ShapeShift is excited to announce our integration with Meta DEX aggregator CoW protocol. Users can buy and sell tokens using gasless orders, settle peer-to-peer transactions among users (cutting the DEX and associated slippage and gas fees out of the equation) and enjoy increased MEV protection. CoW protocol aggregates 0x, 1inch, and ParaSwap and all AMMs, so trades are routed through whichever mix of liquidity pools will result in the best final rate. After you've approved a token for transfer, trades are executed using signed messages--you never need to pay ETH gas fees to trade again. And it makes a mooing sound when you execute a trade--who can argue with that?
Better known as CowSwap after Coincidence of Wants (COW), the economic phenomenon where users with opposite trades are matched peer-to-peer, ShapeShift is one of the first platforms to integrate CowSwap's innovative approach to trading to provide the best user experience and rates for users.
How Does CoW Protocol Work?
CoW protocol matches trades via batch auctions for a variety of on-chain liquidity sources.
Trades can be settled via underlying on-chain AMMs directly or via DEX aggregators, depending on which pool/path offers the best price or has the most liquid venue for the trades within a batch. It is thus essentially acting as a DEX aggregator of aggregators. Before finding the best price for a trade from available on-chain liquidity, Cow protocol first seeks a CoW within the existing batch to offer an even better price than any pool can.
CoWs are one of the protocol's most innovative aspects—they are settlements sharing liquidity across all orders with matching limit prices. Rather than using an automatic market maker (AMM), CoW protocol uses batch auctions as a core mechanism to facilitate CoWs. Using batch auctions leads to better prices for the individual traders and offers bigger savings in gas and liquidity provider fees. Because batch auction uniform clearing prices and CoWs don’t need access to on-chain liquidity, CoW protocol is able to offer the user a level of MEV protection rarely found elsewhere in this ecosystem.
Instead of using a central operator or a constant function market maker to determine trade settlements, CoW protocol uses a party called a “solver.” Solvers are in charge of providing the settlement solution to the batch auctions. Solvers compete against each other to submit the most optimal batch settlement solution. Each time a solver submits a successful batch settlement solution, the protocol rewards them with tokens一meaning, the protocol rewards solvers for solving the batch auction optimization problem. CoW protocol tokenomics ensure that solvers compete against each other to deliver the best order settlement solution for traders in exchange for the reward of each batch auction. Anyone can become a solver一read more about the requirements here.
Benefits
CoW protocol is a fully permissionless Meta DEX aggregator that replaces a central operator or constant function market maker on which anyone can trade any tokens and build integrations. The trades that route through CoW protocol have increased protection from different types of MEV, such as front/back running and sandwich attacks. Additionally, the protocol has access to all on-chain liquidity that offers users the best一or at least as good as the best DEX aggregator一prices. All token pairs are available for trading, and the ability to conduct off-chain order submission enables gasless trading.
Swapping With Zero Added Fees on ShapeShift
With the integration of CoW protocol into the free, community-owned, no-KYC ShapeShift app, users can now buy and sell tokens using gasless orders while enjoying increased MEV protection. As ShapeShift is one of the first platforms to fully integrate CoW protocol, we further position ourselves to be the best free app to buy, sell, earn, track, and trade assets while providing an innovative approach to user experience and transparency.
All Chains, All Protocols, All Wallets. Share Our Vision at app.shapeshift.com