by Henry Krause and Christoph Rosenmayr – November 4, 2024

We are excited to announce our investment in CoW Protocol, the leading intent-based DEX in DeFi. The investment has been made using the TWAP feature from CoW Swap.

Over the course of the last few weeks, we have built a strategic position in CoW Protocol ($COW) as we believe that the complexity of financial products in the DeFi space is set to grow massively with the introduction of hooks in Uniswap V4 and ongoing innovations from other protocols like Panoptic,  Keyring Network, or Liquorice. This explosion in complexity will result in hundreds of liquidity pools, many with specialized functionalities. This complexity can be abstracted away to sophisticated parties who are economically incentivized to execute trades at the most optimal price. Additionally, traditional price-finding algorithms from legacy aggregators might struggle to navigate this increasingly intricate landscape effectively.

Unlike legacy aggregators that rely on static algorithms, CoW Swap leverages their dynamic network of solvers that compete to find the most efficient execution paths across a multitude of liquidity sources. 

The CoW Swap team has been one of the pioneers around the concept of App-Specific-Sequencing since their solutions collect trade intents off-chain and settle them in batches, ensuring that large trades can be executed securely without the risk of being exploited by MEV actors. This method eliminates the possibility of transaction reordering because each token has a single clearing price per batch.

Once the intents are collected, solvers compete to execute trades by offering the highest surplus, fostering a competitive environment that benefits all participants. This model has positioned CoW Swap as the biggest intent-based swap protocol on the market, deployed on Ethereum Mainnet, Arbitrum, and Gnosis Chain.

CoW AMM

The ecosystem is increasingly aware of the negative impact that MEV exploitation has on user profitability, especially being a liquidity provider. CoW AMM, the latest product from the CoW Team, is an MEV-recapturing AMM that enables protocols to provide liquidity pools without suffering losses from constant LVR-related arbitrage. Again they are leveraging solvers to compete in auctions and offering the most surplus to liquidity providers, leading to a drastic reduction in losses to CEX-DEX arbitrage.

Traction & Growth

CoW Swap has demonstrated impressive traction with an average monthly trading volume of $2.4B over the last eight months, compared to $1B monthly volume in late 2023. This consistent growth indicates a loyal user base and the platform’s ability to offer competitive quotes over multiple years. With daily trading volumes around $80M and them being head to head with Uniswap in terms of frontend market share, CoW Swap is one of the largest intent-based DEX’s on Ethereum, while also naturally not having any arbitrage related toxic flow which massively distorts volume number across other venues.

The platform has also seen a steady increase in unique traders, reaching over 14,500 recently. CoW Swap’s dominance in the intent-based trading space has grown to 63%, outperforming competitors like 1inch Fusion and UniswapX.

Starting in January 2024, CoW Swap implemented a very healthy fee mechanism, which led to significant protocol revenue, bringing in around 220 ETH ($550k) per month. Netting them roughly 2000 ETH in revenue since introduction of the fee switch.

Greenfield held great relationships with the core team behind CoW Protocol for many years.

Join us in supporting CoW Protocol

If you’re interested in experiencing CoW Swap firsthand, you can start trading on their platform today. Developers and protocols looking to integrate with CoW Protocol’s solutions can find more information on their website.

We are thrilled to support CoW Protocol in their journey to make decentralized trading more secure and efficient for everyone in the crypto ecosystem.