Crypto Basics

News

Governance

Guides

Product Info


The world of [decentralized finance (DeFi)](https://cow.fi/learn/the-foundations-of-decentralized-finance-a-comprehensive-guide-to-the-de-fi-ecosystem) is expanding at an incredible pace, with new blockchains and layer-2 solutions emerging constantly. But as the ecosystem grows, a new challenge arises: how do you seamlessly move your assets between these disparate networks?

  

Enter bridge aggregators - a game-changer for anyone navigating the multi-chain universe. In this article, we’ll learn how bridge aggregators compare cross-chain protocols to find optimal routes with faster trades and better rates for multi-chain transfers.

# What is a bridge aggregator?

Think of a bridge aggregator as your smart travel agent for digital assets. It's a platform designed to compare and optimize cross-chain transfers across a multitude of bridge protocols. For users looking to move their precious tokens from one blockchain to another, aggregators simplify what can often be a complex and daunting process. They intelligently find the most efficient routes based on a trader's preferred criteria, whether that's minimizing fees, maximizing speed, or prioritizing security.

## Aggregation solves the bridge protocol problem

Imagine the crypto landscape as a vibrant metropolis of interconnected cities. Blockchains like Ethereum, [Polygon](https://cow.fi/learn/cow-protocol-launches-on-polygon), Arbitrum, and many others operate as distinct ecosystems, each with its unique rules and infrastructure. To transport your digital goods from one city to another, you need bridges.

The problem? There are so many bridges. Literally dozens of different bridge protocols exist, each boasting its own set of fees, varying speeds, distinct security levels, and specific routes. Navigating this labyrinth to find the optimal path can be a headache, leading to wasted time and potentially higher costs.

The solution is elegant: bridge aggregation. These platforms automatically find and execute the best cross-chain bridge routes, cutting through the complexity so you don't have to.

### Bridge aggregators are similar to DEX aggregators

If you're familiar with the DeFi space, you've likely encountered [DEX aggregators](https://cow.fi/learn/what-is-a-dex-aggregator). Just as DEX aggregators do for token swaps, bridge aggregators do for cross-chain transfers: they find the best execution across multiple protocols.

This powerful capability translates into significant benefits for users. They save time and money while drastically reducing friction in the multi-chain ecosystem. Bridge aggregators handle all the underlying complexity automatically, often offering robust transaction tracking across the entire cross-chain journey.

Some popular aggregators you might already know include:

-   Bungee Exchange
    
-   Jumper Exchange
    
-   Rubic
    
-   Socket
    
-   Pangolin
    

## What bridge aggregators actually do

Bridge aggregators primarily serve as intelligent intermediaries, simplifying and optimizing cross-chain token transfers within a single, user-friendly interface. But what exactly goes on under the hood?

Here's a breakdown of their core functions:

-   **Route Comparison:** They meticulously scan multiple bridge protocols, comparing routes based on critical factors like cost, speed, liquidity, and security. They can even identify complex multi-hop routes when direct bridges aren't available, ensuring your assets can reach their destination.
    
-   **Optimization:** Based on your preferences, they select the most efficient route. For larger transactions, aggregators can even split the amount across multiple bridges to [reduce slippage](https://cow.fi/learn/what-is-slippage-in-crypto?ref=learn_search) and secure better rates. They dynamically adjust routes in real-time, reacting to changes in liquidity and gas prices.
    
-   **Execution:** Once the optimal route is determined, aggregators handle all the technical interactions with the different bridge protocols. They manage the complex smart contract calls required for cross-chain transfers, processing transactions automatically to ensure a smooth transfer.
    
-   **Risk Management:** By aggregating liquidity from various sources, they help reduce slippage. Some even provide backup routes if a primary bridge encounters issues, and in certain cases, may offer insurance or protection mechanisms to safeguard your assets.
    

### How they do it

The magic behind bridge aggregators lies in their ability to orchestrate complex operations:

-   **Scanning Multiple Bridge Protocols:** They connect to numerous bridge services simultaneously, giving them a comprehensive view of available routes.
    
-   **Comparing Routes and Fees:** They analyze which path offers the best combination of cost, speed, and security, tailored to your specific needs.
    
-   **Executing the Optimal Transfer:** Once the best route is identified, they facilitate the cross-chain transfer through the most efficient bridge, abstracting away the underlying technicalities from the user.
    

## Example: Using a bridge aggregator to minimize gas fees

Let's illustrate the power of bridge aggregators with a common scenario. Imagine Marcus, a dedicated DeFi user, holds $3,000 USDC on the expensive Ethereum mainnet.

His plan for the day:

-   Swap 1,000 USDC to ETH.
    
-   Provide liquidity to a USDC/ETH pool.
    
-   Claim accumulated rewards from staking.
    
-   Potentially rebalance some positions.
    

**His problem:** gas fees. Each of these transactions on Ethereum could easily cost him $40-60 in gas. For all four activities, his total estimated gas costs would be a staggering $160-240. This represents 5-8% of his entire portfolio value just in fees - a painful bite!

### The process: using a bridge aggregator to optimize cost

Here's how Marcus saves approximately $150-230 (a whopping 94-97% cost reduction) by cleverly using a bridge aggregator to access a lower-cost chain:

1.  **Route Analysis:** Marcus checks a bridge aggregator like Socket or Bungee. The aggregator quickly presents him with several options:
    

-   Bridge to Arbitrum: $8 fee, 3-minute completion.
    
-   Bridge to Polygon: $6 fee, 5-minute completion.
    
-   Bridge to Optimism: $9 fee, 2-minute completion.
    

2.  **Decision:** Considering his priority is the lowest bridging cost, he chooses Polygon.
    
4.  **Execution:** Marcus bridges his 3,000 USDC to Polygon for a mere $6.
    
5.  **On-chain Activities:** Now on Polygon, his transaction costs plummet dramatically:
    

-   Token swaps: $0.10-0.30 each.
    
-   Liquidity provision: $0.20.
    
-   Claiming rewards: $0.15.
    
-   Rebalancing: $0.25.
    

**Total Cost Comparison:**

-   Without bridge aggregator (staying on Ethereum): $160-240 in gas fees.
    
-   With bridge aggregator (moving to Polygon): $6 bridging + ~$1 total Polygon fees = $7.
    

This stark comparison highlights the immense value bridge aggregators bring by enabling access to more cost-efficient networks.

## Why crypto traders use bridge aggregators

The simple, overarching reason is cost-effectiveness optimization. But the real value of bridge aggregation unfolds in the nuanced details of their capabilities.

#### Better rates, lower fees

Bridge aggregators compare multiple bridges simultaneously, ensuring you always get the best rates available. Consider this: a trader moving 10,000 USDC from Ethereum to Arbitrum might pay $45 in fees through Stargate Finance, but only $18 through Hop Protocol. The aggregator automatically selects Hop Protocol, saving the trader a cool $27 on a single transaction.

#### Enhanced liquidity

Aggregators combine liquidity from multiple bridges, empowering them to handle larger trades without significant slippage. For instance, if a trader wants to bridge 50 ETH from Ethereum to Polygon, but no single bridge has enough liquidity for the full amount at a good rate, the aggregator can intelligently split this into, say, 30 ETH via Across Protocol and 20 ETH via Connext. This ensures the trader gets better execution than trying to force the entire trade through one bridge with limited liquidity.

#### Better UX

Users gain access to numerous bridging options through a single, intuitive interface, eliminating the tedious task of manual research and comparison shopping. Imagine you need to move USDC from Ethereum to Avalanche. An aggregator presents all bridge options in one place with clear comparisons, allowing you to make an informed decision in seconds rather than spending hours researching each protocol individually.

#### Speed

Beyond just saving money, speed in crypto can also save you money. Different bridges have varying confirmation times based on their underlying technology and current network conditions. Let's say you spot a major market dip and urgently want to move 8,000 USDC from Polygon to Ethereum to "buy the dip" on Uniswap. The aggregator might show that Hop Protocol will take 45 minutes due to network congestion, while Across Protocol can complete the transfer in under 5 minutes. This enables you to choose the quicker option and execute your trade while the asset is still at the lower price.

#### MEV protection

Some advanced bridge aggregators, such as [Hashflow](https://messari.io/report/state-of-hashflow-q2-2024), incorporate Maximal Extractable Value (MEV) protection features. This is crucial for preventing malicious actors from exploiting cross-chain transactions by front-running or sandwiching your trades. For example, when you want to trade 10 ETH, entering an order through Hashflow places a request-for-quote (RFQ) with market makers on their platform, with pricing happening off-chain and quotes signed by market makers to ensure fair execution.

## Aggregators are the future of crypto

Bridge aggregators are making the multichain ecosystem significantly more accessible and user-friendly. As blockchain interoperability becomes increasingly vital for the maturation of Web3, these aggregators are poised to play an even more prominent role.

We're already seeing wallets begin to integrate bridge aggregators directly, a trend that is only likely to grow. Expect expanded chain support to include even more Layer 2s and alternative Layer 1s, and look forward to greater integration with DEX aggregators to enable truly seamless cross-chain swaps.

## Aggregating DEXs with CoW Protocol

While CoW Protocol is not primarily a bridge aggregator, it shares several fundamental design philosophies - particularly in MEV protection and execution optimization - that resonate with the value proposition of bridge aggregators. [CoW Swap operates as a Meta DEX aggregator](https://cow.fi/learn/what-is-a-meta-dex-and-why-should-you-use-it-for-your-trades), bringing unique benefits:

-   **MEV Protection:** It specifically prevents trades from falling victim to front-running and other MEV attacks, ensuring fair execution for users.
    
-   **Gasless Orders:** Users can sign messages rather than submitting transactions directly, potentially reducing gas costs and simplifying the process.
    
-   **Peer-to-Peer Settlements:** CoW Protocol's unique Batch Auction mechanism allows orders to be matched directly between users when possible, optimizing liquidity and reducing reliance on external liquidity sources.
    
-   **Intent-Based Trading:** This innovative approach lets users express what they want to accomplish rather than specifying exactly how, abstracting away much of the underlying complexity.
    

## Next steps

Ready to dive deeper into the world of decentralized trading? Explore how other aggregators are making DeFi more efficient.

**👉Related resources:**

-   [How to choose a DEX aggregator](https://cow.fi/learn/dex-aggregator-how-to-choose)
    
-   [What is a DEX aggregator?](https://cow.fi/learn/what-is-a-dex-aggregator)

large_bridge-aggregator.png

medium_bridge-aggregator.png

small_bridge-aggregator.png

thumbnail_bridge-aggregator.png

bridge-aggregator.png

Learn how bridge aggregators compare cross-chain protocols to find optimal routes with faster trades and better rates for multi-chain transfers.

What is a bridge aggregator?


Ever made a crypto swap and felt like you needed a degree in blockchain engineering just to get it done? You're not alone! The world of decentralized finance (DeFi) is incredible, but sometimes, it can feel a bit... technical. That's where crypto intents come in.

Crypto intents (also known as blockchain intents) are a high-level abstraction for directing transaction outcomes in a blockchain network. Sounds fancy, right? In simple terms, intents make it easier for you, the trader, to direct your transactions, while also allowing the underlying network to be more efficient and secure.

Understanding intents isn't just about buzzwords; it lets you decide what kind of blockchain interaction is right for your trading projects, potentially saving you headaches, gas fees, and even protecting your trades. In this article we’ll tell you everything you need to know what crypto intents are, how they work and how they help you trade safely and securely.

## What Are Intents in Crypto Trading?

At its core, a crypto intent is a blockchain interaction method where users specify their desired outcome (like "I want X token and I'm willing to pay up to Y") rather than explicitly detailing how the transaction should be executed.

Think of it this way:

In a traditional "declarative" system (like many existing DEXes or even centralized exchanges), you have to tell the system exactly what to do: "Swap 1 ETH for USDC, use Uniswap V3, set slippage to 0.5%, and execute now." You're specifying every single detail of the trade.

With intents, you're taking a step back. You're saying, "Hey, here's what I want to achieve, and here are my constraints. You figure out the best way to make it happen." It's like telling a taxi driver your destination ("I want to go to the Eiffel Tower") instead of giving them turn-by-turn directions ("Turn left at this street, then right at that light, go straight for 2 miles..."). The driver (or the underlying system) handles the technical details of execution, navigating traffic and finding the most efficient route.

This abstracted way of representing transactions on a chain keeps execution procedures standardized over time and makes it much easier for traders to construct their desired outcomes without getting bogged down in the nitty-gritty.

## Example: Intent-Based Trades for WETH

Let's look at a concrete example to make this clearer. Imagine you want to swap some USDC for WETH.

With an intent-based system like [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48), here's what happens:

1.  **You submit an intent:** "I want to swap 5,000 USDC for WETH, and I'm willing to accept at least 1.85 WETH." Notice you're not specifying which DEX to use or how the trade should occur.
    
2.  **Behind the scenes:** Your intent is signed and submitted as an off-chain message, not a direct, immediate transaction to a specific DEX. This is crucial.
    
3.  **Solvers compete:** Multiple independent "solvers" (specialized entities running sophisticated algorithms) receive your intent. These solvers then compete in a batch auction to fulfill your intent in the most optimal way for you.
    

-   One solver might find a route through three different DEXs and can get you 1.89 WETH.
    
-   Another solver might see that someone else wants to swap 1.88 WETH for USDC and matches your order directly with them - a super-efficient peer-to-peer match known as a "Coincidence of Wants" (CoW).
    

5.  **Optimal execution:** The protocol automatically selects the best result among the competing solvers. In this case, you receive 1.89 WETH - better than your minimum acceptable amount - at the best available price!
    
6.  **Simplified experience:** You don't pay separate gas fees upfront; they're cleverly deducted from your sell token (USDC). Plus, you benefit from lower overall fees due to batching multiple trades and potential direct matches.
    
7.  **MEV Protection:** Because your intent is never exposed to the public mempool (where malicious bots lurk), your trade is protected from nasty [MEV (Maximal Extractable Value)](https://cow.fi/learn/what-is-mev?ref=learn_search) attacks like front-running and sandwich attacks.
    

## Intent-Based vs. Traditional, Transactional Trades

Let's break down the core difference between these two approaches:

In simple terms:

-   Traditional transaction: "Do A then B, pay exactly C to get X back." (You're the micromanager.)
    
-   Intent-based approach: "I want X and I'm willing to pay up to C." (You state your goal, the system finds the way.)
    

Here's a more detailed comparison:

![Screenshot 2025-06-27 at 11.24.46.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_06_27_at_11_24_46_4c2d431119.png)



  

## How Intent-Based Architecture Works

Beyond just a trading protocol, intent-based architecture often provides a solving protocol. This means there are dedicated entities (those "solvers" we talked about) that build algorithms to resolve user intents into actual, on-chain transactions.

These systems can either have a built-in solver algorithm, or more commonly, offer a solver marketplace. In a marketplace, solvers compete to provide the most efficient solutions. Often, there's a baseline solution, and solvers are incentivized with a cut of the "surplus" or savings their solution generates. The solution that saves the most (e.g., on gas fees or by finding a better price) wins the bid for that cut.

Let's look at an example of intent architecture in practice:

Suppose three traders express the following intents:

1.  Trader A: Buy ETH with USDC
    
2.  Trader B: Sell ETH for BTC
    
3.  Trader C: Sell BTC for USDC
    

A traditional, declarative system would typically lead to a series of separate transactions. Trader A buys ETH, then Trader B sells ETH, then Trader C sells BTC, with each stage incurring gas fees and potential slippage.

Now, with an intent-based system, a solver observes these three intents in a batch. Instead of separate transactions, the solver proposes a three-way swap (or "ring trade") that rotates the tokens according to the agreed-upon prices: Trader A's USDC goes to Trader C, Trader C's BTC goes to Trader B, and Trader B's ETH goes to Trader A.

This clever swap drastically reduces the number of individual on-chain transactions involved in this overall exchange, saving on gas for everyone. If this is the winning solution in a marketplace, that solver gets a small cut of the gas savings they generated, rewarding their efficiency.

## The Benefits of Intent-Based Trading

The shift to intent-based trading isn't just a technical tweak; it brings significant advantages for users and the DeFi ecosystem as a whole:

-   **Efficiency:** Intent architectures can find trade efficiencies that users, with their limited scope of awareness, simply can't discover manually. This leads to more efficient trades and reduced processing costs while encouraging community collaboration among solvers.
    
-   **Security:** Solver-controlled transaction resolution makes MEV attacks like sandwich attacks far less viable. Because your intent isn't immediately public and the execution is optimized by a competitive solver, it creates more stable and predictable transaction behavior. This also allows developers to focus on core chain security without compromising transaction capabilities.
    
-   **Usability:** Users only need to understand the simple intent syntax rather than coordinating entire, complex transaction chains. This levels the playing field between novice and advanced users, making sophisticated trading techniques more accessible to everyone.
    
-   **Gasless Trading:** Solvers submit transactions on users' behalf, with gas costs neatly factored into the price estimates. This means users pay gas fees with their sell token rather than requiring ETH (or the native chain token) upfront, eliminating the need to constantly top up your wallet just for transaction fees.
    
-   **Execution:** Specialized solvers compete fiercely to provide optimal execution across multiple venues and strategies. This results in better pricing than many traditional DEXes can offer, thanks to sophisticated routing and optimization that would be impossible to implement manually.
    

## Coincidence of Wants (CoW) and Crypto Intents

The concept of Coincidence of Wants (CoW) is deeply intertwined with crypto intents, especially at [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48). As we saw in our example, CoW Protocol actively seeks to find efficiencies in aligned intents. When one user wants to sell token A for token B, and another user wants to sell token B for token A, a direct peer-to-peer trade can occur without touching external liquidity pools.

CoW Swap leverages this by:

-   Finding efficiencies in aligned intents, like in our three-way trade example.
    
-   Using solver auctioning to align user behavior with user security, where solvers bid for solutions by demonstrating the highest "surplus" (the most benefit) for the users.
    
-   Combining intent-based techniques to create a more usable, powerful, and secure trading experience for you.
    

## How CoW Swap Implements Intents

[CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) operates as a Meta DEX aggregator, leveraging the powerful intent-based architecture of CoW Protocol. When you decide to make a swap on [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48), you're not directly executing a transaction on-chain in the traditional sense - meaning you're not broadcasting a public transaction that an [MEV](https://cow.fi/learn/what-is-mev?ref=learn_search) bot could front-run. Instead, you're engaging with an intent-based system, which truly elevates your trading experience.

Here's a closer look at what happens behind the scenes when you submit an order on [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48):

1.  **Signing an Off-Chain Message (Your Intent, Your Control):** Instead of constructing a complex on-chain transaction that dictates every step, you simply sign an off-chain message. This message is your intent. It clearly indicates your desired trade, specifying parameters like the tokens you want to swap, the amounts, and any limits (like a minimum amount you're willing to receive). This signing process is gasless and doesn't directly interact with the blockchain's mempool, giving you a crucial layer of privacy and protection from the get-go. Your wallet will prompt you to sign this "intent to trade" message, giving you full transparency over what you're approving.
    

  

2.  **Solvers Compete for Optimal Execution (The "How" is Handled for You):** Once your signed intent is submitted, it enters an off-chain order book managed by the CoW Protocol. This is where the magic really begins. Your intent is grouped with many others into "batches" that are then presented to a network of specialized entities called "solvers." These solvers are sophisticated algorithms, often run by professional market makers, who compete fiercely to find the absolute best way to fulfill all the intents within a given batch. More recently we have built a new system that allows solvers to solve parts of batches. But for now, this is in essence how it works. Their job is incredibly complex: they scan all available liquidity sources - this includes every major on-chain DEX (like Uniswap, Balancer, Curve, etc., similar to how a DEX aggregator works) and private liquidity from their own inventories or centralized exchanges. They're not just looking for the cheapest direct route; they're looking for the most efficient combination of routes, including:
    

-   **Coincidence of Wants (CoW):** This is [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48)'s secret sauce. If, within the batch, another user has an opposite intent (e.g., you want to buy ETH with USDC, and someone else wants to sell ETH for USDC), the solvers will try to match you directly, peer-to-peer. This bypasses external liquidity pools entirely, eliminating AMM fees and often resulting in incredibly favorable prices and significantly lower gas costs because the trade requires fewer on-chain interactions.
    
-   **Ring Trades:** Sometimes, three or more users' intents can be rotated in a loop (like our earlier example of USDC to ETH, ETH to BTC, BTC to USDC). Solvers are adept at finding these multi-party CoWs, further optimizing gas and price for everyone involved.
    

  

3.  **Benefiting from Improved Pricing and [MEV Protection](https://cow.fi/learn/what-is-mev?ref=learn_search) (Your Trade, Reimagined):** The solver competition is designed to maximize "surplus" for the users - essentially, to find the best possible price for your trade. The solver that can achieve the highest surplus across the entire batch wins the right to execute the trades on-chain. This competitive environment incentivizes them to constantly innovate and find better routes.  
      
    

Crucially, this batch auction mechanism, combined with off-chain intent signing and Uniform Clearing Prices (where all trades of the same asset pair within a batch settle at the same price), provides robust [MEV protection](https://cow.fi/learn/what-is-mev?ref=learn_search). Because your order isn't sitting in a public mempool waiting to be exploited, and because solvers absorb any MEV risk themselves, you're shielded from harmful front-running and sandwich attacks.

This entire process means a simpler, safer, and often more cost-effective way to swap your crypto. You tell [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) what you want - your desired outcome - and the protocol, powered by its network of competing solvers, works tirelessly behind the scenes to deliver the best possible outcome for you, all while abstracting away the complex execution details and keeping your trade protected. It's truly a smarter way to trade in DeFi.

## Next Steps

Ready to experience the power of intents for yourself? Head over to [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) and try a trade!

Related Reading:

-   [How CoW Swap Solves the MEV Problem](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem)
    
-   [Understanding Cross-Chain MEV](https://cow.fi/learn/understanding-cross-chain-mev)
    
-   [MEV Transparency: Ensuring Fairness in DeFi Markets](https://cow.fi/learn/mev-transparency-ensuring-fairness-in-defi-markets)

large_crypto intents.png

medium_crypto intents.png

small_crypto intents.png

thumbnail_crypto intents.png

crypto intents.png

Learn how crypto intents simplify DeFi trading by letting users specify desired outcomes while solvers handle execution for better prices and MEV protection.


Understanding Crypto Intents: The Future of Your DeFi Trades


AI agents are a game-changer. They turn the incredible power of Large Language Models (LLMs) and other AI models into autonomous programs that can work tirelessly to help you achieve your goals. Imagine having an intelligent, tireless assistant dedicated to your objectives.

  

Especially in the highly automated, fast-paced world of decentralized finance (DeFi), there's massive, untapped potential for AI agents to impact markets, provide unprecedented insights, and even automate complex strategies. DeFi thrives on speed, data, and efficiency, making it fertile ground for AI innovation.

  

Understanding how to leverage AI agents in DeFi safely and effectively opens up entirely new opportunities for market insights, sophisticated trade techniques, and enhanced security. This isn't just about automation; it's about intelligent, adaptive automation.

In this article, we’ll help you understand:

-   Understand what AI agents are at their core.
    
-   See practical examples of how to leverage AI agents in DeFi.
    
-   Learn about how CoW Protocol can help protect your AI agent's trading strategies.
    

This is part of our series exploring DeFi. If you’re looking to start at the beginning, check out our article: [Getting Started with DeFi: Your Comprehensive Guide to Decentralized Finance - CoW DAO](https://cow.fi/learn/getting-started-with-defi-your-comprehensive-guide-to-decentralized-finance)

  

## Why AI agents are a good fit for DeFi

What makes AI agents uniquely suited for the DeFi landscape? It comes down to a few key characteristics of the decentralized world:

  

-   DeFi features many frequent, automated transactions. The very nature of DeFi protocols, with their constant swaps, liquidity provisions, and lending/borrowing actions, generates an enormous volume of data and requires rapid responses.
    
-   Finding meaningful trends amidst this high volume of information is incredibly difficult for humans. The sheer speed and scale of on-chain data can be overwhelming. Identifying profitable opportunities or spotting potential risks in real-time is like finding a needle in a haystack-a haystack that's constantly growing.
    
-   AI agents offload many of the routine analytic tasks that make understanding possible. They can tirelessly sift through blockchain data, market feeds, and news, performing the grunt work of analysis so you don't have to.
    

  

AI agents' flexibility and power are perfectly suited to the constantly shifting trends and vast data volumes inherent in DeFi analysis. They don't get tired, they don't get bored, and they can process information at speeds no human ever could.

  
  
  

Here's the value AI agents in DeFi can offer:

-   Accelerate analytics pipelines, delivering insights as fast as possible. In a world where milliseconds matter, AI agents provide a competitive edge by crunching numbers and delivering actionable insights with lightning speed.
    
-   Automate routine data processing to free up time for more valuable decision-making and development. Instead of spending hours manually tracking metrics, you can focus on refining your strategies, exploring new protocols, or innovating.
    
-   Give high-level insights quickly to deliver moment-to-moment market insights. Whether it's spotting an arbitrage opportunity or identifying an unusual market movement, AI agents can provide instant, distilled information.
    

  

## Overview: AI agents explained

So, what exactly is an AI agent? In simple terms, AI agents are autonomous sections of a software system that process data using AI models. These AI models could be traditional Machine Learning (ML) models trained for specific tasks, or more flexible Large Language Models (LLMs) that can understand and generate human-like text.

  

AI agents open up possibilities for incredibly complex and powerful software architectures that fully leverage the capabilities of AI. They can operate as standalone programs, executing specific tasks independently, or, more powerfully, they can be coordinated into an agentic workflow. This is where multiple AI agents work together, each handling one specific section of the necessary processing for a larger, more complex task. You can learn more about this concept from IBM's article on [agentic workflows](https://www.ibm.com/think/topics/agentic-workflows).

  

Think of it like a highly specialized team: one agent might gather market data, another might analyze sentiment, a third might identify trading opportunities, and a fourth might execute the trade. Each agent performs its part, contributing to the overall goal.

  
  

## Example: using AI agents for automated DeFi trading

One of the most exciting and impactful applications of AI agents in DeFi is automated trading. Here, AI agents take on the heavy lifting of complex analysis while also executing trades automatically. This creates opportunities for implementing far more sophisticated trading strategies than manual execution would allow. The process is a sort of collaboration between human strategy and AI execution, where the human sets the overarching goals and the AI tirelessly works to achieve them.

  

### How traders interact with AI agents

It's not about turning over full control; it's about smart delegation:

-   Traders set up parameters and goals for their AI agent. This includes defining risk limits, preferred assets, profit targets, and specific market conditions they want the agent to look for.
    
-   The agent monitors markets continuously using these guidelines. It acts as a tireless sentinel, watching for changes 24/7.
    
-   It executes trades when conditions match the trader's criteria. Once the predefined rules are met, the agent can initiate transactions instantly.
    
-   The trader maintains oversight through dashboards and alerts. You're always in the loop, receiving notifications about trades, performance, and any unusual market activity.
    
-   They can adjust parameters as market conditions change. The human element remains crucial for adapting strategies in response to new information or market shifts.
    

  
  

### Step-by-step agent automation with Ethereum

Let's walk through a simplified example of how an AI agent might automate a trading strategy on Ethereum:

#### Step 1 – Trader configures an AI agent with wallet permissions.

The trader securely grants the AI agent limited permissions to interact with their crypto wallet. Crucially, they set strict risk limits and trading preferences (e.g., maximum daily trade volume, assets to trade, acceptable slippage). The agent then connects to real-time Ethereum market data feeds from various decentralized exchanges (DEXs).

#### Step 2 – AI agent analyzes ETH price movements and volume.

The AI agent continuously processes live data. It identifies potential arbitrage opportunities (where the same asset can be bought and sold for a profit across different exchanges) or other price discrepancies across various DEXs. The agent rapidly calculates optimal trade sizes and timing based on current liquidity and gas fees.

#### Step 3 – When conditions align, the agent executes trades automatically.

If the market conditions meet the trader's pre-set criteria (e.g., a profitable arbitrage opportunity appears), the agent instantly executes the necessary transactions. This might involve swapping ETH for USDC on Uniswap and then simultaneously trading that USDC for more ETH on another DEX like Curve to capture the price difference. The entire process happens in milliseconds, far faster than any human could react.

  

## DeFi use cases for AI agents

Beyond automated trading, AI agents are poised to revolutionize many other aspects of DeFi:

  

### Research automation

AI agents can be your ultimate research assistants in the vast, ever-growing ocean of DeFi data:

-   They can tirelessly dig into market trends, analyze news reports, and even scour whitepapers for key information.
    
-   Using powerful language models, they can generate concise summaries of complex topics or market developments, often with extensive links to original sources for verification.
    
-   Through ongoing tuning and prompt engineering by human experts, these agents can become increasingly adept at producing highly accurate and relevant summaries tailored to specific research needs.
    

### Virtual assistants

Imagine having a chatbot that truly understands DeFi and can answer your questions in real-time:

-   AI agents can power sophisticated chatbot UIs that provide instant insights into DeFi markets.
    
-   By accessing recent transaction logs from different chains (like Ethereum, Polygon, Solana), they can answer questions about current market trends, specific token movements, or even historical data on a particular protocol. Need to know the largest stablecoin transactions in the last hour? An AI assistant could tell you.
    

### Automated trading

This is the cutting edge, where agents directly interact with markets:

-   These are advanced agents with secure wallet access permissions that execute transactions based on dynamic prompts and real-time market data.
    
-   For example, you could configure agents that trade puts and calls (options), with their actions triggered by specific trends or patterns detected in recent on-chain transactions or broader market sentiment. This allows for nuanced, algorithmic trading strategies.
    

### Enhanced security

In a space constantly targeted by malicious actors, AI agents can provide an extra layer of defense:

-   Agents can continuously track markets for unusual behaviors, such as large, sudden movements of funds, rapid price fluctuations without clear cause, or unusual contract interactions.
    
-   By identifying these anomalies, they can alert users to potential ongoing attacks like rug pulls, flash loan exploits, or large-scale liquidations.
    
-   Working within broader market analysis and agentic workflows, these security agents can help protect your portfolio from unforeseen security risks by providing early warnings.
    

### Yield farming and staking

Yield farming and staking pools offer high potential for asset growth, but they demand constant, rigorous trend analysis of high-volume, rapidly changing data. This includes factors like fluctuating gas fees, variable algorithmic interest rates, and pool liquidity. You can learn more about it on [Hedera's DeFi yield farming page](https://hedera.com/learning/decentralized-finance/defi-yield-farming).

AI agents are ideally suited for handling these kinds of dynamic data streams and acting on broad trends in the data. They can:

-   Monitor thousands of pools simultaneously.
    
-   Calculate optimal entry and exit points considering gas costs and potential returns.
    
-   Identify the best yield opportunities across different chains based on real-time APY (Annual Percentage Yield) data.
    
-   Alert users to significant changes in pool conditions, helping them maximize returns and minimize impermanent loss.
    

  

## How CoW Protocol helps secure AI agents in DeFi

As powerful as AI agents are, their autonomous nature can also expose them to unique vulnerabilities in the DeFi space. One of the most significant risks is [Miner Extractable Value (MEV)](https://cow.fi/learn/what-is-mev?ref=learn_search).

  

CoW Protocol is a meta-exchange and trading protocol designed specifically to protect users from malicious behavior in DeFi, particularly MEV attacks. You can dive deeper into this with our [explainer on MEV attacks](https://cow.fi/learn/mev-attacks-explained).

  

Agentic workflows, with their rapid and often predictable responses to market trends, can be especially vulnerable to MEV. Transaction order attacks, like front-running or sandwich attacks, can severely undercut the trends that AI agents identify and act on, eating into potential profits or even leading to losses. An AI agent might spot a perfect arbitrage, only for an MEV bot to execute its transaction just before or after, stealing the profit.

  

### What CoW Protocol offers AI agents

CoW Protocol's innovative design offers unique advantages for AI agents operating in DeFi:

  

-   CoW Swap’s solver incentive architecture offers unique surplus access suited to AI agents. Instead of directly interacting with DEXs, CoW Swap uses "solvers" (third-party market makers) to find the best trade execution for users. These solvers compete to provide the best prices and are incentivized to return "surplus" value to the user. This architecture effectively undermines MEV attacks, making them unprofitable and ineffective for malicious actors, as solvers are motivated to protect user value. CoW Protocol has already protected $263 billion worth of trades from MEV. You can learn more over on [CoW Swap](http://cow.fi/cow-swap).
    

  

-   CoW Protocol supports advanced order types and automation suitable to interfacing with agentic workflows. This means AI agents can leverage CoW Protocol's sophisticated order types, such as limit orders, allowing for more precise and automated execution strategies. The protocol is designed to be highly composable and programmable, making it an ideal interface for the complex logic of AI agentic workflows. Explore more about [CoW Protocol](http://cow.fi/cow-protocol)'s capabilities.
    

  

By building your AI agent strategies on top of CoW Protocol, you can ensure that your intelligent automation is not only efficient but also robustly protected against the hidden dangers of the DeFi market.

### 👉 Keep Learning:

  

-   [Understanding Automated Market Makers: A Beginner’s Guide to DeFi Liquidity - CoW DAO](https://cow.fi/learn/understanding-automated-market-makers-a-beginners-guide-to-defi-liquidity)
    
-   [Navigating the Evolution of CoW Swap: From Market Orders to Programmatic Orders - CoW DAO](https://cow.fi/learn/navigating-the-evolution-of-cow-swap-from-market-orders-to-programmatic-orders)
    
-   [A guide to MEV on Ethereum - CoW DAO](https://cow.fi/learn/mev-on-ethereum-a-guide)

large_How AI agents can be used in DeFi.png

medium_How AI agents can be used in DeFi.png

small_How AI agents can be used in DeFi.png

thumbnail_How AI agents can be used in DeFi.png

How AI agents can be used in DeFi.png

AI agents are uniquely suited to handling the complex, high-volume data involved in Defi systems. Learn how to leverage them to maximize and protect your portfolio.

How AI agents can be used in DeFi


In the fast-paced, often volatile world of decentralized finance (DeFi), executing large trades can feel like navigating a minefield. A single, sizable order can trigger significant price slippage, incur substantial fees, and, perhaps most perilously, expose users to sophisticated [MEV (Maximal Extractable Value)](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search) attacks. For institutions, DAOs, or even savvy individual traders looking to buy or sell substantial amounts of tokens without disrupting the market, the challenge is immense.

Enter the [Time-Weighted Average Price (TWAP) order](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders?ref=learn_search). A well-established strategy in traditional finance, TWAP aims to mitigate these risks by breaking down a large order into smaller chunks and executing them over a predefined period. While the concept of TWAP is universal, its practical application in DeFi has historically been plagued by the very issues it seeks to solve: high gas costs for multiple transactions, and persistent vulnerability to MEV.

This is where CoW Protocol stands apart. Its unique architecture - built upon batch auctions, competitive solvers, and native MEV protection - doesn't just offer TWAP orders; it fundamentally re-engineers them. TWAP isn't merely a scheduled execution; it's a dynamic, MEV-resistant, and gas-efficient strategy that truly leverages the protocol's core strengths, delivering an execution experience unparalleled in the decentralized space.

In this article, we explore what TWAP orders are, how they work, and how you can make the most of them.

## What is TWAP? A Primer on Averaging Your Trades

At its core, a Time-Weighted Average Price (TWAP) order is an execution strategy designed to achieve an average execution price close to the actual time-weighted average price of an asset over a specified period. Instead of executing a single, large market order that could significantly impact the market price, a TWAP order divides the total quantity into smaller, predetermined chunks. These smaller orders are then released and executed at regular intervals throughout the trading session.

That offers a number of benefits, including:

1.  **Minimizing Market Impact:** Large orders can "move the market" and lead to lower returns. By spreading the order out, each smaller trade has less individual impact, leading to a better average price for the overall transaction.
    
2.  **Reducing Slippage:** Slippage occurs when the execution price deviates from the expected price due to insufficient liquidity or rapid price movements. TWAP helps to smooth out this effect by interacting with liquidity more gently over time.
    
3.  **Mitigating Price Manipulation:** A large, visible order can be a target for opportunistic traders seeking to front-run or otherwise manipulate prices. TWAP makes the full size of the order less obvious to the market.
    
4.  **Achieving a Fairer Average Price:** Over a period of volatile trading, a single large order might hit an unfavorable price point. TWAP aims to capture the average price across that period, potentially yielding a more desirable outcome.
    
5.  **Simplicity in Execution:** Once set, a TWAP order typically runs automatically, freeing the trader from constant monitoring and manual execution of smaller trades.
    

### How Traditional TWAP Works (and its DeFi Challenges):

In traditional financial markets, a TWAP order might break a 100,000 USD order into 10 orders of 10,000 USD, executed every hour over a 10-hour period. While effective in traditional finance, this straightforward approach faces significant hurdles when ported directly to transparent, gas-heavy, and MEV-prone blockchain environments:

-   **Prohibitive Gas Costs:** Each individual sub-order in a TWAP strategy translates to a separate on-chain transaction. On networks like Ethereum, this means incurring gas fees for every single one of those transactions. For a strategy involving dozens or hundreds of sub-orders, the cumulative gas cost can quickly become exorbitant, eroding any potential savings from better average prices.
    
-   **MEV Vulnerability:** The predictable nature of traditional TWAP orders makes them prime targets for MEV. Malicious actors can observe pending TWAP sub-orders in the mempool and execute profitable [sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself?ref=learn_search) ([frontrunning](https://cow.fi/learn/what-is-frontrunning?ref=learn_search) and [backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained?ref=learn_search)) or other forms of time-bandit attacks, effectively extracting value from the TWAP executor. This undermines the very purpose of using TWAP for better execution.
    
-   **Execution Uncertainty:** Relying on fixed time intervals for execution means sub-orders might hit periods of low liquidity or high network congestion, leading to failed transactions or worse slippage than anticipated.
    

These limitations make a simple, direct port of traditional TWAP strategies largely impractical and economically unfeasible for most users in DeFi. This is precisely why CoW Protocol's unique architecture offers a transformative solution.

## The CoW Protocol Difference: Why TWAP Thrives Here

CoW Protocol doesn't just offer TWAP orders; it redefines them by integrating them into its core mechanisms. The protocol's design inherently mitigates the challenges of traditional DeFi TWAP, making it a powerful and efficient tool for large orders.

Let's delve into how CoW Protocol's distinctive features combine to offer a superior TWAP experience:

### Batch Auctions: The Foundation of Fairness

Unlike conventional DEXs that settle orders individually as soon as they hit the network, CoW Protocol aggregates all signed user intents into "batches". All orders within a batch are settled simultaneously at a uniform clearing price.

Impact on TWAP:

-   **No Front-Running within Batches:** Since all orders in a batch clear at the same price, there's no opportunity for MEV bots to front-run individual trades within that batch. This uniform pricing mechanism immediately eliminates a significant vector for traditional TWAP attacks.
    
-   **Liquidity Aggregation:** Orders within a batch can be matched against each other directly (Coincidence of Wants, or CoW), or against external liquidity sources. This aggregation means that individual TWAP sub-orders benefit from the combined liquidity of the entire batch, reducing market impact even further.
    

### Decentralized, Competitive Solvers: The Smart Executors

At the heart of CoW Protocol are "solvers": independent, off-chain entities that compete to find the optimal settlement for each batch of orders. Solvers are highly sophisticated algorithms (and often teams behind them) that leverage advanced routing strategies, access to various liquidity sources (on-chain DEXs, private liquidity, dark pools), and complex optimization techniques. They are incentivized to find the best possible price for users because the solver who proposes the best settlement for the batch wins the right to execute it.

Impact on TWAP:

-   **Dynamic, Intelligent Execution, Not Rigid Intervals:** This is a crucial distinction. Unlike traditional TWAP which relies on rigid time intervals, CoW Protocol's "TWAP" is an intent for a series of value-optimized executions over time. The solver isn't just executing a small order every 'X' minutes; they are constantly looking for the absolute best way to fulfill parts of your overall TWAP order within the constraints of each batch. They can strategically pause, accelerate, or modify their execution within the limits of your defined TWAP period based on real-time market conditions, CoWs found, and liquidity availability.
    
-   **Leveraging CoWs First:** Solvers prioritize finding "Coincidences of Wants" (CoWs) within a batch - where one user wants to buy exactly what another user wants to sell. These CoWs settle without interacting with external AMMs, leading to zero slippage and maximal MEV protection. For a TWAP order, this means parts of your large order can be filled with zero market impact.
    
-   **Access to Diverse Liquidity:** Solvers are not limited to a single DEX or a single path. They can route portions of your TWAP order through multiple AMMs, aggregators, private pools, and even off-chain sources (where permissible and trust-minimized) to achieve the best possible price for each sub-execution. This comprehensive search for liquidity minimizes slippage and optimizes the average execution price over the TWAP duration.
    
-   **MEV Internalization (or User Benefit):** While solvers could theoretically extract MEV, CoW Protocol's design incentivizes them to internalize it and pass it back to users. If a solver finds an MEV opportunity by reordering or optimizing trades within a batch, they effectively use this "MEV" to achieve a better price for the user, thus increasing their chances of winning the batch competition. The competitive environment among solvers ensures that any MEV extracted is returned to users in the form of improved execution prices.
    

## Native MEV Protection: A Shield Against Extraction

CoW Protocol's design is inherently MEV-resistant. This isn't an add-on feature but a fundamental principle.

Impact on TWAP:

-   **Uniform Clearing Price:** As mentioned, all orders in a batch settle at the same price, removing the opportunity for front-running individual transactions. For a TWAP order, this means each segment is protected from sandwich attacks.
    
-   **Off-Chain Execution:** User orders are signed as "intents" off-chain. Only the final settlement transaction is submitted on-chain by the winning solver. This makes it impossible for bots to see pending individual TWAP sub-orders in the mempool and exploit them, as they are not visible until already included in a settled batch.
    
-   **Solver Competition:** The continuous race among solvers to provide the best execution means that any potential MEV they could capture is passed back to users as better prices to win the competition. This "MEV redistribution" is a unique benefit for TWAP orders.
    

## Gasless Orders: Cost-Effective Execution

One of the most significant barriers to traditional TWAP in DeFi is the cumulative gas cost of numerous sub-transactions. CoW Protocol solves this by making user orders gasless. Users simply sign an intent off-chain, and the winning solver covers the gas fees for the on-chain settlement.

Impact on TWAP:

-   **Economic Viability:** With gas costs absorbed by solvers, TWAP orders become economically viable even for small trade intervals or for users making relatively modest total trades. The user doesn't pay gas for each individual TWAP chunk, eliminating a massive friction point.
    
-   **Reduced Complexity for Users:** Users don't need to worry about managing gas for multiple transactions; they set the TWAP parameters, and the protocol handles the underlying execution complexity and costs.
    

## Intent-Centric Design: Focus on What You Want, Not How

CoW Protocol is built on an intent-centric philosophy. Users express what they want to achieve (e.g., "I want to swap 100 ETH for DAI at the best possible price over the next 24 hours"), and the network of solvers figures out the optimal how.

Impact on TWAP:

-   **User Simplicity:** For a TWAP order, this means users specify the total amount, the desired asset, and the duration. They don't need to worry about the exact interval, order size for each chunk, or gas management. The solvers abstract away this complexity.
    
-   **Optimized Outcomes:** The intent-centric design empowers solvers to make dynamic decisions to achieve the best possible average price, adapting to market conditions rather than adhering to a rigid, pre-programmed schedule.
    

## Reimagining TWAP

The combination of features described above is not found in any other single protocol in DeFi. This is why TWAP on CoW Protocol isn't just an implementation; it's a fundamental reimagining of the strategy itself.

No other protocol combines gasless intent-based orders with batch auctions and decentralized, competitive solvers that internalize MEV and bear gas costs. This specific cocktail of design choices transforms TWAP from a predictable, gas-intensive, and MEV-vulnerable strategy into a highly efficient, protected, and economically viable one.
    
The "time-weighted" aspect shifts from rigidly defined execution intervals to a strategy that optimizes value over a period. Solvers are incentivized to find the best overall average price for the entire TWAP order, leveraging all available liquidity and matching capabilities, rather than just executing at a specific time.
    
It's not just "TWAP on CoW"; it's "TWAP reimagined by CoW Protocol's architecture." The protocol's inherent MEV protection and competitive solver landscape mean that what users get is not a simple scheduled trade, but a sophisticated, adaptive execution strategy that is constantly working to get them the best deal possible, without suffering from the pitfalls of fragmented liquidity or predatory MEV bots.
    

## Powerful Use Cases for TWAP on CoW Protocol

Given its unique advantages, TWAP on CoW Protocol becomes an invaluable tool for various participants in the DeFi ecosystem:

-   DAOs and Institutions: Large treasury swaps, rebalancing portfolios, or executing significant token sales/purchases can be done with minimal market impact and maximum MEV protection, safeguarding community funds.
    
-   **Dollar-Cost Averaging (DCA) Strategies:** Users can set up long-term DCA strategies to buy or sell assets over weeks or months, benefiting from consistent, low-cost, and MEV-protected execution without manual intervention.
    
-   **High-Volume Traders:** For traders looking to enter or exit large positions without signaling their intentions or causing significant price swings, CoW Protocol's TWAP offers a stealthy and efficient solution.
    
-   **Fund Managers:** Managing large portfolios requires precise execution. TWAP on CoW Protocol provides the tools for systematic rebalancing and asset allocation with enhanced security and efficiency.
    
-   **Arbitrageurs (in specific contexts)**: While not traditional arbitrage, solvers can use the batching mechanism to execute complex, multi-leg strategies that benefit from price discrepancies without creating further market impact or being front-run, potentially leading to better fills for users.
    

## How to Initiate a TWAP Order on CoW DAO

Despite the complex intelligence operating under the hood, initiating a TWAP order on CoW Protocol is designed to be user-friendly. Users interact with the CoW Swap interface or directly via API.

Typically, the process involves:

1.  **Connecting your wallet:** Standard procedure for any DeFi interaction.
    
2.  **Selecting the tokens:** Specify the token you want to sell and the token you want to receive.
    
3.  **Defining the total amount:** Input the total quantity of tokens you wish to swap over time.
    
4.  **Setting the duration:** Specify the total period over which the TWAP order should execute (e.g., 1 hour, 24 hours, 7 days).
    
5.  **Reviewing and signing:** The user signs a single, gasless intent for the entire TWAP strategy. The heavy lifting is then passed to the solver network.
    

From the user's perspective, it's a seamless, gas-free experience where they define the intent, and the protocol's sophisticated backend takes care of the optimal, MEV-protected execution across the specified time frame.

## Conclusion

The concept of Time-Weighted Average Price orders has long been a staple in traditional finance, offering a sensible approach to mitigating market impact for large trades. However, its direct translation to the DeFi landscape has been fraught with challenges: the prohibitive cost of gas, the persistent threat of MEV, and the inherent inefficiencies of fragmented liquidity.

CoW Protocol doesn't just offer TWAP orders; it fundamentally redefines them. By leveraging its unique architecture of batch auctions, decentralized solver competition, native MEV protection, and gasless intents, CoW Protocol transforms TWAP from a problematic strategy into a powerful, efficient, and secure tool.

When you execute a TWAP order on CoW Protocol, you're not just scheduling a series of trades; you're leveraging an intelligent network of solvers constantly competing to deliver the best possible average price, shielded from predatory MEV, all without incurring prohibitive gas costs.

This distinctive approach makes CoW Protocol the ideal platform for anyone-from DAOs to institutions to individual power users-seeking to execute large, impactful trades with confidence and optimal outcomes in the decentralized world. Experience the future of execution; [experience TWAP](https://swap.cow.fi/#/1/advanced/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48?tab=all&page=1) on CoW Swap.

Want to dive deeper? Check these articles out below:

-   [The Foundations of Decentralized Finance: A Comprehensive Guide to the DeFi Ecosystem](https://cow.fi/learn/the-foundations-of-decentralized-finance-a-comprehensive-guide-to-the-de-fi-ecosystem)
    
-   [DEXes vs. CEXes: What you need to know](https://cow.fi/learn/dexes-vs-cexes-what-you-need-to-know)
    
-   [Getting Started with DeFi: Your Comprehensive Guide to Decentralized Finance](https://cow.fi/learn/getting-started-with-de-fi-your-comprehensive-guide-to-decentralized-finance)
    
-   [Understanding RPC endpoints for Ethereum](https://cow.fi/learn/understanding-rpc-endpoints-for-ethereum)
    
-   [What is a sandwich attack and how can you protect yourself?](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself?ref=learn_search)

large_Understanding TWAP.png

medium_Understanding TWAP.png

small_Understanding TWAP.png

thumbnail_Understanding TWAP.png

Understanding TWAP.png

Explore what TWAP orders are, how they work, and how you can make the most of them. 

Understanding TWAP: How CoW Protocol Reimagines Time-Weighted Average Price Orders

large_DEXes-CEXes.png

medium_DEXes-CEXes.png

small_DEXes-CEXes.png

thumbnail_DEXes-CEXes.png

DEXes-CEXes.png

CEX or DEX? Convenience or control? Explore the real trade-offs shaping the future of crypto trading — and why it’s not just about tech.

DEXes vs. CEXes: What you need to know 

George Hristov

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)!



large_all-you-need-to-know-about-cow-swap-new-safe-fallback-handler-cover-photo.webp

medium_all-you-need-to-know-about-cow-swap-new-safe-fallback-handler-cover-photo.webp

small_all-you-need-to-know-about-cow-swap-new-safe-fallback-handler-cover-photo.webp

thumbnail_all-you-need-to-know-about-cow-swap-new-safe-fallback-handler-cover-photo.webp

all-you-need-to-know-about-cow-swap-new-safe-fallback-handler-cover-photo.webp

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


When CoW DAO released [CoW AMM](https://cow.fi/cow-amm), its goal was simple: help liquidity providers keep hold of their liquidity. Why was this a problem? Outside of stable-to-stable pools, liquidity providers typically lose 5-7% of their liquidity each year. It’s the dirty secret of automated market making: [hundreds of millions of dollars](https://cow.fi/cow-amm) of LP funds are stolen by arbitrageurs every year.

  

These losses are known as loss-versus-rebalancing (LVR). LVR is a bigger source of MEV than frontrunning and sandwich attacks combined. [CoW AMM](https://cow.fi/cow-amm) is the first product CoW DAO built that directly keeps LVR out of liquidity pools.

  

Since its inception, LPs have been protected from LVR, and also benefited from [CoW AMM](https://cow.fi/cow-amm)’s batch auction and solver system. This has meant LPs have enjoyed [additional surplus](https://dune.com/cowprotocol/cowamms), as solvers work to find the most effective way of rebalancing liquidity pools.

  

Providing liquidity on [CoW AMM](https://cow.fi/cow-amm) has changed the liquidity provider game to such an extent, CoW AMMs behave more like Enhanced Index Funds than the leaky pools of old.

  

In this article we explain why that’s happened, and what doors [CoW AMM](https://cow.fi/cow-amm)s open for more sophisticated pools in future. CoW AMMs are evolving, fast, meaning the possibilities for liquidity providers are changing too.

## What is an Index Fund?

  

An index fund is a type of mutual fund (a professionally managed investment portfolio that pools money from many investors to purchase securities) or exchange-traded fund (ETF) that tracks the performance of a specific index by buying stocks of every company in that index.

  

Index funds are a popular choice for investors because they are a low-cost way to diversify their investments, all the while being passive: no fund manager is actively creating an investment strategy, and charging hefty fees for the privilege. They are so popular, index funds, as well as other kinds of passive investors [hold 33.5% of the US stock](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4188052) market.

  

Index funds typically outperform hedge funds running fancy investment strategies. So much so, legendary investor Warren Buffett made a [$1 million bet](https://www.bloomberg.com/news/videos/2024-07-30/buffett-s-famous-bet-on-the-s-p-500-and-hedge-funds?sref=23bomWKL) in which he wagered that an S&P 500 index fund would outperform a hedge fund over ten years.

  

These funds can be designed to track anything from the price of a commodity to a large and diverse collection of securities. ETFs, or exchanged traded funds meanwhile, can be designed to track specific investment strategies. Those strategies could be for different purposes: income generation to speculation or to partly offset risk in an investor’s portfolio.

  

But these aren’t the only types of Index Funds. There are also Enhanced Index Funds, which we explore in the next section.

## What is an Enhanced Index Fund?

  

If an Index Fund is a passive fund, an enhanced index fund (EIF) is a fund that uses active management to improve returns. They typically use a combination of active and passive investing strategies to generate returns that are higher than the benchmark while keeping risk within a controlled level.

  

The ‘enhanced’ part of the Index Fund is where experts assess which assets inside an index are performing strongly, and which are performing poorly. Once identified, an EIF can be rebalanced, to increase the weighting of one asset, and reduce the asset for another to help the overall fund perform better.

  

This management falls under a broader category called portfolio theory. It is a branch of finance that studies how people should design their portfolios. At a super high level, it says that:

-   People should care both about expected returns and risk.
    
-   Holding multiple assets instead of a single asset (i.e., diversification) is valuable because it reduces risk.
    
-   The problem with diversification is deciding how much to invest in each asset, and several theories exist on how to do so. But broadly speaking, an asset should constitute a higher share (or weight) of the portfolio if its expected future return is high, its volatility is low, and its correlation with the rest of the portfolio is also low.
    

  

Now that we understand the principles behind Index Funds and Enhanced Index Funds, let’s turn to how [CoW AMM](https://cow.fi/cow-amm)s behave like EIFs, and what that means for crypto more broadly.

## What is a CoW AMM?

  

[CoW AMM](https://cow.fi/cow-amm) is the first product on any blockchain to tackle the Loss-Versus-Rebalancing problem head on.

  

LVR is a form of maximal extractable value (MEV) responsible for more price exploitation than all other forms of MEV combined. 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.

  

The [CoW AMM](https://cow.fi/cow-amm) is a special kind of automated market maker designed to help liquidity providers capture MEV from arbitrageurs.

  

Here’s how it works:

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

  

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

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

## Why does a CoW AMM act as an Enhanced Index Fund?

  

As highlighted in earlier sections, Index Funds passively follow an asset or strategy. Because LVR is removed, whenever prices change the AMM will be rebalanced so to make sure that its total TVL is split between the different assets in a pre-specified way: 50/50 for standard constant product, and 80/20 for 80/20 pools.

  

The AMM therefore behaves like a simple index with two components. But CoW AMM pools go one step further: liquidity providers earn trading fees whenever liquidity in the AMM is used to fulfil a user order.

  

Does this mean all liquidity pools can be considered to behave similarly to an Enhanced Index Fund. Not exactly. The simple answer is LVR. CoW AMM was the first on-chain product that solves this. Other pools leak liquidity meaning they aren’t as viable an option as a CoW AMM for investors looking for more consistent returns.

  

With the launch of 80/20 pools, LPs have more options. These pools now offer features including:

  

- 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.

## But this is just the beginning

  

For now, this is limited to simple, fixed-weight rebalancing strategies, but in the future, more complex passive investment strategies will be possible. For example, a multi-token [CoW AMM](https://cow.fi/cow-amm) could have a “manager” who can change its weights and add and remove assets.

  

At present CoW AMM pools feature just two assets. But in future, CoW AMMs will be capable of hosting multi-asset pools. Over on Balancer, there are already [8-asset pools](https://medium.com/balancer-protocol/the-benefits-of-multi-token-pools-653eea3ef03a) featuring multiple tokens within a single pool.

  

Liquidity providers are able to set up their own pools with custom token splits and weights. This level of customization helps providers have full control over their portfolios and plan to reduce their exposure to risky assets. It also enables low-fee swaps for traders using those same pools.

  

CoW DAO has plans to bring multi-asset pools with customisable weights to liquidity providers in future with its class-leading LVR protection. They’re called Decentralized Trading Funds or DTFs.

  

The Decentralized Traded Fund offers the chance for holders to earn a passive income. It combines the ability to gain exposure to assets, but also the ability to enter and exit the fund whenever it is convenient. On top of that, a DTF does not require holders to pay a fee to CoW DAO. More on that in the coming weeks.

  

The end game is a market mechanism that allows retail investors who want to run simple passive investment strategies to do so by contributing liquidity to AMMs, while earning additional returns.

  

If traditional finance is an indication, these AMMs could attract up to a third of the total market cap of various assets as liquidity, providing super-efficient trading at close to zero slippage.

  

Decentralized finance will finally provide better market mechanisms than traditional finance, opening the door to rebuilding the financial system on blockchain rails.

large_1108 Why CoW AMMs Act as Enhanced Index Funds.png

medium_1108 Why CoW AMMs Act as Enhanced Index Funds.png

small_1108 Why CoW AMMs Act as Enhanced Index Funds.png

thumbnail_1108 Why CoW AMMs Act as Enhanced Index Funds.png

1108 Why CoW AMMs Act as Enhanced Index Funds.png

Thanks to CoW AMM's LVR busting capabilities, LPs can earn passive income, in new and exciting ways.

Why CoW AMMs Act as Enhanced Index Fund

![CoW-Case-Study-Qantura-main-image.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Co_W_Case_Study_Qantura_main_image_3519f259be.png)
TL:DR

  

-   [Qantura](https://www.qantura.com/) provides a seamless integration layer that transforms how smart wallets engage with blockchain applications.
    
-   In order for their service to work, it needed a Meta DEX with built-in MEV protection to allow users to swap their yield tokens whenever they tap the VISA card to spend money on real-world items.
    
-   The Qantura team chose CoW Protocol to create a seamless way to rebalance customer wallets.
    
-   The result was a first-of-its-kind application that enables frictionless payments with yield-bearing assets.
    
-   Within the first month after the release, the project saw more than $100,000 USD settled.
    

## Introduction

  

CoW DAO builds products that help keep users safe. But it also builds products that other people can use and integrate. One of those is CoW Protocol. With its built-in MEV protection, simple user interface, customized order functionality, and ease of integration, projects looking for a way of providing better prices for its users while keeping them safe look no further.

## The client

  

[Qantura](https://www.qantura.com/) provides a seamless integration layer that transforms how smart wallets engage with blockchain applications. The company leverages account abstraction to simplify complex blockchain interactions while maintaining the highest security standards. Founded by crypto OGs and security experts, they're making it effortless for wallets to expand their capabilities using their plug-and-play modules. They have already partnered with industry leaders like [Zeal Wallet](https://www.zeal.app/) and [Gnosis Pay](https://gnosispay.com/).

## Identifying the problem and challenges

  

Historically, if someone wanted to pay in crypto, the merchant would have to accept that token directly or use a service provider that performed the conversion from cryptocurrency to cash. With Gnosis Pay, that’s no longer the case.

  

Gnosis Pay is the world’s first on-chain spending account with a Visa Debit Card linked to a self-custodial blockchain wallet, and thanks to [Monerium](https://monerium.com/), users with EURe, or GBPe stablecoins can now spend their currency anywhere where Visa is accepted, with a series of on-chain transactions taking place in the background. However, if a user leaves stablecoins sitting in their wallet, they’re not only missing out on yield farming but also on any capital appreciation they expect in other crypto assets.

  

Instead of simply having customers sit with idle capital on their Gnosis Pay account, Qantura wanted to offer users the opportunity to earn yield and spend that yield on whatever they liked. Qantura teamed up with Zeal and Gnosis Pay, to build a unique feature: allow customers to switch stablecoins to yield-bearing tokens in order to capture such yield, while still being able to spend money on real-world transactions.

  

While that sounds simple in theory, the devil was in the details. In order for all this to work, Qantura “needed a flexible system that worked for swapping any ERC20 token and that ensured users got competitive prices” says a member of Qantura’s team. Additionally, because most of their system is based on smart contracts, they needed a protocol that worked with [ERC1271](https://cow.fi/learn/eip-1271-explained) orders. This allowed them to have their smart contract sign the intent to trade transactions whenever the user actually tapped the card on a payment terminal.

  

Based on all these requirements, the team needed a solution that offered smart contract orders that could be customised to suit what they were building. So they turned to CoW Protocol.

## Working with CoW

  

The team were already familiar with CoW DAO’s suite of products and services, and had been regular users of CoW Swap already.

  

“CoW Protocol offered the flexibility we needed as far as token breadth goes via ERC1271 orders, and its off-chain solver competition did it for us in terms of offering a mechanism that incentivised competitive pricing in rebalancing trades.”  
  
Qantura systems use ERC-1271 smart contract signature verification for order placement. This means that when the user account is deployed, (aka the user wants to earn yield on the funds sitting on their Gnosis Pay card), the yield token is immediately approved on the CoW Protocol settlement contract.

  

This means that now, any third party can create an order as long as it satisfies the wallet’s isValidSignature() function, which in this case would be “Swap my yield token to EURe/GBPe with the best price you can find so that the user can rebalance their card after paying for the coffee bill”. For this to happen, the system places the order via CoW Protocol’s orderbook, which is eventually forwarded to solvers as part of the batch auction process.

  

While monitoring performance, Qantura analyzed nearly 4,000 trades and compared their settled sDAI/EURe prices with a proxy oracle. There’s no oracle in Gnosis chain for sDAI/EURe, so they built a sDAI/EURe proxy oracle instead.  
  

CoW Swap’s unique solver system delivered the most competitive prices than any other venue, and was on par to the comparison model.
![cow-protocol-case-study-qantura.jpeg](https://celebrated-gift-f83e5c9419.media.strapiapp.com/cow_protocol_case_study_qantura_4232e2e475.jpeg)


The graph above highlights Cow Swap’s performance against the price oracle. The median percentage difference between the price of the proxy oracle and CoW Protocol´s found price was just 9 basis points, meaning users typically paid just 0.09% more than the oracle. In the figure, the blue outliers are small amounts of around 1 sDAI.

## The solution

  

The finished product? Recharge. Built in partnership with Zeal Wallet and Gnosis Pay, it allows users to spend yield-bearing tokens via Gnosis Chain in the real world with a Visa card. In the backend, meanwhile, a complex rebalancing takes place to ensure assets are able to be converted for a competitive price and moved to the right places at the right time. It’s a unique showcase of what happens when TradFi meets DeFi composability.

  

Where does CoW Protocol feature in this unique solution? CoW Protocol was integral to ensuring that when rebalancing happens, the execution cost is as low as possible and the best price is achieved.

How does Recharge work? Let’s look at an example. But before you do, we need to clarify a few terms:

  

-   EURe - this is the first fully authorized and regulated euro stablecoin.
    
-   sDAI - or Savings DAI is a token that allows users to earn yield from holding DAI.
    
-   Recharge Smart Contracts - Recharge is a feature that allows Zeal wallet users to maintain a minimum amount of a given currency at any time via the Coordinator. When the amount drops below a threshold, the wallet automatically rebalances itself by swapping one currency for another. In this example, we’ll be using sDAI and EURe. The Coordinator is a smart contract that starts the rebalance once a threshold has been reached.
    

  

### Let’s take a closer look at an example:
![Screenshot 2024-10-25 at 8.39.00 AM.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2024_10_25_at_8_39_00_AM_db0ac99d12.png)


-   (1) Alice pays 5 EURe with her Gnosis Pay card. Before that, Alice had set up rebalance with sDAI and EURe.
    

  

-   (2) Prior to the transaction at the coffee shop, Alice had 1,000 EURe in her Gnosis Pay safe account.
    

  

-   (3) She had also set up her Coordinator smart contract to top up whenever her wallet dropped below 1,000 EURe.
    

  

-   (4a) Qantura's automation service detects Alice’s setup and notices that the new balance of the account is 995 EURe. This takes her below the threshold.
    

  

-   (4b) The service sees that Alice holds 5K sDAI, enough to top up the account.
    

  

-   (4c) The bot drafts the rebalance order, making sure that it meets all conditions specified by the sDAI account including that the order is:
    

  

-   Selling sDAI
    
-   Buying EURe
    
-   Issuing a buy order for 5 EURe
    
-   Sending the funds to the intended receiver; i.e., the user’s Gnosis Pay Safe
    

  

-   (4d) A bot posts the order to CoW Protocol’s orderbook.
    

  

-   (5) The order is forwarded to all solvers as part of the auction process, where they compete to provide the best possible price at the lowest execution cost.
    

  

-   (6) CoW Protocol executes the winning solution, sending 5 EURe to the Gnosis Pay Safe and pulling the sDAI from Alice's sDAI account. The amount pulled is determined by the auction.
    

  

-   (7) Alice's Gnosis Pay Safe is now balanced again.
    

  

CoW Protocol is instrumental in allowing this to happen smoothly. CoW Protocol´s competition pushes solvers to get as much surplus as possible. In the case of Alice, solvers will submit a solution that gets 5 EURe for the least amount of sDAI.

  

## The result

  

Since Recharge launched, more than $100,000 USD has been settled. At the time of writing, there is more than 300k USD generating yield for users. You can follow live metrics on [Qantura's Recharge Dashboard](https://dune.com/steakhouse/qantura-rebalance).

  

Qantura is revolutionizing the payments industry by allowing users to remain capital-efficient in a self-custodial setup. That’s a tall order. But then again, CoW DAO is the place people go to build big things.

## CTA

  

Want to get in touch with Qantura for more details about their solution powered by CoW Swap? [Get in touch with Qantura](https://x.com/QanturaTech).

  

Want to work with CoW DAO’s class-leading suite of products? [Head this way](https://forum.cow.fi/).

large_CoW-Case-Study-Qantura-main-image.png

medium_CoW-Case-Study-Qantura-main-image.png

small_CoW-Case-Study-Qantura-main-image.png

thumbnail_CoW-Case-Study-Qantura-main-image.png

CoW-Case-Study-Qantura-main-image.png

Welcome to CoW Case Studies: in this series we explore how partners used CoW Protocol to build their products.

How Qantura Harnessed CoW Swap To Power the Future of Payments

When it comes to making high volume trades, experts love CoW Swap. In the last few months, several high profile traders have all taken advantage of CoW Swap’s unique feature set to settle trades involving large amounts of tokens. DAOs and multisig wallets have also used CoW Swap to complete large volume trades. But why?

  

This article is going to explain why CoW Swap has become the go to meta-DEX for pros.

  

TL:DR it’s because CoW DAO has a number of unique features that gives traders more control over their assets.

  

## CoW Swap Reduces Slippage

[Slippage](https://cow.fi/learn/what-is-slippage-in-crypto) is the amount the price of an asset may vary between the time the trade is placed and the time it actually executes.

  

To better understand slippage, let’s take a look at an example.

  

Let’s say a user places an order to buy 1 ETH while the price of ETH is exactly $3,000. By the time the order executes, however, ETH has shifted slightly in price and the user ends up only paying $2,980 for 1 ETH. The $20 difference between the $3,000 that they initially placed their order at and the $2,980 per ETH price that the order eventually executed for is known as slippage.

  

In the world of decentralized exchanges, users can set what’s called their slippage tolerance, how far from the price they want they are willing to accept - as a percentage.

  

When it comes to high volume trades, the amount of slippage that has to be set in order for a trade to complete can become prohibitive, especially when the trade is with a token with low liquidity. It’s also a key area for exploitation. MEV bots look for trades with high slippages in order to exploit price differences. But on CoW Swap, that doesn’t have to be the case, thanks to solvers.

  

Solvers are specialized actors that search for the best prices on transactions you want to execute. One of their roles is finding the best liquidity pathway for the tokens you want to trade. They do that in two distinct ways.

  

The first is aggregation. CoW Swap solvers search all major sources of liquidity. That includes the likes of 1inch, Uniswap, 0x, and Paraswap. A CoW Swap solver does the hard work of searching through all these sources looking for the best price. But solvers go one step further. They search off-chain liquidity sources, accessing liquidity pools that aren’t found on other DEXes. If they find the right source off-chain, they can secure a better price.

  

Another key function Solvers perform is they can and do split large trades between multiple liquidity sources to reduce price impact. If a trader went to one DEX and attempted to make one single transaction, it would have a bigger impact on price. With CoW Swap, a solver will look for the most effective way to make your transaction by splitting it into smaller chunks across multiple DEXes.

  

Traders, too, have the option of breaking up their transactions into smaller chunks. They can do that via [TWAP Orders](https://cow.fi/learn/why-twap). Time-Weighted Average Price transactions, or TWAPs split the trade into lots of smaller trades over time. This helps manage the amount of slippage each trade will incur if you had made a large, single trade, thanks to a reduction in price impact.

## Protecting Slippage Tolerance

  

As we discussed in the previous section, slippage is a key part of trading in the DeFi space. Because markets never close, prices are always moving, meaning the price you sell and ultimate price you receive can often be different. While that’s a core part of the DeFi experience, another part is MEV.

  

Maximum Extractable Value is a feature that allows sophisticated actors to search the mem pool for transactions they can profit from. One of the most common attacks is to search for high slippage trades in the mem pool, and exploit them by placing trades in the queue either before or after your trade. For a full explanation of how [MEV works, step this way](https://cow.fi/learn/what-is-mev). With CoW Swap, traders do not have to worry: MEV protection is built in.

  

One of the key ways CoW Swap does that is with its Solver system. When solvers receive an order request, it is hidden from the mem pool, meaning no one can swoop in and exploit your slippage setting to make a quick buck.

  

Additionally, because the Solver system is a competition between different entities trying to find the best price, the system ensures the best prices - with the lowest slippage tolerance - wins. In other words, solvers are incentivised to find the best prices, and help achieve the biggest surplus, by finding paths that help protect against slippage tolerance attacks.

  

Lastly, when there’s a Coincidence of Wants - an economic phenomenon where two parties swap assets with one another peer-to-peer - buyers and sellers are matched directly, meaning the transaction cannot be attacked by bots lurking in the mem pool.

## Gives traders more than they ask for

The price we want and the price we get in crypto can and often is, different. On CoW Swap, there are a number of features that help traders get as close to the prices they want as possible - and sometimes even more!

  

This section explores one of the many ways CoW Swap helps give traders more than what they ask for.

### Coincidence of Wants (CoWs)

  

As discussed in the previous section, Coincidence of Wants are moments when a buyer and seller can complete a transaction directly. When this happens, sellers and buyers don’t incur the same fees or run the same risks as they might trying to complete an order on a DEX or centralized exchange.

  

That means better prices. How? When a buyer and a seller are involved in a CoW, they don’t incur the usual fees to use an AMM - which can add up if it's a large transaction.

### Privileged Pricing for Traders

  

Using CoW Swap directly often means traders can gain access to prices only reserved for pros! CoW Swap’s unique relationship with projects like Balancer allows traders to access reduced fees, [by as much as 75%](https://forum.balancer.fi/t/bip-295-fee-discount-for-cowswap-solvers/4785) when Solvers use liquidity on the network.

  

If Solvers complete their trades using CoW AMM pools meanwhile, no fees are added. That’s because CoW AMM liquidity pools are treated as standing limit orders; if they're included in a batch, it's a CoW with no AMM fees. If you want to understand how CoW AMM works, [head this way.](https://cow.fi/cow-amm)

### Batch Pricing

  

Thanks to the unique Batch Auction feature found on CoW Swap, traders get improvements on prices thanks to transactions being processed in blocks rather than one at a time. Let’s explain. The process starts with traders signaling they want to trade by sending what’s called an “intent to trade” message to CoW Swap.

  

The DEX takes these orders and groups them together into something called batches. Those batches are then sent to solvers, whose job it is to find the best prices for those transactions. The solver that finds the best price for the batch executes the order. Any surplus - the difference between the price quoted and the final price - is partially returned to the traders.

## Better UX for advanced traders

  

When traders are performing lots of trades, the last thing they need is complicated UX. CoW Swap has refined the experience to give traders ultimate control of how they execute their trades. Let’s take a look at a few examples.

### Improved multisig experience

  

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! 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.

### Milkman, CoW Swap’s secret UX sauce

  

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

  

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). This is a unique feature of CoW Swap. 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 Traders Trust CoW Swap

  

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.

  

For pros it goes even further. CoW Swap’s unique specialised smart contracts give traders the chance to set their slippage tolerance and create programmatic orders that trigger when certain conditions are met.

  

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

large_trust-cow-swap.png

medium_trust-cow-swap.png

small_trust-cow-swap.png

thumbnail_trust-cow-swap.png

trust-cow-swap.png

Experts love using CoW Swap for high-volume trades, but why? This article explores the key features that make CoW Swap unique. 

Why Traders Trust CoW Swap for High Volume Trades


The vast world of DeFi offers many kinds of tokens, with more being added every day. Decentralized aggregators like CoW Swap allow users to swap between practically any two ERC-20 tokens, but sometimes you need to manually add a custom token before you can trade it.

## Add Custom Tokens

In order to display user balances, CoW Swap queries the blockchain to see what tokens a wallet holds. To ensure a smooth user experience, this analysis is limited to tokens included on official token lists such as CoinGecko.

![1-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_add_custom_tokens_a00d95fa40.webp)

For this reason, your wallet may hold tokens that don’t show up in your balance on CoW Swap. This doesn’t mean you can’t trade them! The CoW Protocol network of  [solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)  searches all available liquidity to bring you the best prices, even for tokens outside of the default lists.

To trade custom tokens, you simply need to add them to the UI. Here’s how:

## Step 1

Navigate to CoW Swap and click “Select a token.”

![2-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_add_custom_tokens_c80ddc6351.webp)

## Step 2

A token list will come up. Here you can either search the name of your token or enter the contract address in the search box.

![3-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_add_custom_tokens_f8dd21ae8e.webp)

## Step 3

For maximum security, you should always paste the official token contract address into the search box. This prevents any form of manipulation or phishing.

![4-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_add_custom_tokens_1ee5946e85.webp)

For ERC-20 tokens, the contract address starts with “0x” and is followed by 40 characters. You can usually find it by looking up the token you want to trade on reputable websites like  [CoinGecko](https://www.coingecko.com/).

_Note: While rare, it is possible for token lists to show the wrong contract address. Always check the official channels of the project you are trading for the most up-to-date information on token contract addresses._

## Step 4

Once you’ve found the token you’re looking for, click the “Import” button to add it to CoW Swap.

![5-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_add_custom_tokens_da75a6cce1.webp)

## Step 5

Ensure you’ve entered the correct token address and click “Import.”

![6-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_add_custom_tokens_160c90e632.webp)

## Step 6

Once imported, you will be able to trade the token on CoW Swap. Tokens only need to be imported once per browser.

![7-add-custom-tokens.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_add_custom_tokens_149eafcaa6.webp)

If you have any questions or need help importing tokens, feel free to reach out to us on  [Discord](https://discord.com/invite/cowprotocol)  or on  [X](https://twitter.com/CoWSwap). Happy swapping!

large_add-custom-tokens-cover-photo.webp

medium_add-custom-tokens-cover-photo.webp

small_add-custom-tokens-cover-photo.webp

thumbnail_add-custom-tokens-cover-photo.webp

add-custom-tokens-cover-photo.webp

How to Add Custom Tokens on CoW Swap

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

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

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

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

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

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

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

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

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

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

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

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

## **What is Milkman?**

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

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

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

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

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

## **Milkman for DAOs**

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

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

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

## **Technical details**

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

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

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

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

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

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

![4-what-is-milkman.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_what_is_milkman_185027226b.webp)


large_what-is-milkman-cover-photo.webp

medium_what-is-milkman-cover-photo.webp

small_what-is-milkman-cover-photo.webp

thumbnail_what-is-milkman-cover-photo.webp

what-is-milkman-cover-photo.webp

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


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

As a pioneer in the field of intents, CoW Swap has consistently brought faster, easier, and safer trading to DAOs and DeFi enthusiasts.

As DeFi grows and transactions become ever-more complex, the friction of having to sign and make orders manually becomes more pronounced. Traders looking to place recurring orders as a part of a complex trading strategy, DAO operators responsible for managing a treasury, and individuals tired of signing repetitive transactions could all benefit from a system that allows for automated order placement.

Today, CoW Protocol is proud to announce the release of two features that take the pain out of order placement and open up a wide range of possibilities for automation.

To start off, we’re introducing a new order primitive to the world of DeFi. We call it “Programmatic Orders”. Programmatic Orders are orders that create more orders. They require just one signature to create, then execute when on-chain conditions (prices, volumes, balances, times, etc.) are met. Programmatic Orders can execute indefinitely into the future, automating everything from complex trading strategies to advanced order types, portfolio management, DAO operations, and more.

Alongside Programmatic Orders, CoW Protocol is launching the Programmatic Order Framework. As the name implies, it’s a framework that allows for the easy creation of Programmatic Orders.

Below, we take a deeper look at Programmatic Orders, the Programmatic Order Framework, and the technical details necessary for implementation. We also call on the DeFi ecosystem to submit proposals for building applications on top of the Programmatic Order Framework through the  [CoW Grants Program](https://grants.cow.fi/).

## The current state of programmatic actions

The DeFi space currently supports very simple programmatic actions — for example, individual limit orders. Unfortunately, users have to trust a centralized operator to execute these actions correctly and fairly.

Despite the rise of autonomous agents in the wake of initiatives like ERC-1271, the vast majority of interactions are performed manually, which means there is a dependency on individuals, and a central point of failure.

Even when orders are executed properly, users still have to sign a transaction every time they want to place a new order. This may not be an issue for one-off transactions, but it starts to become a nuisance for frequent, recurring transactions.

The Programmatic Order Framework is built to address these problems.

## The Programmatic Order Framework: A decentralized solution for automated orders

At its core, the Programmatic Order Framework brings simplicity to order creation by automating the boilerplate code necessary for order placement. This allows DeFi users to programmatically create any set of orders and automatically approve them for execution with just a single signature.

Users can create advanced order types (such as Stop Loss and TWAP orders), automate DAO payrolls, and create or destroy multiple orders with just one on-chain transaction. Thanks to a “WatchTower” relayer, orders built with the Programmatic Order Framework execute automatically whenever certain on-chain conditions are met, eliminating the need for tedious and repetitive signatures for programmatic actions.

The framework is a plug-and-play system that takes in order logic and executes orders in perpetuity based on on-chain conditions. Creating orders only requires coding the order logic itself. The rest of the swap components like order creation, order validation, signature validation, API calls, order placement, and order settlement are provided by the framework itself.

![1-programmatic-order-framework.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_programmatic_order_framework_5ee644e722.webp)

The key unlock of the Programmatic Order Framework is the low cost of deploying, updating, and deleting orders in large quantities. Developers only need to write code specifying the particular type of order they’d like to execute and the framework takes care of everything else — storing the data, validating parameters, and placing orders.

The WatchTower relayer verifies that order conditions are met, validates the order signature, and places the order on behalf of the user’s smart contract. To make deploying Programmatic Orders easy, CoW Protocol runs a default WatchTower that users can route orders through. However, users can also run their own WatchTower instance for maximum privacy.

## The all-in-one order automation kit

With the Programmatic Order Framework, a single signature can create hundreds of Programmatic Orders. The WatchTower monitors on-chain order conditions continuously and places orders whenever these conditions are met.

For example, a DAO with a diverse treasury can set up conditional orders for each token within its treasury. Based on these conditions, the framework may initiate a swap to rotate into stables when the treasury value rises above a certain threshold, or it may initiate a payout for DAO contractors on a given day of the month.

As the treasury receives various tokens, the framework executes trades accordingly, making DAO financial operations simple and automatic.

## Benefits of the Programmatic Order Framework

The Programmatic Order Framework unlocks a world of convenience for individuals and on-chain organizations:

-   **Leverage on-chain conditions**: Build highly complex use-cases that rely on custom conditional order logic through the Programmatic Order Framework. Create orders that get picked up by the WatchTower on a certain date, once the balance of your contract or wallet is above a defined threshold, or based on other on-chain conditions
-   **Deploy orders en masse**: Create hundreds or even thousands of orders with a single on-chain transaction. Developers can also mass-update orders all at once with a single gas payment by simply updating the Merkle root with another transaction
-   **Execute many orders in parallel**: In a traditional smart contract wallet, orders execute sequentially. With the Programmatic Order Framework, the WatchTower monitors your orders and executes them as soon as the on-chain conditions are met, meaning you can execute many orders simultaneously

Most importantly, the framework is  **fully decentralized**, providing 100% trustless execution with no intermediate contracts or centralized parties.

## Examples & use-cases

With the Programmatic Order Framework, you can program a limitless number of use-cases:

-   **Special order types**: Gone are the days of centralized exchanges offering order types you can’t get in DeFi. Program intricate order types like stop-loss, good-after-time, and take-profit orders — plus many more. CoW Swap’s very own  [TWAP feature](/learn/why-twap)  is built using the Programmatic Order Framework
-   **Automated DAO operations**: Blockchain-native organizations like DAOs process hundreds or even thousands of transactions every month. Thanks to the Programmatic Order Framework, your DAO can automate payroll, treasury diversification, fee collection, or any other type of repetitive transaction
-   **Portfolio rebalancing**: Set up order logic to programmatically rebalance assets based on a portfolio value. Automatically diversify based on market conditions or use custom logic to manage loan risk, farm yield, or hedge positions
-   **Private conditional orders**:  Thanks to the framework’s support for private WatchTower configurations, traders can place highly complex conditional orders while simultaneously keeping them private. Buy and sell tokens through a recurring strategy while keeping your parameters hidden
-   **Protocol integrations**: The Programmatic Order Framework isn’t  _just_  for Safe! DeFi protocols can leverage its power to assist with recurring protocol-level transactions like loan liquidations
-   **Easy transaction modules**: Program custom functionality into any order type. Companies can build DAO tooling with a fraction of the complexity. Focus on building adoption rather than fiddling with backend tech

With just a few lines of code, the Programmatic Order Framework brings convenience and predictability to all types of DeFi actions.

## What will you build, anon?

CoW Protocol is bringing Programmatic Orders to Ethereum through the Programmatic Order Framework. Create any order type you can imagine and deploy it instantly — all within the security of your own smart contract wallet.

The  [CoW Grants Program](https://grants.cow.fi/)  is also putting out a request for proposals relating to the Programmatic Order Framework. Have an idea for a solution built on top of the framework (especially one that includes a UI)? Submit a grant proposal!

The Programmatic Order Framework is now live. Read the documentation  [here](https://hackmd.io/pmZX_qT2Q1yw59KiiT6TPQ)  to get started.

Have questions? The CoW Protocol team is here to help: join us on  [Discord](https://discord.com/invite/cowprotocol)  or send us a  [Twitter DM](https://twitter.com/CoWSwap).

large_Programmatic Orders.png

medium_Programmatic Orders.png

small_Programmatic Orders.png

thumbnail_Programmatic Orders.png

Programmatic Orders.png

Programmatic Orders enable a world of possibilities in DeFi; they’re now easier to create than ever thanks to CoW Protocol’s Programmatic Order Framework

Introducing the Programmatic Order Framework, from CoW Protocol

> _Note: TWAP orders are most useful for big trades! So, when trading on Mainnet, the minimum TWAP order size is $5k. This minimum ensures that your savings from reduced price impact are not lost on execution fees (AKA gas fees). If you want to trade smaller amounts, head over to Gnosis Chain, where the TWAP order minimum is only $5 (and the gas fees are much cheaper!)_

TWAP orders are now available in the  [CoW Swap order interface](https://swap.cow.fi/#/1/advanced)  under the “Advanced” tab.

**Have a Safe?**  Awesome! You can try out TWAP  [here](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=TWAP-guide).

**Don’t have a Safe?**  Not a problem! Create one  [here](https://app.safe.global/share/safe-app?appUrl=https%3A%2F%2Fswap.cow.fi&chain=eth).

For the below guide, we already have a Safe created. To get started, navigate to  [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=TWAP-guide)  and connect your Safe wallet via Wallet Connect, or directly using the CoW Swap Safe native app.

Once your wallet is connected, there are two ways to access TWAP orders:

-   Next to “Limit” in the center module, there is a tab that says “Advanced Orders” → clicking this opens the TWAP orders interface
-   On the top-left corner of the page, next to the CoW Swap logo, it says “Trade” → clicking this opens a drop-down menu that lets you choose between “Swap,” “Limit orders,” and “Advanced orders”

Once you have selected the “Advanced” tab, you will see the following screen:
![1-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_twap_how_to_6290090db4.webp)

After you click “Unlock TWAP orders (BETA)”, you will be taken to the TWAP orders interface.


![2-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_twap_how_to_0171b4ab6d.webp)

On the left side of this screen, you can see the order box where you input your TWAP order parameters. On the right, there is a panel that shows your open orders and order history.

In order to place a TWAP trade, you need to input your tokens and amounts, indicate how many parts you would like to split your order into, and select the time duration of your order.


![3-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_twap_how_to_c1d0d380d2.webp)

To get started, select the tokens you would like to swap from the token list.


![4-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_twap_how_to_961f05a961.webp)

Once you’ve chosen your tokens, you need to select the numbers of parts your TWAP order will be split into, as well as the duration of the TWAP order as a whole.


![5-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_twap_how_to_577542d502.webp)

As an added bonus, trading via a smart contract wallet like Safe automatically bundles your approval transaction and your trade together to save you time and gas.


![6-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_twap_how_to_bcfd7564ec.webp)

Below the Safe bundling banner, you will see a yellow notice. This notice is not related to your TWAP order itself, but to your wallet. TWAP orders are based on the “Composable CoW” conditional order framework which uses Safe fallback handlers to enhance the functionality of your smart contract wallet.


![7-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_twap_how_to_5563d17bc7.webp)

In order to use TWAP orders, you will need to upgrade your Safe fallback handler. This is a secure process; the code was co-developed by CoW Swap and the Safe team and it has undergone two external audits (you can find the final results of the audits  [here](https://github.com/cowprotocol/composable-cow/tree/ab3addad9bc05acdbf5fb040eb5c336209b58e31/audits)).

_Note: if you are interested in learning more about the fallback handler upgrade process, please refer to this_ [_article_](/learn/all-you-need-to-know-about-cow-swap-new-safe-fallback-handler)_. If the fallback handler is new to you, please refer to this Safe_ [_article_](https://help.safe.global/en/articles/40838-what-is-a-fallback-handler-and-how-does-it-relate-to-safe) _for a full introduction to the concept._

Once you understand how the fallback handler interacts with your Safe wallet, you can check the “Modify Safe’s fallback handler when placing order” box in order to upgrade your wallet. This upgrade will take place alongside your trade and bundle any token approvals as a single transaction.


![8-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_twap_how_to_6aab5754fc.webp)

After you click “Approve”, you will be prompted to review your order one last time. Review all of your order details including the price protection, limit price, the minimum tokens you’re set to receive, and all your TWAP properties and ensure everything looks good.


![9-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_twap_how_to_39ea16bee1.webp)

To actually place your TWAP order, click “Place TWAP order” and review & sign your transaction from your Safe interface.


![10-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/10_twap_how_to_6a196bdf6b.webp)



![11-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/11_twap_how_to_e39305a40f.webp)

After you sign your order, you will see an “Order submitted” pop-up and your order will appear in the order panel on the side.


![12-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/12_twap_how_to_71bea598ed.webp)

In the order panel, you will notice that the order status is not “open,” but rather indicates that your order is still in the “signing” stage. The wallet used in this example requires 2 out of 3 signers to execute a transaction. By creating the transaction, we have performed one of the signatures, and to reach the threshold we need one more signer. To sign, the second signer would need to connect to the Safe wallet and navigate to the “Transactions” queue.


![14-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/14_twap_how_to_a703daa281.webp)

In the queue, we can see our pending transaction and confirm it with the last signature required.


![15-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/15_twap_how_to_f995c65744.webp)



![16-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/16_twap_how_to_43c9f04edd.webp)



![17-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/17_twap_how_to_21dd244dc5.webp)

After the last confirmation for the order is done, the order is placed and it will appear in the “Your Orders” UI.

The interface includes several ways to view your orders. You can get a high-level overview at a glance, expand to see the different parts of your TWAP order (in this example the first part executed immediately, which is why only 3 parts are shown), or click into the order to view a full list of details.


![18-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/18_twap_how_to_58564c545d.webp)



![19-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/19_twap_how_to_c6eab87d53.webp)



![20-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/20_twap_how_to_41156cc84e.webp)

Now that your TWAP order is placed, you can sit back, relax, and watch it get filled with CoW Swap’s signature MEV protection and best prices.


![21-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/21_twap_how_to_935598c651.webp)

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


![22-twap-how-to.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/22_twap_how_to_07e8708fcb.webp)



large_how-to-use-cow-swap-twap-orders-via-safe-wallet-cover-photo.webp

medium_how-to-use-cow-swap-twap-orders-via-safe-wallet-cover-photo.webp

small_how-to-use-cow-swap-twap-orders-via-safe-wallet-cover-photo.webp

thumbnail_how-to-use-cow-swap-twap-orders-via-safe-wallet-cover-photo.webp

how-to-use-cow-swap-twap-orders-via-safe-wallet-cover-photo.webp

How to use CoW Swap’s TWAP orders via Safe Wallet, step by step guide


How to use CoW Swap’s TWAP orders via Safe Wallet

**NOTICE: This tutorial is outdated. The orders created with this tutorial **will not automatically appear in the api**, unlike mentioned in this article. We changed the event that we listen to when picking up orders from onchain transactions. We’ll release an updated version of this guide shortly.**

CoW Protocol’s native order types are limited to  _partially-fillable limit buy_  and  _limit sell_  orders. While this expression language covers most retail use cases, it misses some more-powerful advanced order types such as:

-   Good after time orders
-   Stop loss orders
-   Automated rebalancing portfolio orders

… to just name a few.

Adding new native order types to CoW Protocol would involve changing and redeploying the smart contract logic of the core protocol, and is therefore something we want to avoid for the time being.

While the above-mentioned order semantics could be communicated to the protocol/solvers without a smart contract change (e.g. by using additional fields in the  **app_data**), they couldn’t be enforced by the settlement logic and would therefore be subject to “off-chain consensus” (misbehavior would result in slashing by the DAO). This limits the amount of value that can be exchanged using these order types and puts more risk and trust on the solvers.

Smart orders are a clever way of achieving the above-mentioned semantics in a completely trust-less way without requiring a protocol change. Smart orders are based on  [ERC1271](https://eips.ethereum.org/EIPS/eip-1271)’s contract signature scheme and allow smart contracts to decide  **at settlement time**  if an order that is placed in their name is satisfying their trade preference or not.

While regular orders are signed by their owner ahead of time and statically verified using  [**ecrecover**](https://soliditydeveloper.com/ecrecover), smart contract orders implement interactive signature verification by asking the author at settlement time if they are okay with the proposed trade. This verification allows the author to decide just-in-time if they are happy with the proposed trade, so that their approval can be conditioned on any on-chain information (e.g. block time, oracle prices, current balance, etc.).

**In essence, this allows developers to create smart autonomous agents that trade according to predefined rules and strategies, entirely on-chain.**

For example, an automated rebalancing portfolio order (a smart contract that aims to have equal $ value of all its tokens) could perform the following check:

    def checkSignature(order): 
	    buyBalanceAfterTrade = order.buyToken.balanceOf(self) + order.buyAmount
	    sellBalanceAfterTrade = order.sellToken.balanceOf(self) + order.sellAmount
		
		buyBalanceValue = oracle.value(order.buyToken, buyBalanceAfterTrade)
		sellBalanceValue = self.oracle.value(order.sellToken, sellBalanceAfterTrade)

		# Check we only trade portfolio tokens
		assert(order.sellToken in portfolio and order.buyToken in portfolio)
		# Check we don't over-balance
		assert(sellBalanceValue >= buyBalanceValue)
		return  True

Note that the concrete CoW Protocol order that is verified by the smart order contract conforms to the native CoW Protocol order type (i.e. it is a partially-fillable limit order).

However, by incorporating additional information into the interactive verification step (e.g. check the oracle price and only accept if ETH trades below X), the smart order can add additional conditions to the trade.

In fact, the “tricky” part is finding the correct native CoW Protocol order parameter for which the smart contract’s signature verification passes. For this, order placement can happen either:

-   By solvers that are aware of smart orders in the form of just-in-time liquidity (orders that are not part of the official auction set and therefore don’t contribute to the object value)
-   Permissionlessly via the public CoW Protocol API (since ERC1271 doesn’t require a private key signature, anyone can place orders on behalf of a smart contract)

The former option is better suited for very complex order types where the correct order parameters may depend on the outcome of the optimization problem itself. Solvers are incentivised to include these orders since they might allow them to generate more surplus for public user orders.

However, aside from reaching out to solvers directly, there isn’t a great way to inform solvers about this type of custom liquidity today. Therefore, for the purpose of this tutorial, we will focus on the simpler type of order placement: smart orders that are included via CoW Protocol’s public API and available to all solvers by default.

## How do you build a smart order?

We developed an experimental framework for creating smart orders, which proposes a standard interface for conditional smart orders. Orders that implement this interface can be automatically picked up by our supporting infrastructure to place orders without the need for individual operational maintenance:  [https://github.com/cowprotocol/conditional-smart-orders](https://github.com/cowprotocol/conditional-smart-orders)

The core idea is that the smart order contract not only verifies if it is happy to trade a given order. It also proposes (via a separate view method) a concrete CoW Protocol order that it would be willing to accept.

Upon instantiation, the smart order triggers an event. This event is indexed and adds this contract to a registry that an external  _watchtower_  is constantly monitoring by querying the implemented view method. Upon seeing an order candidate, the  _watchtower_  places this order into the CoW Protocol API.

From a developer perspective, all you need to do is implement a single method (**getTradableOrder**), which provides logic for what order parameters your contract would accept given the current state of the chain. The default implementation of the signature verification logic would be as simple as checking that the given order is indeed the one returned by  **getTradableOrder**  (less strict checks are of course also possible in case it’s hard to reliably reproduce the exact order params in between calls).

As soon as  **getTradableOrder**  returns an order, our  _watchtower_  will forward it to the CoW Protocol API, a solver will pick it up and, via the settlement logic, ask your contract to verify it as part of the settlement transaction.

We implemented the registry indexing and  _watchtower_  logic using two [Tenderly Web3 Actions](https://docs.tenderly.co/web3-actions/intro-to-web3-actions):

1.  One to index order creation events and add contracts to the watch registry
2.  Another one to periodically check contracts in the registry if they are willing to trade at the current block

There are other ways to run this off-chain infrastructure, but we found Tenderly’s framework the most convenient without the need for our own cloud setup.

The repository also comes with a few suggested order types (use at your own risk). We would highly appreciate contributions to this repository (you can also apply for  [Grants](https://grants.cow.fi/)  for specific order types).

## How do you deploy a smart order with your Safe?

While the conditional-order framework makes it quite easy to implement custom verification logic, there is usually some amount of custody overhead logic involved that needs to be implemented in such a contract (e.g. how do I get my funds back when I want to exit the strategy). This logic can be complex, expensive to audit and prone to errors. Thankfully, there is a proven smart account abstraction standard out there ([Safe](https://safe.global/)) that allows for a very flexible custody solution and that is already securing many billions of dollars in funds.

In this tutorial we will therefore use a Safe as our main “smart agent” contract and delegate to the conditional smart order logic only for signature verification.

Safe supports ERC1271 signatures out of the box, but also allows the owner to set a custom ERC1271 implementation (e.g. the one your smart order implements). Safes implement ERC1271 via a so-called “fallback handler”, a component that is called whenever the Safe is invoked on a method it doesn’t implement directly (e.g.  **isValidSignature**). Therefore, by setting our smart order implementation as the Safe’s custom fallback handler we replace the default ERC1271 implementation with our own and make our agent trade according to our custom rules. Note that a Safe with such a fallback handler will only be able to ERC1271 sign off on CoW Protocol orders (no other 3rd party dApp related signatures will be valid). Normal Safe transactions with owner signatures will continue to work as usual.

So let’s get started! Most smart orders in our conditional smart order framework come with a  [factory](https://soliditydeveloper.com/clonefactory)  that allows instantiating new instances directly from the Safe UI. The plan of attack is therefore to:

1.  Create a new Safe
2.  Approve the tokens in the CoW Swap app
3.  Create a new smart order instance (targeted at this Safe specifically)
4.  Set the smart order’s address from the previous step as the Safe’s fallback handler
5.  Fund it with the token(s) to be traded. Wait and see the Safe trade automatically

## Step-by-step guide

### 1. Create a new Safe

Head over to [https://app.safe.global/welcome](https://app.safe.global/welcome)  and follow the prompts for “Create new Safe”. Feel free to leave the owner structure simple, e.g. 1/1 signer.

![1-create-new-safe.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_create_new_safe_11947cfc37.webp)

### 2. Approve the tokens in the CoW Swap App

Inside your Safe, head over to Apps →  [CoW Swap](https://swap.cow.fi/#/1/swap/WETH?utm_source=docs.cow.fi&utm_medium=web&utm_content=header-nav-link). At the top-left of the app, click on Account → Tokens and select the token that needs to be enabled.  [Swap](https://swap.cow.fi/#/1/swap/WETH?utm_source=docs.cow.fi&utm_medium=web&utm_content=header-nav-link)  for any other token and approve the token(s) you intend to trade with this contract.

In this example we are going to trade Wrapped XDAI:

![2-approve-tokens-in-cow-swap-app.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_approve_tokens_in_cow_swap_app_5364f18433.webp)

### 3. Create a new smart order instance

For this example we will deploy a TradeAboveThreshold order, which will automatically sell whenever the holds more than X of some token.

The factory for this contract on Gnosis Chain is located at [0xd20a99e3c6c103108d74e241908e00ef4db447fb](https://gnosisscan.io/address/0xd20a99e3c6c103108d74e241908e00ef4db447fb)  (if you can’t find the factory, you can deploy a new factory using foundry). To create a new instance, head to your Safe and create a  _New Transaction_  →  _Contract Interaction_  and load the contract ABI from the factory address.

We want to call create. Fill out the required parameters (with the target being your current Safe). In this example we are selling wxDAI for USDC whenever the contract holds $1 or more:

![3-create-a-new-smart-order-instance.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_create_a_new_smart_order_instance_a65941db91.webp)

Add transaction, create batch, and execute. After the transaction has been executed, open the transaction hash in a block explorer to find the address of the smart order instance that the factory has created (e.g. from looking at the internal txs).

![3-1-create-a-new-smart-order-instance.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_1_create_a_new_smart_order_instance_214ed8ac83.webp)

Here we created [https://gnosisscan.io/address/0xdf724fdbaef2419f1af895f494bd8969ec433d01](https://gnosisscan.io/address/0xdf724fdbaef2419f1af895f494bd8969ec433d01).

### 4. Set Custom Fallback handler

Head back to the Safe to create a  _New Transaction_  →  _Contract Interaction_, this time on the Safe itself (enter the address of the Safe).

When prompted choose  _Use Implementation ABI_.

![4-set-custom-fallback-handler.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_set_custom_fallback_handler_ae00dddb6b.webp)

The contract method selector we want to invoke is setFallbackHandler and the address should be the contract that has been created in the previous step:

![4-1-set-custom-fallback-handler.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_1_set_custom_fallback_handler_12a2a422f0.webp)

After adding and executing this transaction, you will have set the smart order as your Safe’s ERC1271 implementation.

### 5. Fund the Safe

Now, when the Safe receives 1 wxDAI, it should automatically place an order to sell it for USDC. Let’s try:

![5-fund-the-safe.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_fund_the_safe_998c182c18.webp)

Shortly after the transfer is mined, if we check [https://explorer.cow.fi/](https://explorer.cow.fi/)  for our Safe address, we should see a pending order trying to sell the wxDAI for USDC

![5-1-fund-the-safe.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_1_fund_the_safe_141edf754d.webp)

And, after a short amount of time the order should be filled.

You can repeat this process as often as you want by just sending some more funds to this Safe. In order to withdraw the proceeds you can use the standard Safe functionality.

## Conclusion

In this tutorial we described and hinted at the power that smart orders can have in the context of smart contracts becoming autonomous trading agents, talked about how a simple “conditional order” type can be created with a few lines of solidity and walked through a step-by-step example of how we can deploy a smart order using Safe as a custody solution.

We hope this article inspired you to try out smart orders, or even build your own on top of CoW Protocol. Please get in touch with suggestions and ideas. We are looking forward to seeing what type of orders can be built with this paradigm.

Give ERC1271 orders a try today and let us know what you think by reaching out on  [Twitter](https://twitter.com/CoWSwap)  or  [Discord](https://discord.com/invite/cowprotocol)!



large_smart-order-tutorial-cover.webp

medium_smart-order-tutorial-cover.webp

small_smart-order-tutorial-cover.webp

thumbnail_smart-order-tutorial-cover.webp

smart-order-tutorial-cover.webp

[OUTDATED] This tutorial provides an introduction and a step-by-step description of how to create “smart orders” on CoW Protocol. The order that we create will facilitate custom trading logic and use Safe (formerly known as Gnosis Safe) as a backbone.