIP-3860?

There appears to be a discrepancy in your question - the article specifies that EIP-7907 uses 4 gas per word for excess code, not 2 gas per word. This 4 gas per word cost is calculated based on current network economics: the existing cold account access cost (2,600 gas) divided by the maximum current contract size in words (768 words for 24KB) equals approximately 4 gas per word. This differs from EIP-3860's INITCODE_WORD_COST, which applies to initialization code validation, while EIP-7907's cost applies to runtime code loading for deployed contracts exceeding the original size limit.

### Could devnet testing help for this EIP?

Yes, devnet testing would be valuable for EIP-7907 to validate the gas pricing model under real-world conditions, test client performance with larger contracts, and ensure the warm/cold code state tracking works correctly across different transaction patterns. Testing could also help verify that the block size impacts remain within acceptable parameters and that the integration with existing opcodes functions properly.

### What kinds of applications stand to benefit the most—modular contracts, zkApps, account abstraction, rollups?

Comprehensive DeFi protocols combining multiple features (trading, lending, governance) would benefit significantly by avoiding complex proxy patterns. Account abstraction implementations could consolidate wallet logic, signature verification, and policy management in single contracts. Gaming applications requiring complex state management and rule enforcement would benefit from unified contract architecture. zkApps with substantial verification logic could reduce the complexity of splitting proof validation across multiple contracts. Rollups could potentially optimize their settlement contracts by consolidating related functionality.

### How does this EIP relate (or not relate) to EIP-7702's delegated execution model?

EIP-7907 and EIP-7702 address different aspects of contract architecture. EIP-7907 focuses on enabling larger monolithic contracts through size limit increases and gas metering, while EIP-7702 enables externally owned accounts to delegate execution to contract code. These proposals are complementary rather than competing - EIP-7702 could benefit from EIP-7907 by allowing delegation to larger, more comprehensive contracts that consolidate multiple account abstraction features in a single deployment.

### Is this EIP fully backward compatible? Could any existing tooling or contract deployment processes break under these new rules?

EIP-7907 is fully backward compatible for existing contracts under 24KB, which experience no changes in gas costs or functionality. However, deployment tooling may need updates to handle the new 48KB deployment limit and 96KB initialization code limit. Gas estimation tools will need to account for the new code loading costs when calling contracts exceeding 24KB. Development frameworks like Foundry and Hardhat can actually simplify by removing size-optimization features that were previously necessary to stay under the 24KB limit.

Currently, Ethereum enforces a hard 24KB limit on contract code size—a restriction that forces developers into workarounds that increase complexity and costs. EIP-7907 changes this paradigm.

About EIP-7907

Exchange inflows occur when cryptocurrency holders transfer their assets from personal wallets, cold storage, or other platforms to centralized exchanges. This activity often precedes selling events, as users typically move assets to exchanges when they intend to trade or liquidate positions. Large inflow volumes can indicate impending market pressure, while decreased inflows may suggest accumulation phases or market stability.

Messari tracks exchange inflows across major platforms including Binance, Coinbase, Kraken, and other significant exchanges. The platform aggregates this data to provide real-time insights into market sentiment and potential price movements. Understanding these patterns helps investors anticipate market trends and position themselves accordingly.

## Accessing exchange data through Messari

Messari's exchange monitoring capabilities are accessible through multiple channels within their platform. The primary entry point is the Exchanges section, which provides comprehensive volume data, regional breakdowns, and comparative analysis between centralized and decentralized exchanges. This section displays 24-hour volume changes, market share percentages, and trending patterns that reveal exchange activity levels.

The platform categorizes exchanges by region and type, allowing users to filter data based on geographic preferences or exchange characteristics. For example, users can isolate North American exchanges to understand regional trading patterns or focus specifically on centralized exchanges to monitor traditional trading activity.

Volume trending data appears in graphical format, making it easy to identify sudden spikes or drops in exchange activity. These visual representations help users quickly assess whether current activity levels represent normal trading patterns or significant deviations that warrant closer attention.

## Key metrics for exchange inflow analysis

Several metrics prove essential when monitoring exchange inflows through Messari. Trading volume represents the most fundamental indicator, showing the total value of assets moving through exchanges within specific timeframes. Consider a scenario where Bitcoin experiences a 45% increase in exchange volume over 24 hours, jumping from $8 billion to $11.6 billion—this would potentially indicate preparation for significant market movement.

Market share data reveals which exchanges are capturing the majority of trading activity. When Binance typically handles 25% of total cryptocurrency volume but suddenly captures 35%, this concentration might indicate specific market events or regional trading patterns that require investigation.

Volume change percentages provide immediate insight into activity fluctuations. When Ethereum exchange inflows increase by 120% in a single day while Bitcoin inflows remain stable, this disparity suggests asset-specific developments that could affect relative price performance.

## Interpreting volume patterns

Exchange volume patterns provide crucial context for understanding market sentiment. Sudden volume spikes often coincide with significant news events, regulatory announcements, or major price movements. When Solana exchange inflows increase by 200% following a major protocol upgrade announcement, this pattern suggests traders are positioning for volatility in either direction.

Sustained volume increases over multiple days typically indicate more fundamental shifts in market sentiment rather than reactions to single events. Consider a scenario where Chainlink experiences gradually increasing exchange inflows over a week, with daily volumes rising from $50 million to $180 million. This pattern suggests building selling pressure rather than news-driven volatility.

Conversely, declining exchange volumes often signal accumulation phases or reduced selling pressure. When Bitcoin exchange inflows drop 30% below average levels while prices remain stable, this pattern frequently precedes upward price movements as reduced selling pressure allows demand to drive prices higher.

## Regional analysis and market dynamics

Messari's regional exchange data provides insights into geographic trading patterns that influence global markets. Asian trading sessions often drive different volume patterns compared to North American or European sessions. Understanding these regional dynamics helps predict when major inflow events might occur and how they might affect global price action.

When Korean exchanges show 80% higher than normal inflows during Asian trading hours while Western exchanges remain quiet, this pattern might indicate region-specific news or regulatory developments that haven't yet impacted global markets. Such information provides advance warning of potential global market movements.

Time zone considerations prove particularly important when monitoring exchange inflows. A sudden spike in European exchange activity at 3 AM local time suggests either automated trading responses or reactions to developments in other time zones, providing context for interpreting the significance of volume changes.

## Utilizing historical data for pattern recognition

Historical exchange inflow data enables pattern recognition that improves future market predictions. Messari provides historical volume data that allows users to identify recurring patterns around specific events, market cycles, or seasonal trends.

Consider analyzing exchange inflow patterns during previous Bitcoin halving events. When historical data shows exchange inflows typically decrease 40% in the months leading up to halvings, current inflow levels can be compared against these historical benchmarks to assess market positioning relative to major events.

Monthly and quarterly analysis reveals longer-term trends that daily monitoring might miss. When exchange inflows for major altcoins show consistent monthly increases over six months while Bitcoin inflows remain stable, this pattern might indicate a broader shift in investor preferences that could influence allocation strategies.

## Integration with price and market cap data

Exchange inflow monitoring becomes more powerful when combined with Messari's price and market capitalization data. The platform's comprehensive asset listings, including current prices and market cap rankings, provide context for interpreting inflow significance.

When assets like Dogecoin show both 12.32% price increases and significantly higher exchange inflows simultaneously, this combination suggests active trading rather than simple accumulation. Conversely, when an asset shows increasing exchange inflows but stable prices, this pattern might indicate strong demand absorbing selling pressure.

Market cap considerations help assess the relative significance of exchange inflows. A $50 million inflow spike represents different implications for Bitcoin (with its substantial market cap) compared to a smaller altcoin with a $500 million market cap. Messari's integrated data presentation makes these comparative analyses straightforward.

## Advanced monitoring strategies

Sophisticated exchange inflow monitoring involves tracking multiple metrics simultaneously to develop comprehensive market views. Cross-referencing volume changes with price movements, market cap fluctuations, and broader market trends provides more reliable signals than monitoring any single metric in isolation.

Ratio analysis proves particularly valuable for this purpose. When total exchange inflows increase 25% while Bitcoin-specific inflows remain flat, this pattern suggests altcoin-driven activity that might indicate rotation between different cryptocurrency sectors. Such insights help identify specific opportunities or risks within broader market movements.

Alert systems can be configured based on volume threshold breaches or percentage changes that exceed normal ranges. Setting alerts for 50% volume increases above 30-day averages helps identify significant events without requiring constant manual monitoring.

## Practical applications and decision making

Exchange inflow monitoring through Messari supports various trading and investment strategies. Short-term traders use sudden inflow spikes to identify potential volatility opportunities, while long-term investors monitor sustained inflow trends to assess market sentiment shifts that might affect holding strategies.

Risk management applications include using exchange inflow data as early warning signals for potential market corrections. When multiple major cryptocurrencies simultaneously show increased exchange inflows without corresponding positive news, this pattern often precedes broader market weakness.

Portfolio rebalancing decisions can incorporate exchange inflow analysis to time entry and exit points more effectively. Understanding when selling pressure might increase or decrease helps optimize transaction timing to minimize market impact and maximize execution efficiency.

The comprehensive nature of Messari's exchange monitoring tools provides the foundation for developing sophisticated cryptocurrency market analysis capabilities. Regular monitoring of these metrics, combined with broader market analysis, enables more informed decision-making in the dynamic cryptocurrency marketplace.

## Frequently asked questions

### How do I monitor crypto volume?

You can monitor crypto volume by using platforms that track exchange activity across major exchanges like Binance, Coinbase, and Kraken. Look for 24-hour volume changes, market share percentages, and trending patterns in graphical format. Key metrics to watch include trading volume (total value of assets moving through exchanges), volume change percentages, and market share data. Set up alerts for significant volume threshold breaches, such as 50% increases above 30-day averages, to identify potential volatility opportunities without constant manual monitoring.

### What is the real volume methodology of Messari?

Messari aggregates exchange data from major platforms to provide comprehensive volume tracking by filtering out wash trading and fake volume reports. Their methodology focuses on verified exchanges with legitimate trading activity, categorizing exchanges by region and type while providing real-time insights into market sentiment. The platform cross-references volume data with price movements and market cap fluctuations to ensure accuracy, distinguishing between organic trading activity and artificial volume inflation that some exchanges may report.

### What are the top 3 crypto exchanges?

Based on market share and trading volume, the top crypto exchanges include Binance (which typically handles around 25% of total cryptocurrency volume), Coinbase, and Kraken. These exchanges consistently rank highest in terms of legitimate trading volume, regulatory compliance, and user adoption. However, exchange rankings can fluctuate based on regional regulations, trading pairs offered, and market conditions, so it's important to monitor current volume data rather than relying solely on historical rankings.

### How do I monitor my crypto?

Monitor your crypto by tracking multiple metrics simultaneously: exchange inflows, price movements, market cap changes, and trading volumes. Use platforms that provide real-time data on exchange activity, volume patterns, and market sentiment indicators. Set up alerts for significant volume changes or price movements, analyze regional trading patterns across different time zones, and compare current activity against historical benchmarks. Integrate this data with broader market analysis, including news events and regulatory developments, to make informed decisions about your portfolio positioning and risk management strategies.

Learn how to monitor crypto exchange inflows through Messari to identify market trends and trading opportunities. Track volume patterns, analyze regional data, and use key metrics for better cryptocurrency investment decisions.

How to monitor exchange inflows with Messari

Token holder distribution refers to how cryptocurrency tokens are spread across different wallet addresses and stakeholder categories. This distribution pattern reveals the concentration of ownership, potential selling pressure, and overall network decentralization. A well-distributed token typically indicates healthier long-term prospects and reduced manipulation risk.

Messari categorizes token holders into several distinct groups. Exchange holdings represent tokens stored on centralized trading platforms, which often indicate liquid supply ready for trading. Protocol treasury holdings encompass tokens retained by the founding organization for operational expenses, development funding, and strategic initiatives. Team and advisor allocations show tokens distributed to founders, employees, and early supporters. Investor holdings include tokens held by venture capital firms, institutional investors, and retail participants.

## Accessing distribution data on Messari

Messari provides token holder distribution data through multiple interface sections. The Asset Profile section contains fundamental information about token allocation and initial distribution parameters. The On-Chain Data section offers real-time metrics about current holder patterns and concentration levels. The Research Reports section includes detailed analysis of distribution trends and their implications for specific projects.

You can navigate to any supported cryptocurrency project page and locate the distribution metrics in the tokenomics section. This area displays current holder concentration, historical distribution changes, and comparative metrics against similar projects in the same category.

## Key metrics for distribution analysis

The Gini coefficient serves as the primary measure of token distribution inequality, ranging from zero to one. A coefficient approaching zero indicates perfect equality among holders, while values near one suggest extreme concentration. Most healthy crypto projects maintain Gini coefficients between 0.5 and 0.8, balancing necessary stakeholder incentives with broad distribution goals.

Top holder concentration metrics reveal the percentage of total supply controlled by the largest wallet addresses. Messari tracks the top 10, 100, and 1,000 holders to provide granular insight into concentration patterns. Projects where the top 10 holders control more than 50% of supply face significant centralization concerns and potential manipulation risks.

Holder count growth indicates network adoption and distribution expansion over time. Steady increases in unique holders suggest growing community interest and improved distribution. Sudden spikes often correlate with major announcements, exchange listings, or airdrop events.

## Analyzing exchange holdings and liquidity

Exchange holdings represent a crucial component of distribution analysis because they indicate immediate selling pressure and market liquidity. High exchange concentrations suggest that significant token amounts could enter the market quickly, potentially causing price volatility.

Consider a hypothetical scenario where a decentralized finance protocol token shows 40% of its total supply held across major exchanges. This concentration indicates substantial near-term selling pressure and suggests that price movements could be amplified by relatively small trading volumes. Messari's exchange flow data helps identify when large amounts move to or from exchanges, providing early signals for potential price movements.

Conversely, a gaming token with only 15% exchange holdings and steady outflows to self-custody wallets demonstrates growing holder confidence and reduced immediate selling pressure. This distribution pattern typically supports more stable price appreciation during bull markets and better resistance during downturns.

## Evaluating protocol treasury management

Protocol treasury analysis reveals how projects manage their native token reserves for operational sustainability and strategic flexibility. Messari tracks treasury balances, spending patterns, and allocation strategies to assess long-term viability.

A well-managed treasury maintains sufficient reserves for multi-year operations while avoiding excessive concentration that could destabilize markets. For example, a Layer-1 blockchain protocol might hold 20% of total token supply in treasury, allocated across operational expenses, ecosystem development grants, and strategic partnerships. Messari's data shows spending velocity and reserve runway calculations to evaluate sustainability.

Treasury diversification also matters significantly. Projects holding 90% of reserves in their native token face substantial risk during market downturns. Protocols that convert portions of treasury holdings to stablecoins or other assets demonstrate prudent risk management and operational planning.

## Understanding vesting schedules and token unlocks

Token vesting schedules control when different stakeholder groups can access their allocated tokens, directly impacting distribution patterns and potential selling pressure. Messari tracks upcoming unlock events and their potential market impact through detailed vesting calendars.

Team and investor vesting typically follows multi-year schedules with cliff periods and gradual releases. A technology protocol might implement four-year vesting for team tokens with a one-year cliff, meaning no team tokens become tradeable for twelve months, followed by monthly releases over the remaining three years. These schedules prevent immediate selling while maintaining long-term alignment.

Major unlock events can significantly impact token prices and distribution patterns. When a project faces a 25% supply increase from investor token unlocks, Messari's analysis helps predict potential selling pressure and market absorption capacity. Historical data shows how similar projects navigated comparable events.

## Comparative distribution analysis

Messari enables comparative analysis between projects within similar categories, providing context for distribution evaluation. Gaming tokens, decentralized finance protocols, and infrastructure projects each maintain different optimal distribution patterns based on their operational requirements and stakeholder structures.

A comparison between two competing decentralized exchange tokens might reveal significant distribution differences. Protocol A shows 60% community distribution with 15% team allocation, while Protocol B maintains 45% community holdings with 25% team tokens. These differences suggest varying approaches to decentralization and long-term sustainability.

Category benchmarks help identify outliers and potential concerns. When a new decentralized finance protocol launches with 50% team allocation while category averages maintain 20%, this concentration raises legitimate concerns about centralization and alignment with community interests.

## Identifying distribution warning signs

Several distribution patterns indicate potential risks or poor tokenomic design. Extreme concentration among top holders creates manipulation risks and limits true decentralization. When fewer than 100 addresses control 80% of supply, the project faces significant centralization concerns.

Unusual holder behavior patterns also warrant attention. Sudden large-scale token movements between wallets might indicate coordinated selling preparation or market manipulation attempts. Messari's transaction flow analysis helps identify these concerning patterns before they impact prices.

Stagnant distribution metrics suggest limited community growth and adoption challenges. Projects showing minimal changes in holder counts or concentration levels over extended periods may face fundamental adoption issues requiring deeper investigation.

## Practical application and decision making

Token holder distribution analysis should integrate with broader fundamental analysis for optimal decision-making. Distribution metrics provide context for price movements, governance participation, and long-term sustainability assessments.

Investment decisions benefit from distribution analysis at multiple levels. Short-term trading strategies can incorporate upcoming unlock events and concentration risks. Long-term investment evaluation should emphasize distribution trends, community growth, and stakeholder alignment indicators.

Governance participation analysis also relies heavily on distribution metrics. Protocols with highly concentrated holdings may struggle with legitimate decentralized governance, as small groups control voting outcomes. Messari's governance section combines distribution data with voting participation metrics for comprehensive analysis.

Token holder distribution analysis through Messari provides essential insights for cryptocurrency research and investment decisions. Understanding concentration levels, stakeholder categories, and distribution trends enables more informed evaluation of project sustainability, decentralization, and long-term viability. Regular monitoring of these metrics helps identify opportunities and risks in dynamic cryptocurrency markets.

## Frequently asked questions

### What is the Messari classification system?

Messari categorizes token holders into several distinct groups to provide clarity on ownership patterns. Exchange holdings represent tokens stored on centralized trading platforms, which often indicate liquid supply ready for trading. Protocol treasury holdings encompass tokens retained by the founding organization for operational expenses, development funding, and strategic initiatives. Team and advisor allocations show tokens distributed to founders, employees, and early supporters. Finally, investor holdings include tokens held by venture capital firms, institutional investors, and retail participants. This classification system helps analyze concentration levels and potential market dynamics.

### How to analyze tokenomics?

Analyzing tokenomics requires examining several key metrics and distribution patterns. Start by reviewing the Gini coefficient, which measures token distribution inequality on a scale from zero to one - healthy crypto projects typically maintain coefficients between 0.5 and 0.8. Examine top holder concentration metrics, particularly avoiding projects where the top 10 holders control more than 50% of supply due to centralization risks. Monitor holder count growth over time to gauge network adoption, and analyze exchange holdings to understand immediate selling pressure. Additionally, evaluate protocol treasury management, including spending patterns and diversification strategies, while tracking vesting schedules and upcoming unlock events that could impact market dynamics.

### What is token distribution in crypto?

Token distribution refers to how cryptocurrency tokens are spread across different wallet addresses and stakeholder categories. This distribution pattern reveals the concentration of ownership, potential selling pressure, and overall network decentralization. A well-distributed token typically indicates healthier long-term prospects and reduced manipulation risk. Distribution analysis examines various holder categories including exchanges, protocol treasuries, team members, advisors, and different types of investors. The goal is to achieve a balance between necessary stakeholder incentives and broad community distribution, as extreme concentration can lead to manipulation risks and governance centralization issues.

### How to see token unlocks?

Token unlock events can be tracked through detailed vesting calendars that show when different stakeholder groups can access their allocated tokens. These schedules typically follow multi-year timelines with cliff periods and gradual releases - for example, team tokens might have four-year vesting with a one-year cliff period, followed by monthly releases. Major unlock events can significantly impact token prices when they represent substantial supply increases. Vesting schedules are designed to prevent immediate token dumping while maintaining long-term stakeholder alignment. Monitoring upcoming unlock events helps predict potential selling pressure and assess whether the market has sufficient absorption capacity for the additional supply.

Learn how to analyze crypto token holder distribution using Messari's tools and metrics. Discover concentration patterns, exchange holdings, treasury management, and vesting schedules to evaluate project decentralization and investment risks.

How to analyze token holder distribution with Messari

![MEV-resistance.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/MEV_resistance_aa3fe37e0f.png)

MEV or “maximal extractable value” is a hidden tax on all types of Ethereum transactions. Any time you make a DeFi trade, buy or sell an NFT, or lend tokens to a liquidity pool, opportunistic users known as “searchers” may manipulate your trades, resulting in unfavorable prices, failed transactions, and missed opportunities.

  

But that doesn’t mean you just have to sit there and watch as people make off with your hard earned money.

  

MEV resistance is a response to this threat. There are many techniques and pieces of technology that can help you resist MEV attacks on your trade. In this article, we’ll take you through what they are, and the products CoW DAO has built to make resisting MEV simple.

## What is MEV?

Before we work out how to resist MEV, we need to understand what it is and the attack vectors - the places where your trades are vulnerable - people use to extract value.

  

MEV, or maximal extractable value, is a form of price exploitation that acts as a “hidden tax” on Ethereum transactions. MEV is responsible for billions of dollars in losses for everyday traders, especially beginners who often don’t know how to protect themselves.

  

To understand how it happens, we must first understand how Ethereum transactions are processed.

  

When a user places an order, it gets submitted to a holding area for pending Ethereum transactions known as the “mempool.” Transactions in the mempool are public, meaning that [MEV bots (known as “searchers”) can monitor them for exploitation opportunities](https://cow.fi/learn/mev-bots-switch-from-searcher-to-solver).

  

An MEV attack uses a feature of how Ethereum transactions are processed: validators can reorder transactions based on how much someone is willing to pay to prioritise their transaction over someone else’s. Let’s look at an example of a type of MEV called ‘sandwich’ attack.

  

-   A user places a transaction, and it’s added to the public mempool.
    
-   Bots called ‘searchers’ monitor transactions looking for trades that they could potentially exploit.
    
-   Once a profitable trade is identified, the searcher places a trade before and after your trade. The first trade pushes up the price, forcing the user to pay a higher price for their transaction. A subsequent trade after the users takes advantage of the higher price and sells. The result is a series of trades that leaves the original user out of pocket.
    

  

But sandwich attacks are just one type of MEV attack. There are frontrunning attacks and backrunning attacks.

  

To learn more about the different types of MEV, check out our articles on [sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself), [frontrunning](https://cow.fi/learn/what-is-frontrunning), and [backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained).

  

The above example helps provide context for why MEV resistance is important: it helps protect your trades from prying eyes. In the next section we’ll explore ways of building in MEV resistance into your trades.

## How to create your own MEV resistance

  

The most basic defense against MEV is setting a low slippage tolerance.

Since [MEV relies on slippage for price manipulation](https://cow.fi/learn/what-is-slippage-in-crypto), transactions with a lower slippage tolerance give searchers less room to exploit trades.

  

For users who aren’t utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it’s by no means a complete solution.

  

Setting the slippage tolerance too low often results in failed transactions. Even with optimal slippage, MEV bots may still be able to extract value from your trades. Let’s take a look at a more robust technique.

## Using an RPC endpoint to help protect against MEV

  

A better way to resist MEV is to install an MEV protection RPC endpoint.

A Remote Procedure Call (RPC) endpoint is an intermediate layer that routes transactions from a user’s wallet to the blockchain itself.

  

Transactions pass through RPC endpoints before getting to the mempool, so RPCs can provide additional functionality across any blockchain application or protocol.

  

Normally, RPCs are a boring piece of blockchain infrastructure. But more recently, specialized RPCs have begun incorporating extra security guarantees for transactions before they reach the blockchain. One of those is [MEV Blocker.](https://cow.fi/mev-blocker)

  

As the name suggests, [MEV Blocker provides protection against MEV across all of Ethereum](https://cow.fi/learn/mev-blockers-explained-how-they-protect-users). The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions. Instead, they capture value through [backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained).

  

Anytime a searcher backruns a user’s transaction, the searcher keeps up to 10% of the value and sends the other 90% back to the user as a rebate. So even when a transaction leaves money on the table, MEV Blocker puts it back into the pockets of users.

  

MEV Blocker provides protection for any type of Ethereum transaction (not just swaps), and it works with all Ethereum wallets. Install the MEV Blocker RPC endpoint by following the instructions [here](https://mevblocker.io/).

  

But if the thought of installing and MEV Blocker manually feels like too much hard work, there is another option.

## Baked in MEV Resistance

  

While RPC endpoints provide significant MEV protection, the most complete protection comes at the application layer.

  

As MEV has become more prevalent, decentralized applications (especially [decentralized exchanges — DEX’s](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem)) have begun offering creative protection solutions to users. For example, many DEXs offer an “auto-slippage” feature which determines the optimal slippage for user trades, reducing the chances of price exploitation. But some go further than that.

  

CoW Protocol is a meta [DEX aggregator](https://cow.fi/learn/what-is-a-dex-aggregator) that finds the best prices for trades and provides comprehensive MEV protection. The protocol uses [a unique trading mechanism that relies on batch auctions](https://cow.fi/learn/understanding-batch-auctions) and [intents](https://cow.fi/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade) to achieve the best outcomes for users.

  

Starting at the application level, CoW Protocol provides end-to-end MEV protection through its unique protocol design:

  

-   **Delegated Trade Execution:** On CoW Protocol, [bonded third parties known as “solvers” execute transactions on behalf of users.](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers) Solvers source liquidity across multiple DEX’s and even off chain liquidity sources to find the best prices for any given trade. Solvers also execute transactions on behalf of users, meaning they are never exposed to the blockchain directly.
    

  

-   **Coincidences of Wants (CoWs):** Thanks to CoW Protocol’s batching mechanism, trades may be matched using peer-to-peer liquidity in a [Coincidence of Wants (CoW)](https://cow.fi/learn/what-are-cows-on-cow-swap). This method of trading bypasses AMMs, reducing fees and preventing MEV.
    

  

-   **Uniform Clearing Prices:** Another benefit of batching is that [duplicate trade pairs within a given batch clear for the same price](https://cow.fi/learn/what-is-price-improvement-and-why-is-it-unique-to-cow-swap). For example, if multiple users are trading ETH and USDC in the same batch, the assets will execute for the same price across the various trades. This makes transaction reordering useless, removing the opportunity for price exploitation.
    

  

Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Protocol users benefit from thorough MEV protection on all trades.

## Want MEV protection on all your trades? Use CoW Swap

  

MEV is a billion dollar problem for the Ethereum ecosystem. CoW DAO builds products to protect users from negative outcomes for transactions of all types and sizes. Another one of those is [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=understanding-mev-article).

  

CoW Swap takes the world of DEX aggregators and takes it to the next level. CoW Swap is not only the largest intent-based aggregator, it’s also one of the largest DEX aggregators. In November 2024, it [handled $6.2 billion in trading volume](https://x.com/CoWSwap/status/1869017209345130511), and is trusted by thousands of traders.

  

Whales and DAOs (as well as retail users) rely on CoW Swap as their aggregator of choice too because CoW Swap does more than just aggregate liquidity. It also provides comprehensive [MEV protection](https://cow.fi/learn/understanding-mev-protection) and enables price optimizations — such as [CoWs](https://cow.fi/learn/what-are-cows-on-cow-swap) — that traditional aggregators can’t. Thanks to its intent-based architecture, CoW Swap supports 22 solvers that compete with each other to find the best prices for each user trade, and even provide a price surplus on top.

  

While other aggregators claim to provide the best prices, CoW Swap’s architecture is built from the ground up to incentivize the best prices and the most surplus for trades, all in an easy-to-use, worry-free interface.

  

Give CoW Swap a try for yourself at [swap.cow.fi](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=dex-aggregator-article).

  

If you want to learn more about MEV, check out “[MEV Transparency: Ensuring Fairness In DeFi Markets](https://cow.fi/learn/mev-transparency-ensuring-fairness-in-defi-markets)” and “[How CoW Swap solves the MEV problem](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem).”

large_MEV-resistance.png

medium_MEV-resistance.png

small_MEV-resistance.png

thumbnail_MEV-resistance.png

MEV-resistance.png

MEV resistance is a response to people exploiting your trades. In this article, we’ll take you through what they are, and the products CoW DAO has built to make resisting MEV simple.

What is MEV Resistance?

![levelling-up.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/levelling_up_e5e3db9c89.png)

Most of the time, the buying and selling crypto tokens happens in real time. A user heads to an exchange, finds the token they want to buy or sell, and then executes an order. But Limit Orders allow you to set and forget trades to execute into the future.

  

In this blog, we explain what Limit Orders are, and how [CoW Swap](https://cow.fi/cow-swap) takes them to the next level.

## What are limit orders?

Limit orders are orders to buy or sell tokens at a specified price within a specified time horizon. If the available price hits the target price within the time horizon, the order executes.

  

Another way of thinking of limit orders is you can set them and forget them. The orders will only execute if you get what you wanted. Didn’t get the price you wanted? No worries, you don’t incur any costs.

  

Limit orders can work for both buy orders and sell orders. One thing to note: the price you want is not guaranteed. So you can’t set unrealistic orders and expect them to be filled. Only orders that can be met or completed.

## How are limit orders different from other trades?

  

There are lots of different types of orders you can place in crypto. But as a general rule, there are broadly two types: ones you place now, and ones you can place in the future.

  

Limit orders are used to make trades in the future. If you’re looking to make a trade now, these are commonly referred to as Market Orders.

  

The main difference between a market order and a limit order is that a market order lets you immediately trade a token at its current value, whereas a limit order allows you to signal intent to trade a token in future, but only if certain conditions are met.

## Why should I use limit orders?

  

The first and perhaps most important reason for using limit orders is control. Crypto markets are volatile, meaning timing your trades can be tricky.

  

With limit orders you don’t need to wait around for the price to be right. You can set your orders, set how long you want them to be open for and then get on with your life.

## Why are Limit Orders on CoW Swap different from others?

  

Limit orders from [CoW Protocol](https://cow.fi/cow-protocol) differ from other limit orders products in DeFi because they are built on top of [CoW Protocol](https://cow.fi/cow-protocol)’s unique architecture.

  

We say that CoW Protocol limit orders are, in fact, UN-limited, because they offer:

-   **Unlimited order management:** traders can manage orders without paying fees, meaning they can set and cancel limit orders as much as they’d like without paying for gas. You would incur costs on other exchanges.
    
-   **Unlimited order placement:** traders can use the same crypto balance to place many orders at once that can stay active for up to a year; CoW Protocol fills orders as they hit their limit prices, and stops filling them once a wallet runs out of sell tokens. When that happens, traders can top up their wallets to keep the orders flowing.
    
-   **Unlimited order surplus:** traders get the price at execution time, so if a price falls below the trigger price, the upside belongs to them and not the order taker. Additionally, any price improvement generated by solvers finding more-optimal execution paths (i.e. finding a Coincidence of Wants) belongs to the trader
    

  

CoW Protocol offers the most-flexible limit order experience in DeFi. This experience is uniquely achievable thanks to CoW Protocol’s specific architecture, which leverages [batch auctions](https://docs.cow.fi/overview/batch-auctions) to deliver fair and efficient outcomes for traders.

  

When placing market orders with [CoW Protocol](https://cow.fi/cow-protocol), users sign trade intents rather than actual transactions on-chain. CoW Protocol collects these intents into batches, and settles them in the most-efficient way possible (by auctioning them via a decentralized network of solvers).

  

Limit orders leverage this same innovative architecture, and it is because users sign intents rather than transactions that we are able to offer such a flexible, gasless limit orders product.

  

Another benefit unique to limit orders on CoW Protocol is that they are surplus-capturing.

  

Surplus-capturing means that the protocol can improve prices above-and-beyond what users expect when they place their limit orders. CoW Protocol generates surplus on behalf of its users by matching [Coincidences of Wants](https://docs.cow.fi/overview/coincidence-of-wants) within batches, and by capturing favorable price movements between the time orders are sent and the time they are settled on-chain.

  

As an aside: this also means that if you accidentally place an order much below market price, CoW Protocol’s smart contract will protect you from your mistake and execute the order at the best available price it can find.

  

But we haven’t stopped there! CoW DAO has been busy working on an overhaul of Limit Orders to make them even s-moooo-ther to use.

  

Below is an overview

### Customize your input field orders

![Screenshot 2025-02-03 at 13.19.02.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_03_at_13_19_02_3966dbc8bc.png)

Trade your way. You can customize what inputs you use to calculate your order, giving you more flexibility to build orders that work for you.

### Auto-calculate limit price for your trades

![Screenshot 2025-02-03 at 13.19.40.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_03_at_13_19_40_cbada779a4.png)
The new look Limit Orders will now automatically calculate the limit price for your trades, giving you a better understanding of what you will receive once your limit order has been executed.

### Set limit prices in USD

![Screenshot 2025-02-03 at 13.19.58.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_03_at_13_19_58_bc55909d5d.png)

You can now toggle between limit prices in the native currency or in US Dollars. No more secondary calculations, it all happens inside the Limit Order interface.

### Preview estimated fill price before placing a trade

![Screenshot 2025-02-03 at 13.20.21.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_03_at_13_20_21_a62fe78c70.png)


Yep, Limit Orders on CoW Swap will now show the estimated fill price before you place a trade.

  

Because CoW Swap uses intents, when you place a limit order on CoW Swap, you don’t have the option to pay gas separately - this is because the gas price is already covered by the solver.

  

To cover the cost, the solver has to wait until the market price of your asset is slightly better than your set limit price, so when the solver executes the order they get just enough extra to cover the gas.

  

This means that CoW Swap limit orders don’t execute exactly when the limit price is reached. Especially for small trades, the difference between the limit price and the actual price where the order is able to fill can be significant.

  

With this update, we will start calculating & showing the estimated fill price while the user is setting up their order, so they can understand whether their limit price is realistic or not.

### Extended Order duration

![Screenshot 2025-02-03 at 13.21.38.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_03_at_13_21_38_b63105085d.png)

In this upgrade, traders have more choice when it comes to how long they want their orders to last. You can specify anywhere between 5 minutes up to 1 year, so you can set and forget your trades and let CoW Swap do the rest.

### More customization options than ever

![Screenshot 2025-02-03 at 13.21.58.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_03_at_13_21_58_93f0c29c4f.png)

Yep, there’s a lot more customization to come. Everything from partial executions, custom recipient features, to how Limit Orders display on your desktop.

  

[Try limit orders on CoW Swap](https://swap.cow.fi/#/1/limit-orders/WETH?tab=open&page=1) now.

  

We’ve written a [how-to guide](https://medium.com/@cow-protocol/how-to-user-cow-swaps-surplus-capturing-limit-orders-24324326dc9e) to guide you through the experience.

  

Moooooo 🐮

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Limit Orders allow you to set and forget trades to execute into the future. In this blog, we explain what Limit Orders are, and how CoW Swap takes them to the next level. 


Limit Orders Explained

![delegate-3.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/delegate_3_f28eaa3bb8.png)
CoW DAO is launching a token delegation program for token holders. This will allow token holders to delegate their tokens to vetted members of the CoW DAO community who are able to participate in CoW DAO governance on their behalf.

  

This is an important step for the CoW DAO community, as it helps increase participation and improves public discourse.

## Why would you delegate your vote?

  

There are many reasons why you’d delegate your vote to a third party.

  

**It’s more time efficient:** If you don’t have the time to stay on top of every proposal, delegating ensures your votes are still contributing to the direction of CoW DAO.

  

**You can collaborate with experts:** You can delegate to someone with deeper knowledge or specialized expertise in areas critical to the DAO's success.

  

**It increases your Influence:** Feel strongly about a CIP? Pooling votes with a trusted delegate can amplify your collective impact on key decisions.

  

**It gives you more flexibility:** Delegation allows you to remain a part of the DAO even if you can't engage consistently.

  

**It helps build stronger governance:** By delegating to active participants, you contribute to creating a more robust and responsive decision-making process.

  

**It strengthens the community:** Delegation helps empower those who are deeply committed to advancing the DAO's mission, fostering a healthier ecosystem.

## What happens to my tokens when I delegate?

  

Even though you have delegated your votes to a third party, you retain a number of key features.

  

**You can still vote directly** - even if you’ve allocated your tokens to a third party, you still have the ability to vote on future CIPs.

  

**You can re-assign or revoke your delegation at any point** - If you feel your delegator is not voting in accordance with your values, you can revoke your vote, and re-allocate it at any time.

  

**Your tokens remain in your account and are not frozen** - Yep, you can use your tokens as you see fit. Want to buy more or sell tokens? You can. If you reduce or increase the voting power attached to your account, the delegate’s voting power updates accordingly.

  

There is no expiration date set for your delegation, so make sure you keep an eye on how your delegate is voting. A few other key points: Your delegate cannot delegate onwards and you cannot split your voting power across multiple delegates.

## How do I delegate my tokens?

  

We’ve made finding the right delegate, and assigning your tokens as simple as possible. There are two pathways. Below is a step-by-step process of each.

  

### Process 1: Via the CoW DAO Forum

  

**Step 1: Find your delegate**
![Screenshot 2025-02-05 at 11.48.50.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_05_at_11_48_50_a33cee2565.png)

Scroll down and you’ll find a heading called “[Current List of Recognised Delegates](https://forum.cow.fi/t/recognised-delegates-scheme/2688)”. Click a delegate's name to be taken to their Snapshot profile.

  

**Step 2: Click the ‘delegate’ button on the delegate’s profile**

  

Once you’re on the Snapshot page for a delegator, you will find a delegate button, in the top right hand corner.
![Screenshot 2025-02-04 at 12.43.18.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_04_at_12_43_18_215b987b0a.png)

Head to the CoW DAO forum and the dedicated page for Delegates called [“Recognised Delegates Scheme”](https://forum.cow.fi/t/recognised-delegates-scheme/2688).

  


**Step 3: Follow the instructions to connect your wallet**

  

A pop-up box should appear for you to connect your wallet of choice. Follow the instructions from there.

![Screenshot 2025-02-04 at 12.46.14.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_04_at_12_46_14_b32b84fe35.png)

### Process 2: Via the Snapshot Delegates Overview

  

Head to [Snapshot’s Delegation](https://snapshot.box/#/s:cow.eth) tab.

![Screenshot 2025-02-04 at 13.05.49.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_04_at_13_05_49_fa3dab458d.png)


You will then be able to view all current delegates. You also have the option to sort via voting power, or number of delegators currently assigned.

  

Please note: It is recommended you do not delegate to anyone without a statement, and to always do your own research before committing to a delegate.

![Screenshot 2025-02-04 at 13.20.36.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_04_at_13_20_36_a040944e29.png)

## How do I see who I have delegated to?

  

There are two options.

  

[A Dune Dashboard](https://dune.com/bleu/cow-dao-delegations)  - Head to the Dune dashboard and paste the address of your delegate; or scroll down and paste your own address

  

Snapshot - [Snapshot](https://snapshot.box/#/s:cow.eth) has a new UI which allows users to see who they have delegated to.

![Screenshot 2025-02-04 at 13.05.49.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_02_04_at_13_05_49_fa3dab458d.png)

## How do I contact my delegate?

  

You can contact your delegate by [heading here](https://forum.cow.fi/t/recognised-delegates-scheme/2688), finding your delegate and contacting them directly.

## Who gets to be a delegate?

  

Anyone can become a CoW DAO delegate, at any point in time, there is no “program close”. Becoming a delegate is permissionless.

  

However, to become a recognized delegate, there is a vetting process. Recognized delegates have to be vetted by at least one member of the GrantsDAO committee based on subjective evaluations of their expertise, knowledge, and contributions.

  

These delegates must allocate 10,000 COW tokens to their delegate address, signaling alignment with the community’s goals. They are also expected to disclose any conflicts of interest.

  

Delegates who wish to be included can reach out to the GrantsDAO committee by linking their introduction in [this thread](https://forum.cow.fi/t/recognised-delegates-scheme/2688/13). They are also encouraged to introduce themselves on the [CoW DAO Forum](https://forum.cow.fi/c/cow-improvement-proposals-cip/delegates/25) (using [this introduction template](https://forum.cow.fi/t/delegate-introduction-guidelines/2669)) and complete their Snapshot profiles.

  

## In summary: Delegation increases engagement in CoW DAO governance

  

CoW DAO is committed to creating a robust, balanced, and effective governance structure. We believe a delegate program helps deliver on that promise.

  

The delegation program fosters participation, enhances decision-making, and improves public discourse. It strengthens CoW DAO’s ecosystem and contributes to its long-term success.


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CoW DAO is launching a token delegation program for token holders. This will allow token holders to delegate their tokens to vetted members of the CoW DAO community who are able to participate in CoW DAO governance on their behalf. 


CoW DAO launches delegate program for token holders

Decentralized Finance (DeFi) liquidity represents the total value of digital assets deposited in blockchain-based protocols to enable trading, lending, borrowing, and other financial services. Unlike traditional finance, where liquidity flows through banks and centralized institutions, DeFi liquidity operates through smart contracts—automated programs that execute financial transactions without intermediaries.

The cornerstone metric for measuring DeFi liquidity is Total Value Locked (TVL), which quantifies the aggregate dollar value of assets committed to these protocols. Think of TVL as the equivalent of deposits in traditional banking, but distributed across thousands of decentralized applications rather than concentrated in financial institutions.

Messari, a leading blockchain analytics platform, tracks TVL across individual protocols and entire blockchain networks. This monitoring reveals dramatic shifts in capital allocation. For instance, when Flare Network integrated USD₮0—a new stablecoin variant—the network's TVL surged from $37.1 million to $120.9 million within just 13 days. Such rapid movements underscore both the opportunities and volatility inherent in decentralized markets, making continuous monitoring essential for understanding where capital flows in this emerging ecosystem.

## Analyzing individual protocol performance

Messari's protocol-specific analysis provides granular insights into how different DeFi applications attract and utilize liquidity. Each protocol report encompasses TVL trends, the composition of deposited assets, and performance benchmarks against competitors.

When examining Uniswap—the largest decentralized exchange—analysts can assess trading volume, fee generation, and liquidity utilization efficiency. The platform reveals how liquidity distributes across different token pairs and identifies which assets drive overall protocol growth. For lending protocols like Aave, the analysis tracks both supplied assets (deposits) and borrowed amounts, creating a comprehensive view of lending market dynamics.

These reports illuminate seasonal patterns and external factors affecting liquidity flows. Protocols often experience TVL increases during periods of high trading activity or market euphoria, while experiencing outflows during volatility or uncertainty. Understanding these patterns helps predict future liquidity trends and identify optimal timing for protocol participation.

## Cross-chain liquidity movement patterns

Modern DeFi operates across multiple blockchain networks, creating complex liquidity flows between different ecosystems. Messari provides network-specific analysis showing how capital moves between these parallel financial systems.

Consider liquid staking derivatives—tokens representing staked Ethereum that can be used in DeFi while earning staking rewards. While protocols like Lido maintain primary liquidity on Ethereum's main network, these derivatives migrate to Layer 2 networks and alternative blockchains through cross-chain bridges. Messari tracks these movements, showing how stETH (staked ETH) liquidity spreads across Arbitrum, Optimism, and Polygon networks.

The platform identifies liquidity migration patterns when new networks launch attractive opportunities. When emerging Layer 2 networks offer compelling yield farming programs, analysts can track capital flows from established networks to these new ecosystems. This intelligence reveals which networks gain traction and where institutional and retail capital concentrates.

## Sector-wide market intelligence

Messari categorizes DeFi protocols by function—lending, decentralized exchanges, yield farming, derivatives—enabling comprehensive analysis across different financial services sectors. This sectoral perspective reveals broader market trends and competitive dynamics that individual protocol analysis might miss.

In the decentralized exchange sector, comparisons across automated market makers like Uniswap, SushiSwap, and newer entrants reveal market share evolution, fee generation efficiency, and user adoption patterns. When Uniswap maintains 60% of decentralized exchange liquidity while newer protocols gain share, this signals increasing competition and market fragmentation.

Lending protocol analysis reveals borrowing demand patterns and collateral preferences across market cycles. During periods of high leverage demand—often preceding market rallies—lending protocols typically experience TVL increases as users deposit more collateral to access loans. Conversely, market downturns trigger liquidation events that can cause rapid TVL contractions as collateral gets sold to repay loans.

## Research context and market intelligence

Messari's research reports provide essential context for interpreting raw liquidity data. These analyses explain fundamental drivers behind liquidity changes and identify emerging trends that quantitative metrics alone cannot reveal.

Recent research has highlighted liquid staking derivatives' growing influence on DeFi liquidity composition. As more Ethereum becomes staked to secure the network, protocols integrating these staking derivatives experience increased TVL. Research reports explain how this structural shift affects different protocol categories and identify which projects benefit most from this trend.

The reports also document seasonal patterns and market cycles affecting liquidity distribution. "DeFi Summer" periods—characterized by high experimentation and generous liquidity mining rewards—contrast sharply with bear markets, where liquidity consolidates in established, security-focused protocols. Understanding these cycles helps anticipate capital allocation shifts.

## Stablecoin liquidity infrastructure

Stablecoins—cryptocurrencies designed to maintain stable values relative to reference assets like the US dollar—form the foundation of most DeFi activity. Messari provides detailed analysis of stablecoin distribution and flows across protocols and networks.

USD₮0's rapid adoption on Flare Network, capturing 63.2% market share shortly after launch, demonstrates how new stablecoin variants can quickly establish significant liquidity pools. This analysis helps identify which stablecoins gain adoption and which protocols successfully attract stablecoin deposits.

The platform tracks stablecoin yield opportunities across different protocols, showing where stablecoin holders can earn returns through lending, providing liquidity to exchanges, or participating in yield farming programs. This intelligence proves crucial for understanding capital flows and identifying emerging opportunities in the stablecoin ecosystem.

## Incentive program analysis

Liquidity incentive programs—often called "liquidity mining"—significantly impact TVL distribution across protocols. These programs reward users for depositing assets, typically through token distributions. Messari tracks these programs and analyzes their effectiveness in attracting and retaining liquidity.

Flare's USD₮0 Boost program, offering annual percentage yields up to 30%, exemplifies how yield incentives can rapidly increase protocol TVL. The platform analyzes whether protocols maintain liquidity levels after incentive programs conclude, distinguishing between sustainable growth and temporary capital attraction.

The analysis compares different incentive structures, from direct token rewards to fee sharing arrangements and governance participation rights. This comparison helps identify which models most effectively build long-term protocol liquidity rather than attracting transient capital.

## Advanced screening and discovery

Messari Pro offers sophisticated screening capabilities for identifying protocols based on specific liquidity criteria. Users can filter protocols by TVL magnitude, growth rates, blockchain network, and sector classification.

Custom screens can identify protocols with monthly TVL growth exceeding 50% or those with favorable TVL-to-market capitalization ratios suggesting potential undervaluation. These screening tools help identify emerging opportunities and protocols gaining momentum before widespread recognition.

The functionality enables competitive analysis by comparing similar protocols across key liquidity metrics. This capability proves valuable for investors seeking exposure to specific DeFi sectors or researchers analyzing market evolution patterns.

## Real-time market monitoring

DeFi liquidity can shift rapidly during market volatility or protocol developments. Messari provides real-time tracking showing immediate liquidity changes across major protocols, essential for understanding market dynamics as they unfold.

During significant market events—large liquidations, protocol security incidents, or regulatory announcements—real-time tracking reveals how liquidity responds across different protocols. Some protocols may experience outflows as users seek perceived safety, while others benefit from flight-to-quality movements.

The platform's alert system notifies users of significant liquidity changes, maintaining awareness of important market developments. These alerts particularly benefit active DeFi participants who must respond quickly to changing market conditions.

## Strategic application

Effective DeFi liquidity analysis requires combining quantitative metrics with qualitative context to understand current conditions and anticipate future trends. Messari's platform provides comprehensive tools for thorough liquidity analysis, spanning protocol-specific metrics to sector-wide trends and cross-chain capital flows.

The platform's primary strength lies in combining raw data with expert research and analysis, providing context essential for correctly interpreting liquidity movements. Whether tracking established protocols or identifying emerging opportunities, these tools enable informed decision-making in the rapidly evolving DeFi landscape.

Regular liquidity trend monitoring, combined with understanding underlying factors driving changes, positions market participants to identify opportunities and mitigate risks in this dynamic ecosystem. As DeFi continues maturing and institutional adoption increases, sophisticated liquidity analysis becomes increasingly crucial for navigating this new financial frontier.

## Frequently asked questions

### How to track liquidity in crypto?

You can track crypto liquidity through several key methods. Monitor Total Value Locked (TVL) which represents the aggregate value of assets committed to DeFi protocols. Use platforms that provide protocol-specific data including TVL trends, asset composition, and comparative analysis against competitors. Track cross-chain liquidity flows to understand how assets move between different blockchain networks. Implement real-time monitoring systems that can alert you to significant liquidity changes during market volatility. Additionally, analyze sector-wide trends across categories like lending, decentralized exchanges, and yield farming to get a comprehensive view of market liquidity movements.

### How to track DeFi positions?

Track DeFi positions by monitoring your assets across multiple protocols and networks simultaneously. Use portfolio tracking tools that aggregate data from lending protocols, DEXs, and yield farming platforms. Set up alerts for significant changes in your position values or yields. Monitor the health of protocols where you have positions by tracking their TVL, trading volumes, and fee generation. For lending positions, track both supplied and borrowed amounts to understand your exposure. Keep an eye on incentive program changes that might affect your yields, and use screening tools to identify when better opportunities emerge that might warrant repositioning your assets.

### How does DeFi liquidity work?

DeFi liquidity works by users depositing assets into decentralized protocols to facilitate trading, lending, borrowing, and other financial activities. When you provide liquidity to an automated market maker (AMM) like Uniswap, your tokens are pooled with others to enable trading between different assets. In lending protocols, your deposited assets become available for others to borrow, generating yield from interest payments. Liquidity providers typically earn fees from trades or interest from borrowers. The system relies on smart contracts to automatically manage these processes, with liquidity flowing between different protocols and networks based on yield opportunities and market conditions.

### What is the Messari classification system?

The Messari classification system categorizes DeFi protocols by sector to enable comprehensive analysis across different types of financial activities. The system includes categories such as lending protocols, decentralized exchanges (DEXs), yield farming platforms, and liquid staking derivatives. Each category allows for comparative analysis within similar protocol types - for example, comparing automated market makers like Uniswap and SushiSwap within the DEX sector. This classification enables sector-wide liquidity analysis, revealing broader market trends and competitive dynamics. The system also tracks market share changes, fee generation efficiency, and user adoption patterns within each category, making it easier to identify which sectors are growing and which protocols are gaining market share.

Learn how to effectively track DeFi liquidity using Messari's analytics platform. Discover Total Value Locked (TVL) metrics, cross-chain liquidity flows, protocol performance analysis, and real-time monitoring tools for decentralized finance investments.

How to track DeFi liquidity with Messari

Wallet performance evaluation on Dune begins with understanding the fundamental metrics that drive successful cryptocurrency trading. The platform tracks comprehensive data points including transaction volume, profit and loss calculations, win rates, and trading frequency, providing a complete picture of how effectively a wallet operates in volatile digital asset markets.

When analyzing any wallet, the system distinguishes between realized and unrealized gains—a critical concept for newcomers to understand. Realized gains represent completed trades where digital assets were purchased and subsequently sold, while unrealized gains reflect the current market value of tokens still held in the wallet. This distinction matters significantly because a wallet might display impressive theoretical profits that could evaporate if market conditions shift unfavorably.

## Trading volume and frequency analysis

Daily transaction volume serves as a primary indicator of wallet activity and market engagement. A wallet executing $50,000 in daily trades demonstrates substantially more market involvement than one processing $1,000 daily. However, volume alone provides incomplete information about trading success. High-frequency trading wallets might generate substantial volume while maintaining modest profit margins, whereas strategic wallets might trade less frequently but achieve superior returns per transaction.

Transaction frequency patterns reveal underlying trading philosophies. A wallet executing 100 trades daily likely employs algorithmic or high-frequency strategies, while one making 5-10 carefully timed trades probably follows a more analytical, research-driven approach. Each methodology carries different risk profiles and success indicators that require separate evaluation frameworks.

## Understanding win rate context

Win rate represents the percentage of profitable trades relative to total transactions executed. While an 80% win rate appears highly successful on its surface, this metric demands proper context for meaningful interpretation. A portfolio achieving small profits on 80 trades while experiencing massive losses on the remaining 20 trades could produce overall negative performance despite the impressive win rate statistic.

Dune Analytics provides sophisticated win rate analysis by segmenting performance across different profit margin categories. A wallet might demonstrate varying win rates for trades generating 0-50% returns versus those exceeding 200% gains. This granular analysis helps determine whether a wallet consistently produces modest profits or occasionally achieves major winners that drive overall performance.

## Return on investment calculations

ROI calculations on Dune account for complete trading lifecycles rather than isolated transactions. The system tracks initial investment amounts, final sale proceeds, and current holdings valuations to provide comprehensive performance pictures. If a wallet invested $10,000 across multiple digital assets and currently holds positions worth $15,000 after realizing $5,000 in profits from completed trades, the total return calculation would show $10,000 profit on the initial investment.

The platform incorporates sophisticated logic to handle complex scenarios where wallets sell more tokens than they initially purchased. In cases involving token farming, airdrops, or other acquisition methods beyond direct purchases, excess profits are excluded from ROI calculations to prevent artificially inflated performance metrics that misrepresent actual trading skill.

## Market capitalization preferences

Dune's analysis framework categorizes wallet behavior based on market capitalization preferences, revealing important strategic insights. Some wallets focus exclusively on tokens with market caps below $1 million, indicating preference for extremely early-stage investments carrying high risk but potentially explosive rewards. Others concentrate on tokens in the $10-100 million range, suggesting more conservative approaches focused on established projects with demonstrated growth potential.

A wallet consistently trading tokens in the sub-$500,000 market cap range demonstrates exceptional risk tolerance but might also indicate sophisticated early-stage project identification capabilities. Conversely, wallets avoiding tokens below $5 million market cap prioritize stability and established fundamentals over speculative growth potential.

## Temporal pattern analysis

Time-based performance analysis reveals crucial patterns that static metrics might obscure. A wallet displaying exceptional performance over 7-day periods but mediocre results over 30-day timeframes suggests either changing market conditions or evolving strategy implementations. Dune's temporal analysis capabilities help distinguish between sustainable trading skill and temporary market alignment that might not persist.

Hourly trading patterns provide additional strategic insights. Wallets consistently generating profitable trades during specific time periods might possess access to unique information sources or employ strategies optimized for particular market conditions. A wallet showing peak performance between 2-4 AM EST might be capitalizing on Asian market movements or following automated trading schedules aligned with global market dynamics.

## Identifying artificial performance indicators

Sophisticated traders should recognize that some wallets display artificially enhanced metrics designed to attract copy-traders and generate following. These operations might engage in coordinated activities where they purchase low market cap tokens before promoting them to followers, then liquidate their positions once copy-traders drive prices higher through increased demand.

Dune's comprehensive analysis helps identify these manipulation patterns through detailed volume analysis and trade timing examination. A wallet showing consistent success with tokens that subsequently crash after their transactions might be providing exit liquidity for their own previous positions. The platform tracks whether tokens maintain value after wallet transactions or experience rapid declines, helping users avoid becoming victims of sophisticated exit liquidity schemes.

## Practical application examples

Consider a wallet generating $200,000 in weekly trading volume with a 70% win rate maintained over 30 days. Initial analysis might suggest strong performance, but deeper investigation reveals the wallet focuses on tokens in the $1-10 million market cap range and typically holds positions for only 2-4 hours. While the win rate appears attractive, further analysis shows average winning trades generate 15% returns while losing trades average 25% losses. Despite the positive win rate, overall performance might be negative due to this asymmetric risk-reward profile.

Contrast this with another wallet showing only $20,000 in monthly volume but maintaining positions for 1-2 weeks on average. This wallet demonstrates a 60% win rate with winning trades averaging 150% returns while losses typically remain below 40%. The lower trading frequency and volume might initially appear less attractive, but the risk-adjusted returns significantly outperform the high-volume alternative when properly analyzed.

## Implementation best practices

Effective wallet analysis requires systematic approaches rather than ad-hoc investigation. Begin with 7-day periods for initial screening, then extend to 30-day analysis for promising candidates. Longer timeframes provide more statistically reliable data but require additional computational resources and processing time. For active trading decisions, 30-day analysis typically provides sufficient data for informed decision-making while maintaining reasonable analytical complexity.

Compare multiple wallets simultaneously by running parallel queries and maintaining detailed performance spreadsheets. This approach enables direct performance comparisons and helps identify consistent patterns across different wallet strategies and market segments. Analyzing 3-5 wallets operating in similar market conditions provides valuable perspective on relative performance quality and market-adjusted returns.

## Verification and risk management

Use Dune analysis as a comprehensive verification step after identifying potential wallets through other platforms and screening tools. Initial identification through platforms like GMGN or Solscan can surface interesting candidates, but Dune's sophisticated analytical capabilities provide the detailed performance metrics necessary for final selection decisions and risk assessment.

Effective wallet performance evaluation requires systematic analysis of multiple interconnected metrics rather than relying on superficial indicators that might mislead decision-making. Dune Analytics provides comprehensive data infrastructure necessary for thorough wallet assessment, but success depends entirely on understanding how to interpret these metrics within broader market contexts and realistic expectations.

Focus on sustainable performance patterns while carefully accounting for hidden risks and conducting thorough comparative analysis. This approach enables identification of genuinely successful wallets worthy of study or potential emulation, while avoiding common pitfalls that trap inexperienced cryptocurrency traders. Remember that exceptional performance claims often conceal significant risks, and maintain realistic expectations about copying successful strategies given inherent challenges around execution timing, market liquidity, and rapidly changing digital asset market dynamics.

## Frequently asked questions

### How to check Solana wallet performance?

You can check Solana wallet performance by analyzing key metrics including transaction volume, profit and loss calculations, win rates, and trading frequency. Look at both realized gains (completed trades) and unrealized gains (current holdings value). Monitor daily transaction volume, trading patterns, and ROI calculations that account for the complete trading lifecycle. Analyze temporal patterns to see if performance is consistent across different timeframes, and examine market cap preferences to understand the wallet's risk tolerance and strategy.

### What is Dune Analytics?

Dune Analytics is a comprehensive blockchain data platform that provides detailed wallet performance analysis and tracking. It offers tools to evaluate trading metrics including transaction volume, win rates, ROI calculations, and trading patterns. The platform tracks both realized and unrealized gains, provides temporal analysis across different timeframes, and helps identify artificial performance indicators. Dune enables users to conduct thorough wallet assessments by analyzing multiple data points simultaneously and comparing performance across different wallets and market segments.

### How to track successful crypto wallets?

To track successful crypto wallets, focus on multiple performance metrics rather than single indicators. Analyze win rates in context - a high win rate means nothing if losing trades are disproportionately large. Examine trading volume and frequency patterns to understand strategy types, whether high-frequency algorithmic trading or strategic position holding. Look at market cap preferences to gauge risk tolerance, and use temporal analysis to verify consistent performance over different timeframes. Compare multiple wallets simultaneously and verify performance through comprehensive data analysis rather than relying on surface-level metrics.

### How to check AML score of crypto wallet?

AML (Anti-Money Laundering) scores for crypto wallets are typically checked through specialized blockchain analytics tools that analyze transaction patterns, source of funds, and interactions with known risky addresses. These tools examine factors like mixing services usage, connections to sanctioned entities, transaction clustering patterns, and geographic risk indicators. While the provided information doesn't detail specific AML scoring methods, professional compliance platforms typically provide risk scores based on transaction history analysis, counterparty screening, and behavioral pattern recognition to assess potential money laundering or illicit activity risks.

Learn how to evaluate crypto wallet performance on Dune Analytics with comprehensive analysis of trading metrics, win rates, ROI calculations, and risk assessment. Master the tools to identify successful wallets and avoid performance manipulation schemes.

How to evaluate wallet performance with Dune

![OFA.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/OFA_6463c6d8c0.png)

Want to know what makes CoW Swap unique? Apart from the amazing UI, MEV protection, and class leading surplus of course. It’s our unique use of Order Flow Auctions (OFAs). Never heard of them? You’re in the right place.

  

In this article we’ll explain what they are, how they work, and how they help traders on CoW Swap not only get the best prices for their trades, but help avoid dreaded MEV attacks.

## What is an Order Flow Auction?

  

Order Flow Auctions are, at their simplest, a process where solvers compete to fulfil trades. The aim is to ensure users capture as much value from each swap or trade, while also being protected from [Maximal Extractable Value (MEV).](https://cow.fi/learn/what-is-mev)

  

The key point to take away from OFA is that it’s a competitive bidding system where solvers compete over who can make the best offer, which is then selected by the protocol. This system not only simplifies the trading process but also ensures traders access the best available price without the need to manually search through multiple platforms.

## What’s the difference between Order Flow Auctions and regular swaps?

  

There is a difference between what happens when you swap on CoW Swap and what happens when you use platforms or wallets that don’t use OFAs.

  

When you trade or swap on other platforms that do not use Order Flow Auctions to manage trades, when you hit the button to trade, your transaction is sent to the mempool. This is a public queue of all transactions awaiting to be assigned to a block.

  

Validators then pull transactions from the mempool and add them to the next block when it’s time for it to be built. Here is where the opportunity to extract value through MEV comes in.

  

Validators are not required to add transactions to the block in the same order that they were submitted by users, so searchers can pay validators a fee to order transactions in a specific way. For example, they can pay to have their transactions come first if they want to frontrun someone else, or they can pay to have their transactions come right after a specific transaction if they want to perform a backrun — both are types of MEV.

  

On OFAs, however, your transactions are hidden from that mempool, meaning your trades are not exposed to prying eyes.

  

To find out more about how this system works, check out our page explaining [what MEV is and how it works.](https://cow.fi/learn/what-is-mev)

## Why are Order Flow Auctions important?

  

Order Flow Auctions not only offer a safer way for users to make transactions, they are also more efficient. That’s because inside CoW Protocol’s OFA is a matching system called a [Coincidence of Wants (CoW)](https://docs.cow.fi/cow-protocol/concepts/how-it-works/coincidence-of-wants).

  

The solvers we mentioned earlier who are competing to find you the best deal on your trades look at a number of different sources in order to find you the best deal. One of those might be another trade in the batch. If the solver does find someone with a mirror trade to yours, they will facilitate the trade, which can help you save on fees.

  

If the protocol does not find a CoW, the solvers search all available on-chain and off-chain liquidity to find the best price for a set of trade intents within a batch.

Liquidity sources include:

-   AMMs (e.g. Uniswap, Sushiswap, Balancer, Curve, etc.)
    
-   DEX Aggregators (e.g. 1inch, Paraswap, Matcha, etc.)
    
-   Private Market Makers
    

  

These different sources - some of which may not be available to users - mean users can search dozens of liquidity sources with a single click, saving time, effort, and money too.

  

Let’s take a deeper look at how the Order Flow Auction Process works.

## The Order Flow Auction Process Explained

  

There are several key steps to the Order Flow Auction process, which you can find below.

  

-   Gathering Orders: Orders from multiple users are collected and grouped together in a batch.
    
-   Auction Initiation: These batches are then presented in an auction format, and the auction begins.
    
-   Bid Optimization: Bidders assess the orders within the auction and then try to find the best execution based on what’s in the batch.
    
-   Selecting Winning Bids: Once all bids are submitted, the winning bid is selected.
    
-   On-Chain Settlement: The winning bids are pushed on-chain, along with all the orders included in the auction, and they are settled.
    

  

While these are the core components of each OFA, there are several different types of auction, which we explore below.

## The different types of Order Flow Auctions

  

There are three primary types of Order Flow Auctions:

  

-   RFQ (Request for Quote) Auctions: RFQs are optimized for price discovery, so they are particularly suited to market makers offering quotes for swaps. These auctions help facilitate price discovery through a system of bidders quoting swaps and market makers using private inventory to offer better prices than [automated market makers (AMMs)](https://cow.fi/learn/cow-protocol-glossary#:~:text=amm).
    
-   Frequent Batch Auctions: A combination of price discovery, price optimization, and settlement path, Frequent Batch Auctions enable multi-dimensional intent matching. This, in turn, allows for trade optimizations not available through other mechanisms and complete protection from MEV thanks to peer-to-peer trading.
    
-   Block Space Aggregator Auctions: Unlike other auctions that focus on price discovery and execution, Block Space Aggregator Auctions provide value to the user through post-trade rebates. These rebates come from capturing value that likely would have leaked out at the last stage of the supply chain.
    

  

CoW DAO has long understood the potential of Order Flow Auctions to ensure better prices and better protection. Let’s take a look at how CoW DAO has implemented Order Flow Auctions into its products.

## MEV Blocker RPC uses Order Flow Auctions at the block builder level

  

MEV Blocker is an RPC endpoint that facilitates Order Flow Auctions. If you're a wallet, a solver, or any project that settles transactions on behalf of users, MEV Blocker protects them from MEV and helps you earn some extra revenue.

  

Its primary objectives are to provide privacy, expedite transaction inclusion, and offer protection from MEV. MEV Blocker protects user transactions from the worst types of MEV, but it goes a step further by capturing backrunning opportunities and providing rebates. Users receive up to 90% of the value of any backrunning opportunity they create before MEV bots can take it for themselves.

  

Just 6 months after launch, MEV Blocker had protected 387,000 users, 7 million transactions, and $21 billion in DEX volume.

## CoW Swap uses Order Flow Auctions at the dApp level

  

CoW Swap is an Order Flow Auction operating at the dApp level. It relies on intents, which hardcode transaction outputs, in order to prevent MEV exploits. CoW Swap aims to protect users from MEV, enhance liquidity, offer fair pricing, and optimize fee consumption.

  

Let’s see how Order Flow Auctions works when someone makes a transaction on CoW Swap.

A timeline of an order on CoW Swap:

-   Users express an intent to trade
    
-   Intents are registered in the orderbook
    
-   The protocol initiates a batch auction
    
-   [Solvers](https://docs.cow.fi/solvers/solvers) optimize the trades within the batch auction
    
-   The protocol selects the winning solvers
    
-   Transactions are pushed on-chain, and users receive their tokens
    

  

CoW Swap’s efficiency lies in bundling multiple transactions into one which reduces block congestion and requires less gas. It also ensures uniform clearing prices for liquidity pools, promoting fairness and balanced liquidity.

## How have Order Flow Auctions helped users of CoW Swap and MEV Blocker?

  

So far, these products have had a profound impact. Since its creation, MEV Blocker has protected over $188 billion in trading volume across 2.4 million users from MEV and has returned over 4,324 ETH in rebates (for an updated version of these stats, check out the [MEV Blocker Dune dashboard](https://dune.com/cowprotocol/mev-blocker)).

  

CoW Swap, meanwhile, has optimized and protected tens of billions in trading volume across millions of users, (for an updated version of these stats, make sure to check the [CoW Swap Dune dashboard](https://dune.com/cowprotocol/cowswap)).

  

These figures highlight the essential role that OFAs play in enhancing the Ethereum ecosystem.

## Where might Order Flow Auctions go next?

  

Order Flow Auctions have the potential to benefit all Ethereum users through better price discovery, lower transaction costs, more liquidity, and fewer opportunities for exploitation.

  

The key features of OFAs are transparency and a competition mechanism that ensures only the best outcomes prevail.

  

CoW DAO is showcasing the power of OFAs through MEV Blocker and CoW Swap, two products that protect users from MEV and optimize block space usage.

  

In conclusion, as the blockchain space continues to evolve, Order Flow Auctions are emerging as a crucial tool for achieving fairness, efficiency, and transparency. CoW DAO’s [innovative solutions](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem) offer promising glimpses into a future where users can trade with confidence in a secure and friendly environment.

large_OFA.png

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small_OFA.png

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OFA.png

Order Flow Auctions are, at their simplest, a process where solvers compete to fulfil trades. The aim is to ensure users capture as much value from each swap or trade, while also being protected from Maximal Extractable Value (MEV). 

Order Flow Auctions Explained 

Market sentiment manifests in measurable on-chain behaviors that provide concrete evidence of how participants actually allocate capital. Unlike traditional sentiment indicators that rely on surveys or social media analysis, blockchain data reveals trading volume patterns, wallet clustering around specific narratives, and transaction timing with unprecedented precision.

Dune's extensive database covers over 100 blockchains with complete historical data, processing over 3TB of information daily. This comprehensive coverage makes it possible to track sentiment patterns across different market cycles and ensure signals remain current and actionable.

## Setting up sentiment tracking dashboards

Creating effective sentiment tracking begins with identifying the right metrics to monitor. Volume-based indicators show immediate market interest, while wallet behavior patterns reveal longer-term sentiment shifts. Address clustering analysis helps identify when institutional or large holder activity concentrates around specific themes.

For example, tracking daily active addresses interacting with decentralized finance protocols reveals whether institutional sentiment toward DeFi remains strong. A dashboard monitoring this metric would query transaction counts across major DeFi protocols, filtering for unique addresses and transaction values above certain thresholds.

Similarly, monitoring new wallet creation rates during market events indicates retail sentiment. Sharp increases in new wallet registrations often precede major price movements, as retail participants enter markets during periods of heightened interest.

## Narrative-based sentiment analysis

Cryptocurrency markets operate on rotating narratives that capture investor attention for weeks or months. These narratives include themes like Layer 2 scaling solutions, artificial intelligence tokens, or real-world asset tokenization. Tracking capital flows into narrative-specific token baskets provides early signals of sentiment shifts.

Consider tracking an AI narrative basket containing tokens focused on artificial intelligence applications. When weekly trading volume across these tokens increases by 200% while Bitcoin volume remains stable, this indicates growing sentiment around AI-related projects rather than cryptocurrency generally.

Narrative rotation patterns follow predictable cycles. Early adopters enter when volume is low and prices are stable. Momentum builds as more participants recognize the trend. Peak sentiment occurs when mainstream coverage becomes extensive, often coinciding with price tops. Tracking volume ratios between narrative baskets and broader market indicators helps identify these transition points.

## Large holder activity and smart money tracking

Significant holders often move before broader sentiment shifts become obvious. Monitoring large transactions provides early warning signals for major market movements. Dune enables tracking of wallets with specific characteristics, such as those holding substantial amounts across multiple narratives or demonstrating consistent profitability.

For instance, tracking wallets that successfully identified previous narrative rotations creates a "smart money" indicator. When these wallets begin accumulating tokens from a new narrative while reducing exposure to current positions, this signals potential sentiment rotation. A dashboard tracking profitable wallets across multiple sectors would query their transaction history, token holdings, and recent activity patterns.

Large holder transaction timing also reveals sentiment intensity. During strong bullish sentiment, major holders typically transact during high-volume periods, confident that liquidity exists to absorb their trades. During uncertainty, these transactions cluster during off-hours to minimize market impact.

## Cross-chain sentiment indicators

Multi-chain analysis reveals sentiment patterns that single-chain analysis misses. When similar narratives show strength across multiple blockchains simultaneously, this indicates broad-based sentiment rather than chain-specific phenomena. Conversely, when sentiment appears strong on one chain but weak on others, narrative strength may be limited.

For example, if DeFi volume increases significantly on Ethereum but remains flat on Solana and Polygon, this suggests the sentiment shift may be Ethereum-specific rather than a broader DeFi revival. However, if all three chains show simultaneous increases, this indicates stronger underlying sentiment toward DeFi generally.

Bridge activity between chains also indicates sentiment flows. When users bridge assets from one blockchain to another, this shows capital flowing toward specific opportunities. Tracking these flows helps predict where sentiment will strengthen next.

## Technical implementation strategies

Effective sentiment tracking requires combining multiple data sources into coherent signals. Volume-weighted sentiment indicators provide more reliable signals than simple transaction counts. Weighting by transaction value ensures that large transactions receive appropriate influence in sentiment calculations.

Time-based filtering improves signal quality by reducing noise from automated trading activities. Focusing on transactions occurring during normal trading hours and filtering out micro-transactions helps isolate genuine sentiment-driven activity.

Creating composite sentiment scores involves normalizing different metrics and combining them mathematically. For instance, combining normalized large holder activity scores with retail participation metrics and cross-chain flow indicators creates a comprehensive sentiment index. Each component receives weighting based on historical correlation with price movements.

## Real-time monitoring and alert systems

Sentiment shifts happen rapidly in cryptocurrency markets. Real-time monitoring systems enable traders to respond quickly to changing conditions. Dune's query capabilities allow for creating automated alerts when specific sentiment thresholds are reached.

Setting up alerts for unusual large holder activity involves creating queries that monitor significant transactions above historical norms. When large holder transaction volume exceeds the 90th percentile of the past 30 days, this triggers an alert indicating potential sentiment shifts. Similar alerts can monitor retail activity spikes, cross-chain bridge volumes, or narrative rotation signals.

Effective alert systems balance sensitivity with noise reduction. Too many false signals reduce alert value, while too few alerts cause missed opportunities. Testing alert thresholds against historical data helps optimize sensitivity levels.

## Interpreting sentiment data for trading decisions

Raw sentiment data requires interpretation within market context. Strong positive sentiment during bear markets often indicates temporary bounces rather than trend reversals. Conversely, negative sentiment during strong bull markets may signal healthy corrections rather than trend changes.

Sentiment divergences provide particularly valuable signals. When price continues rising while sentiment indicators weaken, this suggests potential trend exhaustion. Similarly, improving sentiment during price declines often precedes trend reversals.

Correlation analysis between sentiment indicators and subsequent price movements helps validate signal effectiveness. Indicators showing consistent correlation with price movements 1-7 days in advance provide actionable trading signals. Those with longer lag times serve better as positioning guides for longer-term strategies.

Market sentiment tracking through Dune Analytics transforms abstract market psychology into measurable, actionable data. By monitoring wallet behaviors, narrative flows, and cross-chain activities, traders gain concrete insights into market direction changes before they become obvious through price action alone. Success requires combining multiple indicators, filtering noise appropriately, and interpreting signals within proper market context.
## Frequently asked questions
### How to know crypto market sentiment?

Crypto market sentiment can be measured through on-chain data and behavioral analysis. Key indicators include trading volume patterns, wallet clustering around specific narratives, transaction timing, and daily active addresses interacting with protocols. Unlike traditional sentiment analysis that relies on surveys, blockchain data provides concrete evidence of how participants actually allocate capital. Monitor whale activity, new wallet creation rates during market events, and capital flows into narrative-specific token baskets to gauge overall market sentiment.

### How to follow crypto signals?

Following crypto signals effectively involves tracking multiple data sources and whale activity patterns. Monitor wallets that have successfully identified previous trends to create "smart money" indicators. Set up real-time monitoring systems that alert you when whale transaction volumes exceed historical norms or when retail participation spikes significantly. Focus on volume-weighted indicators rather than simple transaction counts, and use time-based filtering to reduce noise from automated trading. Cross-chain analysis also reveals broader sentiment patterns that single-chain monitoring might miss.

### How to track market sentiment?

Market sentiment tracking requires setting up comprehensive dashboards that monitor key metrics across multiple blockchains. Track daily active addresses, transaction volumes, wallet behavior patterns, and narrative rotation cycles. Create composite sentiment scores by combining normalized whale activity, retail participation metrics, and cross-chain flow indicators. Monitor bridge activity between chains to identify capital flows and emerging opportunities. Use volume ratios between narrative baskets and broader market indicators to identify sentiment transition points and potential trend changes.

### How to use Dune for crypto?

Dune Analytics processes over 3TB of daily data across 100+ blockchains, making it ideal for comprehensive crypto analysis. Create dashboards that query transaction counts across major DeFi protocols, filter for unique addresses and transaction values above specific thresholds. Set up automated alerts for unusual whale activity, cross-chain bridge volumes, or narrative rotation signals. Use Dune to track profitable wallets across multiple sectors, monitor their transaction history and recent activity patterns. Combine multiple metrics into coherent signals and test alert thresholds against historical data to optimize trading strategies.

Learn how to track cryptocurrency market sentiment using Dune Analytics' on-chain data to identify whale activity, narrative rotations, and trading opportunities across 100+ blockchains with real-time monitoring systems.

How to track market sentiment signals with Dune

Token mindshare represents the percentage of community attention a cryptocurrency receives relative to its market capitalization. These metrics reveal when assets gain disproportionate focus, potentially signaling emerging opportunities or risks. When Ethereum's typical 15% mindshare suddenly increases to 25%, this elevated attention often indicates developing momentum that may influence price action. The API tracks these variations across multiple timeframes, enabling identification of both immediate spikes and sustained narrative developments.

Social sentiment analysis extends beyond simple mention counts to evaluate the emotional context of cryptocurrency discussions. The system processes conversations across platforms to determine whether community sentiment trends bullish, bearish, or neutral. This qualitative assessment becomes particularly valuable when combined with quantitative market indicators, either confirming existing trends or revealing potential divergences that warrant investigation.

# Identifying Emerging Market Narratives

Narrative tracking represents perhaps the most sophisticated element of modern sentiment analysis. Messari's platform identifies developing themes within the cryptocurrency ecosystem before they achieve mainstream recognition. These narratives frequently drive substantial capital flows across markets, making early detection particularly valuable for strategic positioning.

Consider the emergence of decentralized physical infrastructure networks (DePIN) as a market theme. The Signal API detects increasing mentions of related terminology, identifies relevant tokens within this category, and monitors sentiment evolution over time. This early-warning capability allows market participants to evaluate positioning opportunities before widespread narrative adoption occurs.

The system also analyzes narrative persistence versus decay patterns. Some developments generate intense but brief community interest, while others build sustained momentum over extended periods. Distinguishing between temporary trends and fundamental market focus shifts requires understanding these underlying patterns through systematic tracking.

# Integrating News Analysis and AI-Powered Insights

Messari's News API complements sentiment tracking by providing curated content enhanced with AI-generated summaries. This integration delivers contextual understanding of sentiment shifts, helping users comprehend the underlying drivers affecting specific assets or market sectors.

The AI Toolkit offers additional analytical depth through its chat interface, trained on comprehensive real-time cryptocurrency data. Users can query this system to understand sentiment patterns, investigate specific narrative developments, or receive explanations for unusual market behavior that traditional metrics might not capture.

When Bitcoin sentiment turns negative despite positive price performance, for example, the AI system can identify contributing factors such as regulatory developments, technical analysis concerns, or institutional investor behavior shifts that explain the apparent contradiction.

# Monitoring Protocol Developments and Market Events

The Key Developments API tracks real-time protocol and asset events across more than 500 cryptocurrencies. These developments often trigger sentiment changes before price impacts become apparent. Token unlock schedules, governance proposals, partnership announcements, and technical upgrades all influence community perception and should be monitored alongside sentiment indicators.

Intel Events provide enterprise-level monitoring and alerts for over 60 event types. When combined with sentiment analysis, these notifications help users understand the catalysts behind sentiment shifts and assess whether changes are likely to persist. A governance proposal generating negative community sentiment, for instance, might indicate longer-term concerns about a project's strategic direction.

# Implementing Effective Sentiment Analysis Strategies

Successful sentiment tracking begins with establishing baseline measurements for target assets. Users should monitor normal sentiment ranges and mindshare percentages for their cryptocurrency interests. Significant deviations from these baselines often signal important developments or shifts in market psychology that warrant further investigation.

Automated sentiment-based alerts enable opportunity identification without constant manual monitoring. Setting an alert when Solana's mindshare increases by more than 50% from its seven-day average could capture early momentum in SOL-related narratives. Similarly, tracking sentiment changes for specific sectors like decentralized finance or gaming tokens reveals rotating market preferences and potential allocation opportunities.

Correlation analysis between sentiment metrics and price movements provides insights into which signals offer the most predictive value for specific assets. Some cryptocurrencies demonstrate strong sentiment-price correlation, while others may exhibit inverse relationships during particular market conditions or cycles.

# Analyzing Influencer Impact and Opinion Leadership

The Mindshare API tracks key opinion leader activity and influence within cryptocurrency communities. Understanding which voices drive conversations about specific assets helps predict sentiment shifts before they achieve widespread adoption across the broader market.

When prominent Bitcoin advocates begin discussing Ethereum with increased frequency, this attention shift from respected opinion leaders often precedes broader community interest and potential price implications. The system identifies these influence patterns to help users understand sentiment origins and assess their potential market reach.

# Combining Sentiment Data with Traditional Market Analysis

Sentiment analysis achieves maximum effectiveness when integrated with conventional market metrics available through Messari's comprehensive API suite. Price action, trading volume, derivatives data, and on-chain activity provide essential context for interpreting sentiment signals accurately.

A scenario involving negative sentiment around a DeFi token despite increasing on-chain usage metrics might indicate market overreaction or information gaps, potentially presenting opportunities for those who recognize the discrepancy. This type of analysis requires combining multiple data sources to develop complete situational awareness.

Trading volume patterns frequently confirm or challenge sentiment signals. Increasing negative sentiment accompanied by declining volume might suggest temporary weakness, while negative sentiment with rising volume could indicate more serious fundamental concerns requiring careful evaluation.

# Understanding Cross-Asset Sentiment Relationships

The cryptocurrency market exhibits frequent sector rotation based on evolving narrative trends. Messari's sentiment tracking identifies these rotations by monitoring mindshare shifts between asset categories. When gaming tokens begin losing mindshare to AI-related cryptocurrencies, this suggests capital and attention are rotating between sectors, creating potential opportunities in both emerging and declining themes.

Cross-correlation analysis reveals how sentiment in major cryptocurrencies influences smaller assets. During periods when Bitcoin sentiment dominates mindshare, alternative cryptocurrency narratives typically receive reduced attention, potentially creating opportunities in temporarily overlooked assets with strong fundamentals.

# Analyzing Sentiment Persistence and Market Cycles

Sentiment metrics demonstrate both trending and mean-reverting characteristics that require careful interpretation. Extreme positive or negative sentiment readings often precede corrections, while persistent moderate sentiment changes might indicate longer-term trend development requiring different strategic approaches.

Historical data capabilities allow users to study sentiment persistence patterns for specific assets over time. Some cryptocurrencies maintain elevated sentiment during extended bull market periods, while others quickly revert to baseline levels after initial excitement subsides, suggesting different community engagement patterns and price dynamics.

# Risk Management Through Sentiment Monitoring

Sentiment analysis serves as an important risk management tool by identifying potential market inflection points before they manifest in price action. Extremely positive sentiment across multiple assets might signal market euphoria and increased correction risk, while persistently negative sentiment could indicate oversold conditions or fundamental problems requiring attention.

Portfolio-level sentiment analysis helps assess overall exposure to narrative risks. When multiple holdings are driven by similar themes, adverse sentiment shifts could impact the entire portfolio simultaneously. Diversifying across different narrative categories based on sentiment analysis can help reduce this concentration risk and improve overall portfolio resilience.

Messari's comprehensive sentiment tracking infrastructure provides sophisticated tools for understanding market psychology and identifying potential opportunities before they become obvious to broader market participants. By combining social sentiment monitoring, narrative analysis, influencer tracking, and AI-powered insights with traditional market data, users can develop more complete market understanding and make better-informed investment decisions in the dynamic cryptocurrency ecosystem.

## Frequently asked questions

### How to know crypto market sentiment?

Crypto market sentiment can be tracked through multiple data sources and metrics. Social sentiment analysis processes mentions, comments, and discussions across social platforms to determine whether sentiment is bullish, bearish, or neutral. Token mindshare metrics reveal which cryptocurrencies are capturing attention relative to their market capitalization - for example, if a token's mindshare suddenly spikes above its normal range, this indicates increased community interest that could precede price movements. You can also monitor key opinion leader activity and influence within the crypto community, as shifts in what prominent figures discuss often precede broader sentiment changes. Additionally, combining sentiment data with traditional market metrics like trading volume, price action, and on-chain activity provides the most comprehensive view of market psychology.

### Is Messari API free?

Messari offers both free and paid API tiers. The free tier provides access to basic market data and limited API calls, suitable for individual developers and small projects. However, advanced features like comprehensive sentiment tracking, real-time alerts, enterprise-grade monitoring, and higher rate limits require paid subscriptions. Premium features include access to the Signal API for sentiment analysis, Intel Events for monitoring 60+ event types, and AI-powered analysis tools. The pricing structure is designed to accommodate different user needs, from individual traders to institutional clients requiring extensive data access and support.

### How to use ChatGPT for crypto?

While ChatGPT can provide general cryptocurrency information and analysis, specialized AI tools trained on real-time crypto data offer more accurate insights. AI chat endpoints trained specifically on structured and unstructured cryptocurrency data can help understand sentiment patterns, explain narrative developments, and provide explanations for unusual market behavior. For example, if Bitcoin sentiment suddenly turns negative despite positive price action, AI systems can identify contributing factors such as regulatory concerns or shifts in institutional behavior. These specialized tools can process current market data, news events, and social sentiment to provide contextual analysis that general AI models may miss due to their training data limitations.

### How to monitor crypto trends?

Effective crypto trend monitoring requires tracking multiple data sources simultaneously. Monitor emerging narratives by detecting increased mentions of specific themes or sectors before they become mainstream - for example, tracking DePIN-related terms and identifying key tokens within emerging categories. Set up sentiment-based alerts for when assets exceed normal mindshare ranges, such as alerting when a token's mindshare increases by more than 50% from its seven-day average. Track real-time protocol events like token unlocks, governance proposals, and partnership announcements, as these often trigger sentiment shifts before impacting prices. Additionally, analyze cross-asset sentiment correlation to identify sector rotation patterns, and combine sentiment metrics with traditional indicators like trading volume and on-chain activity for comprehensive trend analysis.

Learn how to track cryptocurrency sentiment through mindshare metrics, social analysis, and narrative tracking. Discover Messari's AI-powered tools for identifying market opportunities, monitoring emerging trends, and implementing effective sentiment-base

How to track market sentiment signals with Messari

![DCA.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/DCA_4012e24431.png)


Are buying the dip, or selling the news? When it comes to crypto, there are lots of different terms, ideas, and strategies to buying and selling tokens. One of the most enduring is Dollar-Cost Averaging (DCA).

  

DCA is, at its simplest, a method for buying, or selling tokens over a period of time. The idea is that by spreading out the buying and selling, you can offset the price volatility that is common in crypto markets.

  

This article explores the concept in more detail and looks at how CoW Swap’s unique programmatic orders can take the hard work out of using a DCA strategy.

## What is Dollar-Cost Averaging (DCA)?

  

Dollar-cost averaging (DCA) is a strategy that seeks to reduce the impact of market volatility when it comes to buying and selling cryptocurrencies.

  

It does this by spreading out transactions across time, either weekly, monthly, quarterly, or even annually, depending on your preferred means of buying and selling.

  

Why would you spread these out over time? The primary goal is to buy and sell assets for an average cost. Volatility is common in crypto, meaning one week you might buy an asset for $1 but the next week it could $2.

  

By spreading out the amount you buy over time, you can offset the volatility of the token. The idea is to lower the average cost per unit over time.

## How Does Dollar-Cost Averaging Work?

  

Instead of buying an asset once in a single transaction, DCA means you buy an asset multiple times. So instead of buying $100 worth of tokens in one go, you buy $10 worth of tokens every week for 10 weeks. Let’s take a look at an example.

  

You’ve got your eye on a meme coin but are waiting for the right time to buy. Using a DCA strategy would mean allocating a fixed amount of money to purchasing, irrespective of market conditions.

  

So if the price is high in your first transaction, you’ll buy fewer tokens, but when the price is low, you’ll buy more. Over time, this can result in a lower average cost per unit compared to making a one-time lump sum allocation.

## Why would I use Dollar-Cost Averaging over a single transaction?

  

A DCA strategy eliminates the need to time the market. Picking the perfect time to enter or exit a market can be challenging, even for experienced traders.

  

By allocating or selling a fixed amount at regular intervals, you remove the guesswork, and the potential stress of entering and exiting a market or asset.

  

A DCA strategy is a good option if you’re trying to minimise the average cost per unit aims to potentially lower the average cost per unit of an asset. By allocating resources regularly, you acquire more units when prices are low and fewer units when prices are high. This can result in a lower average cost per unit over time.

## Who Can Benefit from Dollar-Cost Averaging?

  

DCA is a strategy that can benefit both beginners and long-term investors. For beginners, it's a simple and disciplined approach to resource allocation that doesn't require extensive market knowledge.

  

For long-term investors, it can be a strategy that helps iron out the bumps in the market and help with longer term planning and portfolio building.

## Taking the hard work of DCAing with Programmatic orders

  

CoW Swap has a number of unique features that take the hard work out of doing DCAing manually. We call them “[Programmatic Orders](https://cow.fi/learn/introducing-the-programmatic-order-framework-from-cow-protocol)”. Programmatic Orders are, at their simplest, 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.

  

One particular type of programmatic order we think you’ll love is [TWAP orders.](https://cow.fi/learn/why-twap)

  

TWAPs, or Time-Weighted Average Price (TWAP) orders are a unique type of trade that lets users apply a number of different parameters to their trades.

  

TWAP orders allow traders to spread their trade over a specified period of time. In essence: a TWAP order consists of multiple smaller orders placed at regular intervals over a predefined time period. You decide on the intervals, the number of parts, and other key factors including total duration and part duration. It’s like a DCA strategy inside one single signed transaction.

  

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.

  

But it doesn’t stop there. Using CoW Swap for your DCA strategy can help you do other things too.

## When you want to sell your small cap tokens

  

Built up a war chest of small caps but can’t seem to exit? [TWAP orders](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders) can be useful for breaking up the trade into chunks. Trying to push large trades in small caps can often face hurdles. But with [TWAP](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders) you can set your trade to execute over periods as long as a month and in multiple chunks, helping you exit small caps in one go.

## When you’re trying to reduce your slippage

  

If you’re trying to keep your slippage low, using [TWAP](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders) to split up a large order into smaller parts allows you to use a smaller slippage tolerance for each part. [TWAP orders](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders) are also protected from MEV, helping protect your trades. The MEV bots can look elsewhere.

## When you want to receive 100% of your order surplus

On [CoW Swap](https://cow.fi/cow-swap), all order surplus is forwarded to you. If your order executes for a better price than your quoted price — thanks to [Coincidence of Wants](https://cow.fi/learn/what-are-cows-on-cow-swap) or any other price improvement that solvers are able to find — the extra price improvement will be forwarded to you.

## When you’re trying to navigate volatile prices

  

By giving traders the time-weighted average price, TWAP orders smooth out market volatility, which makes trying to predict prices a thing of the past.

## When you want to specify certain conditions or parameters

  

TWAP orders allow you to fine-tune your order by specifying the number of parts you’d like it split up into, as well as the time period you want it to execute over. On [CoW Swap](https://cow.fi/cow-swap), TWAP orders also have a “price protection” option which protects your order from executing at an unfavorable price due to market volatility.

  

Ready to start DCAing on CoW Swap?

  

[Starting trading today.](https://cow.fi/cow-swap)

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DCA is, at its simplest, a method for buying, or selling tokens over a period of time. This article explores the concept in more detail and looks at how CoW Swap’s unique programmatic orders can take the hard work out of using a DCA strategy. 


Understanding Dollar Cost Averaging in Crypto

Stablecoin supply represents the total number of tokens circulating in the market at any moment. Unlike traditional cryptocurrencies such as Bitcoin, which have predetermined supply schedules, stablecoin quantities fluctuate dynamically based on market demand and issuer decisions. When institutional investors or traders require more stablecoins for transactions, issuers mint new tokens. Conversely, when demand wanes, tokens are redeemed and permanently removed from circulation through a process called "burning."

Messari, a leading cryptocurrency data platform, tracks circulating supply data for major stablecoins including USDT (Tether), USDC (USD Coin), DAI, USDS, and others. The platform calculates real-time market capitalization by multiplying circulating supply by token price. For properly functioning stablecoins trading near their $1.00 peg, market capitalization closely approximates total supply value.

Supply fluctuations serve as important indicators of broader market conditions. Rapid supply increases often precede bull markets, as investors accumulate stablecoins for trading activities and participation in decentralized finance (DeFi) protocols. Supply contractions typically signal market uncertainty, regulatory pressure, or reduced crypto trading activity as users exit positions for traditional fiat currency.

<h2>Tracking supply evolution across time periods</h2>

Messari's analytical tools enable users to visualize supply changes across multiple timeframes, from daily fluctuations to yearly trends. This historical analysis reveals seasonal patterns, growth trajectories, and market responses to significant events such as regulatory announcements or major cryptocurrency price movements.

For context, USDT supply has reached approximately $162 billion in current market conditions, representing extraordinary growth from its early stages. Users can examine this expansion through Messari's comprehensive charts, which display how supply changes drive total market value fluctuations.

The platform also tracks supply distribution across different blockchain networks. USDT operates on Ethereum, Tron, Bitcoin's network, and other blockchains simultaneously. Messari displays this cross-chain distribution, revealing user preferences for different blockchain ecosystems based on factors like transaction costs, speed, and technical capabilities.

<h2>Monitoring real-time minting and burning activities</h2>

Stablecoin issuers continuously adjust token supply through minting and burning operations based on redemption requests and market demand. These activities create immediate supply changes that influence market dynamics and liquidity availability. Messari captures these events through sophisticated on-chain data analysis.

Consider scenarios where major issuers like Tether mint billions of USDT tokens within 24-hour periods. Such substantial issuances typically indicate institutional demand, exchange inventory building, or preparation for anticipated market volatility. Messari's monitoring systems capture this data through blockchain analysis and display updated supply figures in real-time.

Similarly, when Circle (USDC's issuer) burns tokens during redemption processes, circulating supply decreases correspondingly. These burn events often coincide with market downturns when traders convert crypto holdings back to traditional fiat currency, creating deflationary pressure on stablecoin supply.

<h2>Analyzing liquidity flows within the ecosystem</h2>

Stablecoin movement patterns reveal where liquidity concentrates within the cryptocurrency ecosystem. Large transfers to centralized exchanges may indicate upcoming trading activity or market volatility preparation. Flows toward DeFi protocols suggest increased lending, yield farming, or other decentralized financial activities.

While Messari provides foundational data on stablecoin movements, comprehensive flow tracking typically requires additional specialized on-chain analysis tools. However, users can identify significant patterns by monitoring supply changes across different platforms and protocols over time.

For example, if DAI supply increases while Maker Protocol (DAI's underlying system) shows growing loan demand, this suggests users are minting new DAI tokens for trading or DeFi participation. Conversely, supply decreases paired with reduced borrowing activity indicate loan repayments and diminishing demand for leveraged positions.

<h2>Evaluating cross-chain distribution strategies</h2>

Contemporary stablecoins operate across multiple blockchain networks to serve different user needs and cost structures. USDT maintains significant presence on Ethereum, Tron, Bitcoin, and other chains, each serving distinct use cases and user demographics. Messari tracks these distributions, illustrating where stablecoin activity concentrates geographically and technically.

Tron has gained popularity for USDT transactions due to substantially lower fees compared to Ethereum's network. Users can monitor this adoption shift through Messari's data, which shows supply allocation across different blockchain infrastructures. This information helps identify emerging trends in blockchain adoption and user preferences.

Migration patterns, such as hypothetical scenarios where hundreds of millions in USDT value moves from Ethereum to Tron over several weeks, often indicate users seeking lower transaction costs or increased participation in chain-specific applications and services.

<h2>Analyzing competitive positioning among stablecoin projects</h2>

Messari displays comprehensive market share data across different stablecoin projects, revealing competitive dynamics within this crucial market segment. USDT currently maintains the largest market capitalization at approximately $162 billion, followed by USDC at roughly $64.6 billion. These rankings shift based on supply changes, regulatory developments, reserve transparency, and evolving user preferences.

Market share analysis reveals competitive positioning over time. If USDC supply grows faster than USDT, Circle gains relative market share compared to Tether. Factors driving these shifts include regulatory clarity, reserve audit transparency, technical integration capabilities, and institutional partnership development.

DAI represents the decentralized stablecoin alternative, maintaining a smaller but strategically significant market position. Its supply growth reflects demand for non-custodial, overcollateralized stablecoins that operate independently of traditional banking relationships and centralized control mechanisms.

<h2>Identifying supply-driven market opportunities</h2>

Supply pattern changes often precede price movements and create trading opportunities for sophisticated market participants. Large minting events may indicate upcoming market volatility as fresh liquidity enters the cryptocurrency system. Conversely, supply contractions might signal reduced institutional activity or broader market uncertainty.

Professional traders systematically monitor these patterns for strategic positioning advantages. Observing substantial new stablecoin issuance ahead of major market announcements or events often suggests institutional preparation for increased trading volumes or significant position adjustments.

Supply concentration analysis also reveals potential systemic risks. When stablecoin supply becomes heavily concentrated on single exchanges or platforms, technical issues or regulatory actions affecting those entities could create broader market disruption and liquidity constraints.

<h2>Understanding regulatory implications</h2>

Stablecoin supply patterns increasingly reflect changing regulatory environments across different jurisdictions. Recent legislative developments in the United States and other major markets impact how stablecoin issuers operate, maintain reserves, and ensure compliance with evolving financial regulations.

When regulators scrutinize particular stablecoins or their issuers, supply may contract as users migrate toward alternatives with clearer regulatory standing. Conversely, regulatory clarity and approval can drive significant supply expansion as institutional adoption accelerates with reduced compliance uncertainty.

Messari provides crucial context for these developments through its research publications and market analysis, enabling users to combine quantitative supply data with qualitative regulatory developments for comprehensive market understanding.

<h2>Leveraging Messari's research capabilities</h2>

Beyond fundamental supply tracking, Messari offers extensive research on stablecoin projects, publishing detailed analyses of tokenomics, use cases, competitive positioning, and growth prospects. These resources complement raw numerical data with strategic insights and market context.

Research reports examine underlying factors driving supply changes, including DeFi protocol adoption, cross-border payment facilitation, and institutional cryptocurrency adoption trends. This analysis helps users understand fundamental market forces rather than simply observing numerical fluctuations.

The platform provides comparative analysis across different stablecoin operational models, enabling users to evaluate centralized versus decentralized approaches, various backing mechanisms, and different regulatory compliance strategies.

<h2>Implementing systematic monitoring approaches</h2>

Effective stablecoin analysis requires systematic approaches that combine multiple data sources and analytical perspectives. Users should establish regular monitoring routines encompassing supply changes, market capitalization fluctuations, and cross-chain flow patterns. Setting automated alerts for significant supply changes helps identify important market developments as they occur.

Integration with broader cryptocurrency market analysis enhances monitoring effectiveness substantially. Correlating stablecoin supply data with Bitcoin price movements, DeFi protocol activity metrics, and traditional financial market indicators provides comprehensive market understanding and context.

Professional users often combine Messari's comprehensive data coverage with specialized on-chain analysis tools for detailed transaction flow tracking. This integrated approach enables precise identification of fund movements between exchanges, protocols, and individual user wallets.

Messari's combination of comprehensive data coverage and sophisticated analytical tools provides essential infrastructure for understanding stablecoin market dynamics in an increasingly complex ecosystem. Regular monitoring of supply metrics, flow patterns, and competitive positioning enables informed decision-making within rapidly evolving cryptocurrency markets.

<h2>Frequently asked questions</h2>

<h3>How does stablecoin supply indicate broader market conditions?</h3>

Stablecoin supply changes serve as key indicators of broader crypto market conditions. When demand increases, issuers mint new tokens to meet market needs, often preceding bull markets as investors seek stablecoins for trading and DeFi activities. Conversely, supply contractions typically signal market uncertainty, regulatory pressure, or reduced trading activity as tokens are burned or redeemed for fiat currency.

<h3>What drives minting and burning activities in stablecoins?</h3>

Minting and burning activities are primarily driven by market demand and redemption requests. Large minting events, such as billions in new USDT issuance, typically indicate institutional demand or exchange inventory building. Burning occurs when users redeem stablecoins for fiat currency, often coinciding with market downturns when traders exit crypto positions.

<h3>How do stablecoin flows reveal market activity patterns?</h3>

Stablecoin flows provide insights into where liquidity moves within the crypto ecosystem. Large transfers to exchanges may signal upcoming trading activity, while flows to DeFi protocols indicate lending, yield farming, or other decentralized finance activities. Monitoring these patterns helps identify market trends and user behavior across different platforms and protocols.

<h3>Why do stablecoins operate across multiple blockchain networks?</h3>

Stablecoins operate across multiple blockchain networks to serve different use cases and user bases. Each network offers distinct advantages - for example, Tron has become popular for USDT transactions due to lower fees compared to Ethereum. This multi-chain approach allows users to choose networks based on their specific needs for transaction costs, speed, and ecosystem preferences.

<h3>How do regulatory changes affect stablecoin supply?</h3>

Regulatory developments significantly impact stablecoin supply patterns. When regulators scrutinize particular stablecoins, supply may contract as users seek alternatives with better compliance profiles. Conversely, regulatory clarity can drive supply expansion as institutional adoption increases. Recent legislation affects how stablecoin issuers operate and maintain reserves, leading to compliance-driven supply adjustments.

<h3>What trading opportunities can supply changes reveal?</h3>

Supply changes often precede price movements and trading opportunities in the broader crypto market. Large minting events may indicate upcoming market volatility as new liquidity enters the system, while supply contractions might signal reduced trading activity. Professional traders monitor these patterns for strategic positioning, as significant supply changes can suggest institutional preparation for major market movements.

<h3>How do centralized and decentralized stablecoins differ in supply management?</h3>

Centralized stablecoins like USDT and USDC rely on issuer decisions for minting and burning based on redemption requests and market demand. Decentralized stablecoins like DAI operate through algorithmic mechanisms and overcollateralization, with supply changes driven by user borrowing and repayment activities within protocols like Maker. This fundamental difference affects how supply responds to market conditions and regulatory pressures.

Discover how stablecoin supply dynamics tracked by Messari reveal crucial cryptocurrency market trends. Learn to analyze USDT, USDC, and DAI supply changes, minting/burning activities, cross-chain distributions, and trading opportunities through comprehen

How to monitor stablecoin supply and flows with Messari

Decentralized Finance (DeFi) liquidity represents the availability of digital assets within protocols that enable trading, lending, and other financial activities without traditional intermediaries. Understanding and tracking this liquidity involves monitoring pool compositions, total value locked (TVL), flow patterns, and provider behaviors across various protocols. Nansen aggregates this data across more than 18 blockchains and 140 protocols, providing a comprehensive view of the DeFi liquidity landscape.

The platform captures real-time data on liquidity pool sizes, composition changes, fee generation, and provider entry and exit patterns. This information enables users to identify trends, spot opportunities, and understand market dynamics that traditional financial analysis tools cannot provide. For newcomers to cryptocurrency, think of liquidity pools as digital reservoirs of paired assets that facilitate automated trading—similar to how market makers provide liquidity in traditional markets, but operated by smart contracts rather than human intermediaries.

## Multi-protocol coverage

Nansen tracks liquidity across major DeFi protocols including Uniswap, SushiSwap, Curve, Aave, and Compound, among dozens of others. The platform monitors both established protocols on Ethereum—the primary blockchain for DeFi applications—and emerging protocols on layer-2 networks like Arbitrum, Optimism, and Polygon. These layer-2 solutions offer faster transactions and lower fees while maintaining security through their connection to Ethereum.

Users can track how liquidity migrates between different versions of the same protocol, such as Uniswap V2 and V3 pools for specific token pairs, or monitor the growth of liquidity on newer protocols. This comprehensive coverage ensures no significant liquidity movement goes unnoticed across the fragmented but interconnected DeFi ecosystem.

## Real-time pool analytics

The platform provides detailed analytics for individual liquidity pools, including current composition, historical performance, fee generation rates, and provider concentration. Users can examine how pool dynamics change over time and identify patterns that indicate shifts in market sentiment.

Consider tracking the ETH/USDC pool on Uniswap V3, where ETH represents Ethereum's native currency and USDC is a U.S. dollar-backed stablecoin. Nansen displays the current liquidity distribution across different price ranges, recent additions and withdrawals, fee earnings over time, and the concentration of liquidity around the current price. This data helps users understand market expectations and positioning strategies employed by sophisticated traders.

## Liquidity provider tracking

Nansen identifies and tracks the behavior of major liquidity providers, including institutional players, whales (individuals or entities holding large amounts of cryptocurrency), and protocol treasuries. The platform labels these addresses and tracks their movements across different protocols and pools.

Users can monitor when large liquidity providers add or remove significant liquidity from specific pools. These movements often precede major price movements or indicate changing market conditions, providing valuable signals for market participants.

## Accessing DeFi analytics

Navigate to Nansen's DeFi section and select the liquidity analytics dashboard. This provides an overview of total liquidity across tracked protocols, recent changes in TVL, and top-performing pools by various metrics including volume, fees, and growth.

The dashboard displays aggregate metrics such as total DeFi TVL across all chains, daily volume changes, and the distribution of liquidity across different protocol categories. Users can filter by specific blockchains, protocols, or time periods to focus their analysis on areas of particular interest.

## Protocol-specific analysis

Selecting specific protocols reveals their liquidity composition and trends. Examining Curve Finance, for instance, shows the distribution of liquidity across different stablecoin pools, the concentration of liquidity in major pools, and recent changes in provider behavior. Curve specializes in efficient trading between similar assets, particularly stablecoins and wrapped versions of the same underlying asset.

The protocol view shows total TVL trends, top pools by size and activity, recent large transactions, and the breakdown between different asset types. This information helps users understand which protocols are gaining or losing liquidity and the underlying reasons for these shifts.

## Individual pool performance

Drilling down into specific liquidity pools reveals detailed performance metrics. For a WETH/WBTC pool analysis on SushiSwap—where WETH represents wrapped Ethereum and WBTC represents wrapped Bitcoin—users can view current pool composition, recent trading volume, fee earnings distribution, and changes in liquidity provider participation.

Pool analysis includes price impact calculations, historical annual percentage yield (APY) for liquidity providers, impermanent loss estimates, and correlation with broader market movements. Impermanent loss represents the opportunity cost of holding tokens in a liquidity pool versus simply holding them individually, occurring when the relative prices of pooled tokens change.

## Liquidity alert configuration

Configure alerts for significant liquidity events such as large deposits or withdrawals, sudden pool composition changes, or unusual trading activity. These alerts help users react quickly to market developments that could affect their positions or present new opportunities.

For example, set alerts when liquidity in a major stablecoin pool drops below a certain threshold, potentially indicating stability issues, or when institutional addresses add significant liquidity to emerging protocols, suggesting growing institutional interest.

## Cross-chain liquidity analysis

Nansen enables tracking of liquidity movements between different blockchains. Users can monitor how liquidity migrates from Ethereum mainnet to layer-2 solutions during periods of high transaction fees, or observe the growth of liquidity on alternative chains like Avalanche or Fantom.

This analysis reveals broader trends in DeFi adoption and can help predict where liquidity will flow next based on factors such as transaction costs, yield opportunities, and protocol incentives. Understanding these patterns becomes crucial as the multi-chain DeFi ecosystem continues to evolve.

## Liquidity mining impact assessment

The platform tracks the effectiveness of liquidity mining programs across different protocols. Liquidity mining involves protocols distributing their native tokens to users who provide liquidity, creating additional incentives beyond trading fees. Users can analyze how token incentives affect liquidity provision, measure the sustainability of incentivized pools, and predict impacts when incentive programs end.

This analysis includes monitoring initial liquidity surges from high token rewards, the composition of liquidity providers attracted by yields, and retention rates when rewards decrease—providing insights into organic versus incentivized demand.

## Investment strategy development

Investment managers use Nansen's liquidity data to develop DeFi strategies. By analyzing historical liquidity patterns, protocol adoption trends, and provider behavior, they can allocate capital to protocols with sustainable growth and attractive risk-adjusted returns.

The data helps identify protocols gaining institutional adoption, pools with consistent fee generation, and emerging opportunities in new blockchains or protocol categories. This approach moves beyond speculative trading to focus on fundamental value creation within the DeFi ecosystem.

## Risk management applications

DeFi protocols themselves use liquidity tracking for risk management. By monitoring the concentration of liquidity providers, the stability of major pools, and early warning signs of liquidity crises, protocols can implement protective measures and maintain system stability.

This includes tracking the health of lending protocols by monitoring collateral pool liquidity, identifying potential bank run scenarios where large numbers of users might simultaneously withdraw funds, and assessing counterparty concentration risks that could threaten protocol stability.

## Market research and analysis

Researchers and analysts use Nansen's data to understand DeFi market dynamics, measure protocol adoption, and identify trends affecting the broader cryptocurrency ecosystem. This research informs investment decisions, protocol development, and regulatory considerations.

The analysis includes measuring real adoption of DeFi protocols beyond speculative trading, understanding user behavior patterns, and assessing the long-term sustainability of different DeFi models as the technology matures and regulatory frameworks develop.

## Custom dashboard creation

Users can create customized dashboards focusing on specific aspects of DeFi liquidity relevant to their needs. This might include tracking liquidity across specific token categories, monitoring protocol competition in particular market segments, or following the behavior of key liquidity providers.

## Historical analysis and strategy testing

Nansen provides historical data enabling backtesting of liquidity-based strategies. Users can analyze how their approaches would have performed during different market conditions, stress test methods against historical volatility, and refine techniques based on past performance data.

Tracking DeFi liquidity with Nansen provides essential insights for navigating the complex and rapidly evolving decentralized finance landscape. The platform's comprehensive coverage, real-time analytics, and advanced tracking capabilities enable users to make informed decisions about liquidity provision, investment strategies, and risk management.

Success in DeFi requires understanding not merely price movements but the underlying liquidity dynamics that drive those movements. Nansen's tools provide the depth and breadth of data necessary to develop this understanding and act effectively. Whether managing personal DeFi positions, developing institutional strategies, or researching market trends, proper liquidity tracking forms the foundation of successful DeFi participation.

The combination of multi-chain coverage, sophisticated participant tracking, and customizable analytics makes Nansen an indispensable tool for serious DeFi market participants seeking to understand and capitalize on liquidity trends across the decentralized finance ecosystem.

## Frequently asked questions

### How to track liquidity in crypto?

To track liquidity in crypto, use analytics platforms that monitor liquidity across multiple DeFi protocols and blockchains. Key steps include accessing DeFi analytics dashboards to view total value locked (TVL) across protocols, analyzing protocol-specific liquidity composition and trends, monitoring individual pool performance with metrics like volume and fee generation, and setting up alerts for significant liquidity events. Look for platforms that provide real-time data on liquidity pool sizes, composition changes, and provider entry/exit patterns across major protocols like Uniswap, Curve, and Aave.

### How to track DeFi positions?

Track DeFi positions by using comprehensive analytics tools that integrate portfolio tracking with broader market data. Monitor your liquidity provider positions across different protocols, track yield farming rewards and APY changes, analyze impermanent loss for your LP tokens, and compare your performance against overall market trends. Set up custom dashboards focusing on your specific DeFi activities, whether that's liquidity provision, lending, or yield farming. Integration between portfolio tracking and market analytics provides essential context for understanding how your positions perform relative to market conditions.

### Can a blockchain DeFi wallet be tracked?

Yes, blockchain DeFi wallets can be tracked since all transactions occur on public blockchains. Analytics platforms can monitor wallet addresses across multiple chains and protocols, tracking interactions with DeFi protocols, liquidity provision activities, token swaps, and lending/borrowing behavior. Advanced platforms label significant addresses including institutional players, whales, and protocol treasuries. This transparency allows users to follow "smart money" movements and understand how major players are positioning themselves across different DeFi protocols and opportunities.

### How to find and track smart money wallets in crypto?

Find and track smart money wallets by using analytics platforms that identify and label significant addresses based on their trading patterns and holdings. Look for platforms that track institutional players, successful traders, and protocol treasuries across multiple blockchains. Monitor these addresses for their DeFi activities including when they add or remove liquidity from specific pools, which protocols they're using, and how they're positioning for market changes. Many platforms provide whale tracking features that alert users when large addresses make significant moves, often preceding major price movements or indicating changing market conditions.

### How are you tracking all your crypto?

Track all your crypto holdings using comprehensive analytics platforms that provide multi-chain portfolio tracking integrated with market data. Monitor positions across different DeFi protocols, centralized exchanges, and wallet addresses from a single dashboard. Use tools that automatically calculate portfolio performance, track yield farming rewards, monitor impermanent loss, and provide historical analysis for backtesting strategies. Set up alerts for significant changes in your positions or broader market movements that might affect your holdings. Integration with DeFi liquidity data helps contextualize individual performance against overall market trends.

### Can you use Nansen to track most profitable yield farming?

Yes, analytics platforms can track profitable yield farming opportunities by monitoring liquidity mining programs across different protocols and chains. Track APY rates, token incentive programs, and their sustainability over time. Analyze the effectiveness of different liquidity mining initiatives, measure how incentives affect liquidity provision, and predict impacts when reward programs change or end. Monitor cross-chain opportunities where liquidity migrates to higher-yielding protocols, and use historical data to backtest yield farming strategies against different market conditions. Advanced features include tracking institutional participation in yield farming and identifying emerging opportunities in new protocols.

Learn how to track DeFi liquidity across 18+ blockchains and 140+ protocols with Nansen's comprehensive analytics platform. Monitor TVL, pool performance, liquidity provider behavior, and cross-chain movements for informed DeFi investment decisions.

How to track DeFi liquidity with Nansen

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See you later 2024! But before we wave goodbye to this year, let’s review all the amazing things that went on in and around CoW DAO over the last 12 months.

  

Ready?

  

Let’s go.

## CoW DAO broke new ground in revenue, market share, and transaction speed

  

This year was big for CoW DAO, in all the ways. CoW DAO earned 2,815 ETH in revenue over the course of 2024, breaking all previous records since the project started.

  

As you can see from the chart below, things got better as the year passed, setting CoW DAO up for another stellar year in 2025.

![Screenshot 2024-12-30 at 13.47.51.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2024_12_30_at_13_47_51_37ad5d1632.png)

That was powered, in part by gains in market share. CoW DAO had an ambitious target for [CoW Swap](https://cow.fi/cow-swap): to become the largest DEX aggregator in the DeFi space. In January 2024, 1inch held a dominant position, with 40% market share, CoW Swap meanwhile, was second with 18%.

  

By the end of the year, CoW Swap had grown to 26.8% market share, pulling 1inch back to 35%. Our goal for 2025 still remains: to make CoW Swap the number 1 destination for DEX aggregation in DeFi.

  

In the anti-MEV market meanwhile, [MEV Blocker](https://cow.fi/mev-blocker) finished the year with an 81.3% market share, dominating the space.

  

Helping CoW Swap, and the underlying CoW Protocol achieve this feat was the tireless work CoW DAO’s engineering team did to improve transaction speeds.

  

CoW DAO engineers decreased the average execution time by 45% while increasing the percentage of orders executed in less than 50 seconds by 80%. Not bad at all.

  

But this was just the beginning. Below we delve into what else CoW DAO got up to in 2024.

## CoW Swap headed to new new chains

![cover_Co_W_Swap_Base_25636981fa.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/cover_Co_W_Swap_Base_25636981fa_8a787503ef.png)

It was a big year for new networks. In June CoW Swap [launched on Arbitrum](https://x.com/CoWSwap/status/1797996272349323412) - the first L2 for CoW Swap. That meant Arbitrum users for the first time had access to:

-   The most robust solver competition
    
-   Surplus-capturing (price-improving) swaps
    
-   Advanced order types and custom intents
    

  

Since launching CoW Swap has grown its market share to become one of the key DEX aggregators on Arbitrum. But we didn’t stop there.

  

In December, [CoW Swap launched on Base.](https://cow.fi/learn/cow-dao-deploys-on-base)

  

  

Traders who already used CoW Swap on Ethereum mainnet loved its features, and with the launch on Base, could now seamlessly switch to the L2 inside CoW Swap’s existing UI with the touch of a button.

  

You no longer need to leave CoW Swap to trade on the world’s fastest growing L2.

  

This launch positions CoW DAO as a foundational player in the Base ecosystem, targeting both traders and developers, while extending CoW DAO’s suite of products, which are now available to users on Ethereum, Gnosis Chain, Arbitrum and now, Base.

## CoW Product Launches and Tweaks
![8c799938-a80b-4e3d-8821-64cdc9d3b5fd.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8c799938_a80b_4e3d_8821_64cdc9d3b5fd_e60d3106f0.png)


The engineering team were super busy in 2024, building and releasing new products, while simultaneously tweaking and improving existing ones. Here’s an overview.

### In January we overhauled [our technical documents](https://x.com/CoWSwap/status/1746916877677596936)

  

This was a mighty endeavour. Our technical documents are vital to helping developers understand and integrate CoW DAO products into their own tech stacks. We’re proud of how they’ve turned out.

  


### In March we launched [CoW AMM Safe app](https://x.com/CoWSwap/status/1767587714826956807)

  

Funded by CoW Grants and developed by BlueFi Studio, the CoW AMM Safe app allows anyone to deploy a liquidity pool between two tokens, inside the Safe app.

  

This made it simpler than ever to pick a token pair, and let CoW AMM power your very own passive investing strategy.

  


### In May we launched [MEV Scanner](https://x.com/CoWSwap/status/1796184456631374227)

  

In late spring, we launched MEV Scanner!

  

This is an X, Telegram, and Discord bot that checks how much MEV an Ethereum wallet address has suffered.

  

This meant that anyone could look up an Ethereum wallet address, or ENS name, and a bot will respond with how much MEV the address has suffered along with the most-MEV'd AMM contract.

  

Oh and we built a [website, too](http://mevscanner.com/)!

  


### In June we launched a new brand identity
![6c078b1c-e273-4205-92ea-b79fa13f8071.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6c078b1c_e273_4205_92ea_b79fa13f8071_8f6525cea2.png)

CoW DAO is very different today than it was when it first launched.

  

CoW DAO was created to support CoW Protocol, but over the past two years it has launched two more mission-aligned products: MEV Blocker (the #1 MEV protection RPC) and CoW AMM (the first MEV-capturing AMM).

  

Supporting three products behind CoW Protocol proved awkward and confusing, so we're re-emphasized CoW DAO over CoW Protocol. With the rebrand this allowed us - and hopefully you - to see CoW DAO products as a house of inter-connected and mission-aligned brands.

  

Not only does the new brand provide a framework to hold existing products together – it creates a flexible and cohesive identity system that can incorporate future launches, while making it easier to cross-promote every brand in the family.

### In August, we launched CoW AMM

![IcNCDH5W.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Ic_NCDH_5_W_5c6044e055.png)

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

  

Launching CoW AMM was 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, it was the perfect time 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.

  

Since launch, CoW AMM has a TVL of more than $25 million, helping market makers everywhere avoid MEV.

### In August we also relaunched the progress bar

![GWD--uLaUAAgxxN.jpeg](https://celebrated-gift-f83e5c9419.media.strapiapp.com/GWD_u_La_UA_Agxx_N_2ee8094a09.jpeg)

CoW Swap's order progress bar got a facelift! In late summer, our front-end team put the finishing touches on a shiny new progress bar. This meant traders could now see:

  

- When your order is included in a batch

- When solver competition starts

- When the best price is found

- View all solvers that took part

### In October we launched 80/20 Pools on CoW AMM

![GbyTHNDbIAAuIVa.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Gby_THN_Db_IA_Au_I_Va_e9af35e541.png)


Following on from the summer launch of CoW AMM, we rolled out a unique new feature with our partners, Balancer.

  

Loss Versus Rebalancing (LVR) is DeFi's dirty secret. As the price of an asset deviates across exchanges, arbitrageurs rush in to take advantage of price differences between pools. The first to do so can trade using an outdated price, siphoning profits from LPs.

  

Those leaks lead to $100s of millions in losses for LPs. Not on CoW AMM. Its LVR protection means pools remain leak free. By introducing 80/20 pools, CoW AMM offers more flexibility for deploying capital.

  

Using CoW AMM and 80/20 pools gives LPs:

-   Asymmetric upside
    
-   Reduced impermanent loss
    
-   Hedging
    

  

In essence, these pools can maximize exposure to the native token while providing an avenue to boost returns via trading fees and token rewards.

  

CoW AMM's 80/20 pools give liquidity providers new pastures to play in.

## New Listings

![GfGzfPNaUAAmzxn.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Gf_Gzf_P_Na_UA_Amzxn_267cee31aa.png)


The $COW token went big in 2024. Lots of centralized exchanges listed $COW, helping new users discover the COW ecosystem.

  

The likes of BitVavo, Kraken, Coinbase, Binance and BingX Official all listed $COW in 2024.

  



  

This is a big step on our journey toward making DeFi safe and seamless for all. More access equals more liquidity, more awareness and, ultimately, more users.

## CoW Protocol became the place projects go to do big things

![6o6VOK3O.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6o6_VOK_3_O_2c07fde243.png)


In the autumn, [CoW DAO](https://cow.fi/)  [partnered with Sky](https://cow.fi/learn/cow-protocol-maker-dao-sky-transition-token-migration), formerly MakerDAO to help the project migrate its tokens as it transitions to its next chapter.

  

The team behind Sky approached CoW DAO to integrate CoW Protocol into their SWAP feature to allow users to seamlessly, and safely swap their tokens between DAI and its replacement, USDS, and its governance token MKR to SKY.

  

This was a sizable task: the MakerDAO transition was one of the largest token migrations. DAI is one of the world’s largest stablecoins, with a market cap of $5.3 billion and [more than 500,000 holders.](https://etherscan.io/token/0x6b175474e89094c44da98b954eedeac495271d0f) MKR, meanwhile, has a market cap of $1.5 billion and more than [100,000 token holders.](https://etherscan.io/token/0x9f8f72aa9304c8b593d555f12ef6589cc3a579a2)

  

But thanks to the rock-solid architecture of CoW Protocol, the migration was a smooth and simple process for thousands of traders.

  

Thinking of doing something big in 2025? [Get in touch](https://discord.com/invite/cowprotocol).

## Reflecting on our Udderly amazing Journey, and cheers to a CoW-tastic 2025!

  

This year has been the most exciting year so far for CoW DAO. We’re already diving headfirst into 2025 with a renewed commitment to more products built for both novice and experienced users.

  

Here’s to another thrilling year at the forefront of DeFi!

  

Mooooo

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See you later 2024! But before we wave goodbye to this year, let’s review all the amazing things that went on in and around CoW DAO over the last 12 months.

CoW DAO: 2024 in Review!

CoW DAO develops the most user-protective products in Ethereum - so you can do more with less worry.

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