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DeFi puts power in your hands - and responsibility too. This guide breaks down the biggest risks, smartest habits, and essential tools to help you stay safe while navigating the fast-moving world of decentralized finance.

Navigating DeFi Security Risks and Rewards for the Savvy User

How to analyze token flows with Nansen


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)

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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

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This guide, part of our broader series on getting to grips with DeFi, breaks down the key ideas and technologies behind DeFi.

The Foundations of Decentralized Finance: A Comprehensive Guide to the DeFi Ecosystem

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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 

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If you're new to the space or looking to deepen your understanding, this guide offers a comprehensive, beginner-friendly roadmap to navigating DeFi confidently.

Getting Started with DeFi: Your Comprehensive Guide to Decentralized Finance


Gnosis has announced the launch of [Circles](https://www.aboutcircles.com/) - a radically new approach to decentralized money. Circles is an attempt to reimagine money from the ground up: no central issuer, no fixed supply, no allegiance to any state or institution.

  

At the core of Circles is a simple but powerful idea: every user is their own central bank. New currency is created continuously by individuals. Value circulates through social trust - not capital concentration. It's money as a social system, not a financial product.

  

And making that system work in the real world? That's where CoW Protocol comes in.

  

Circles depends on reliable, permissionless trade execution without exposing users to value extraction or manipulation. CoW Protocol provides the infrastructure to settle trades fairly, efficiently, and securely, ensuring Circles users can transact with confidence in a truly decentralized environment.

## What is Circles?

  

[At its core](https://files.gitbook.com/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fs76GmMOXUUWWi7YK8Ugp%2Fuploads%2FeugvhtIIqA6IUW0aJKsw%2FCircles_Whitepaper_v220.pdf?alt=media&token=0ab0f75c-2121-4b47-a2e1-a2bd0eabd53f), Circles introduces a currency system where every participant issues their own money, on equal terms. No pre-mines. No whales. No central banks. Just individuals creating and transacting with their own tokens-CRC (Circles) - backed by trust, not collateral.

  

The system is built on two key ingredients:

  

-   **Individual issuance:** Every user continuously generates a small amount of CRC, by design. It's predictable, egalitarian, and immune to early-mover advantages.
    

  

-   **Social trust:** Value flows through trust connections. You can only spend someone's CRC if they (or someone who trusts them) trusts you. It's like a peer-to-peer central bank network - where the "central" part is completely missing.
    

  

The result is a network-native form of money that grows with its users. It's unowned, unaligned, and designed for a multipolar world where no single power dictates the rules of exchange.

  

Unlike traditional currencies - or even many crypto assets - Circles isn't trying to be scarce or deflationary. It's designed to be inclusive by default, with issuance, supply, and access directly tied to participation, not prior wealth.

  

Thanks to CoW Protocol's infrastructure, CRC can now move securely across the network without value leakage, [frontrunning](https://cow.fi/learn/what-is-frontrunning), or middlemen.

## The Problem Circles Solves

  

Money, as we know it, comes with baggage. Whether it's fiat currencies backed by states or crypto assets dominated by early adopters, the system tends to reward proximity to power: political, financial, or technological.

  

Circles was created to break that cycle.National currencies, like the US dollar, serve their issuing countries - not the world. If you're outside that sphere of influence, you're at the mercy of someone else's economic decisions.

  

Bitcoin, for all its innovation, isn't immune either. Its fixed supply has led to extreme wealth concentration - over 94% of the supply is [held by less than 3% of users](https://coinshares.com/corp/insights/knowledge/crypto-whales-is-there-a-concentration-risk/). It's not designed to grow with new participants. It's designed to reward the first ones through the door.

  

Circles does it differently.

  

-   Issuance is distributed, continuously, to every user. No one starts with an edge.
    
-   Supply adapts to participation. More people? More money.
    
-   Value is earned through trust, not through mining rigs, financial engineering, or political connections.
    

  

There's also a built-in demurrage mechanism: money gradually loses value if it just sits there. That's not a bug; it's a feature. It nudges the system toward circulation, not accumulation. In a Circles economy, the healthiest wallet isn't the biggest, it's the one that's being used.

  

And unlike most systems where you rely on central banks or code to protect against manipulation, Circles relies on something more human: your social graph. Trust becomes the gatekeeper. Not perfect, but harder to game than most alternatives.

## CoW Protocol's Role: More Than Infrastructure

  

At its core, Circles relies on users being able to trade their CRCs, to turn personal trust networks into real economic coordination. That means safe, efficient, and manipulation-resistant transactions are non-negotiable. And CoW Protocol delivers exactly that.

  

Here's what CoW Protocol makes possible for Circles:

  

-   **Trustless Trade Execution:** Every user issues their own CRC. Trading between different CRCs-or between individual and Group-CRC-requires a neutral, reliable settlement layer. CoW Protocol handles this with batch auctions that prevent [frontrunning](https://cow.fi/learn/what-is-frontrunning) and maximize fairness.
    
-   **MEV Protection by Design:** Without protection, value leaks from users to arbitrage bots. Circles' commitment to fair distribution would fall apart in a hostile mempool. CoW Protocol's design protects users from [MEV](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem?ref=learn_search) extraction, maintaining the economic integrity Circles is built on.
    
-   **Permissionless, Efficient, and Decentralized:** No whitelists. No gatekeepers. Just a protocol that lets anyone connect and transact, no matter where-or who-they are. Exactly in line with Circles' vision of global accessibility.
    

  

The result? Circles users can focus on trust and participation, knowing that the trading layer they rely on is secure, neutral, and built to align with their values.

  

CoW Protocol didn't just provide the rails-it helped shape the terrain. When you're trying to redesign money from the ground up, you need infrastructure that doesn't quietly re-centralize control behind the scenes. CoW Protocol was the right fit because it stays out of the way-but still does the heavy lifting.

## Why CoW Protocol?

Circles didn't just need infrastructure-it needed infrastructure it could trust.

Launching a new currency system, especially one this radical, comes with serious requirements: neutrality, security, scale, and a rock-solid commitment to user protection. That's why Circles chose CoW Protocol.

Because CoW doesn't just offer trade execution-it offers execution without compromise. It's what happens when you design for fairness from the start. [MEV protection](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem?ref=learn_search) isn't a bolt-on; it's built in. Trustlessness isn't marketing-it's the baseline.

And that's exactly why more projects building for the long haul-not just the next hype cycle-are choosing CoW Protocol. If you're designing mechanisms for real coordination, real value exchange, and real users, you need infrastructure that won't quietly undermine your goals.

Circles is bold. It's ambitious. And it's now live. CoW Protocol helped make that possible-not with fanfare, but with fundamentals.

If you're building something big, something that needs to work when the market isn't watching, you go where the infrastructure matches your ambition.

You go to CoW Protocol.

Mooo.

[Come talk to us.](https://discord.com/invite/cowprotocol)

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Gnosis launches Circles, a new type of decentralized currency, powered by CoW Protocol

Gnosis Launches Circles — A New Era of Decentralized Currency, Powered by CoW Protocol

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Every move you make on a decentralized exchange: from scoping out token prices to sealing the deal on a trade relies on one critical piece of infrastructure: RPC endpoints. These endpoints are the unsung heroes that connect DEXs to the blockchain, translating your intent into on-chain action. When RPC performance falters, so does the entire trading experience. For traders, this can mean missed opportunities, failed transactions, and unnecessary friction. For seamless, reliable, and MEV-resistant trading, high-quality RPC endpoints aren't just helpful, they're essential.

  

In this post we’ll be exploring how RPC endpoints impact DEX trading, the benefits of endpoints, and how you can use them to enhance security.

## The basics: Remote Procedure Protocol endpoints

In simple terms, a [Remote Procedure Call (RPC)](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao) is the bridge between your wallet and the blockchain. It's a communication protocol that lets one program (like your wallet interface) request data or actions from another program (like a blockchain node) - even if it's sitting on a completely different machine.

  

When you interact with a DEX, send a trade, or check your wallet balance, it's not magic - it's your wallet using an RPC endpoint to talk to the network. Think of the RPC as the translator and dispatcher. It routes your requests - whether it's querying token balances, fetching gas prices, or submitting a transaction - straight to the blockchain and back again, ideally in milliseconds.

  

For traders, this infrastructure matters more than you think. A reliable RPC endpoint means faster confirmations, accurate balance checks, and lower chances of failed transactions. A slow or overloaded RPC? That can mean missed opportunities, stale data, or frustrating reverts.

  

Most wallets and dApps connect to public RPCs by default - which are often crowded. But using custom or private RPCs (like [MEV Blocker](https://cow.fi/mev-blocker)) can improve your trading experience by reducing latency, increasing throughput, and ensuring you're always working with up-to-date on-chain information.

  

Bottom line: if you're serious about trading on-chain, you should know how your wallet connects to the blockchain - and why the RPC behind it might be the quiet MVP of your whole setup.

### RPC endpoints streamline and secure crypto transactions

  

At its core, an RPC endpoint is what ensures your wallet can communicate with the blockchain. But beyond that, it plays a direct role in how fast, reliable, and cost-effective your transactions are.

  

Let's break it down:

  

Reliability: In high-traffic situations - like NFT mints, token launches, or market surges - public RPCs can become congested. This increases the risk of failed or delayed transactions. A robust RPC endpoint keeps your transactions moving, making sure they reach the mempool and are broadcast to the network without unnecessary friction.

  

Speed: Execution speed can directly impact trading outcomes. Whether you're arbitraging, swapping, or cancelling an order, every second counts. A fast RPC connection minimizes latency and ensures that your orders are submitted and confirmed quickly - helping you secure better pricing and reduce slippage in volatile markets.

  

Lower Gas Fees: Accurate gas estimation is key to efficient trading. Good RPC endpoints provide up-to-date block data and fee suggestions, helping you avoid overpaying - or worse, underpaying and having a transaction fail. By optimizing how transactions are priced and prioritized, they help you minimize costs without compromising execution.

  

In short: the right RPC endpoint doesn't just connect you to the chain - it actively improves your ability to trade smarter, faster, and cheaper..

## Public vs. private RPC endpoints

Not all RPC endpoints are created equal - especially when it comes to visibility. And in crypto, visibility = vulnerability.

  

When you send a transaction through a public RPC endpoint (like Infura, Alchemy, or QuickNode), your transaction enters the public mempool. That's essentially a waiting room where anyone - including [MEV bots](https://cow.fi/learn/what-are-mev-bots-and-how-do-they-make-money?ref=learn_search) - can see your order before it's confirmed. This exposure opens the door to MEV attacks: [frontrunning](https://cow.fi/learn/what-is-frontrunning?ref=learn_search), [sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself?ref=learn_search), and [backruns](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained?ref=learn_search) that can extract value from your trades without your consent.

  

In contrast, private RPC endpoints are designed to shield your transactions from public view. Tools like [MEV Blocker](https://cow.fi/mev-blocker) route your transaction through private relays - keeping it out of the public mempool and out of reach of predatory bots. This significantly reduces the chance of being targeted by MEV strategies that eat into your profits.

  

The difference comes down to who sees your transaction before it hits the chain. With private endpoints, visibility is limited to trusted relays. With public endpoints, it's a free-for-all.

  

There's another layer worth noting: tracking. Some public RPC providers have been known to log transaction metadata, wallet behavior, and trading patterns. While it may not be malicious, it's another form of exposure that privacy-conscious traders should care about.

  

So the choice is strategic. Public RPCs offer accessibility. Private RPCs offer protection. If you're actively trading, experimenting with new protocols, or just want to avoid unnecessary MEV slippage, switching to a private endpoint might be one of the lowest-lift, highest-impact moves you can make.

  

The below chart helps explain the differences between public and private RPC endpoints more clearly.
![White Yellow and Pink Minimalist Brand Comparison Chart.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/White_Yellow_and_Pink_Minimalist_Brand_Comparison_Chart_0592ba1c35.png)


## How private RPC endpoints protect against MEV

Privacy is the foundation of MEV protection - but it's not the whole picture. Once your transaction is hidden from the public mempool, what happens next depends on how that private system is designed. The best RPC endpoints don't stop at concealment. They actively optimize for fair execution, value sharing, and transaction reliability.

  

Let's break it down:

  

**Trusted Validators**

In a private RPC environment, your transaction doesn't just need privacy - it needs a trustworthy path to the chain. That's where curated validator sets come in. These are validators that commit to ethical execution - no frontrunning, no sandwiching, no games. It ensures that even after your transaction is out of public view, it's not being manipulated by bad actors at the validator level.

  

**Rebates via Backrunning**

Here's where privacy meets strategy. Some RPC endpoints - like [MEV Blocker](https://cow.fi/mev-blocker) and advanced bundlers - selectively allow backrunning (executing a transaction immediately after yours) in controlled environments. We call them rebates. When value is extracted, a portion of that MEV is given back to you. That turns what was once a loss into a financial incentive, helping offset gas fees or increase net gains.

  

**Preventing Reverts**

Failed transactions waste gas and erode trust. Smart RPC endpoints validate transactions before inclusion, or cancel the broadcast altogether if the transaction becomes invalid (due to price changes, slippage, etc.). The result? Fewer reverts, fewer surprises, and more confidence at the point of click.

  

Together, these tactics turn a private RPC from a black box into a value-aligned pipeline - one that protects, rewards, and optimizes every transaction you send.

### Protective endpoints in MEV Blocker

  

[MEV Blocker](https://cow.fi/mev-blocker) is more than just a private RPC - it's a purpose-built shield against the most common and costly MEV (Maximal Extractable Value) attacks, like frontrunning and sandwiching. By routing transactions away from the public mempool and through a private network of trusted searchers, or solvers as we call them, it helps ensure your trades land where they should - not as profit opportunities for bots.

  

But not all trades are the same. That's why MEV Blocker offers multiple RPC configurations, giving users the flexibility to choose what they care about most: speed, privacy, reliability, or rewards.

  

Here's how each endpoint works:

  

-   Fast Endpoint: Best for speed and simplicity. This endpoint offers basic MEV protection and potential rebates, routing your transaction through trusted searchers. It's built for fast inclusion but doesn't guard against transaction reverts.
    

  

-   Full Privacy Endpoint: Designed for maximum confidentiality. Your transaction is sent directly to builders, skipping searchers entirely. This offers the strongest privacy and MEV protection, and crucially, prevents reverts. The tradeoff? No rebate opportunities.
    

  

-   No-Revert Endpoint: Optimized for reliability. This option blocks invalid transactions from being broadcast at all, eliminating reverts and wasted gas. It includes both MEV protection and rebate potential, striking a strong balance between safety and efficiency.
    

  

-   Max Backruns Endpoint: Ideal for value maximizers. This endpoint widely shares your transaction with trusted searchers to enable maximum rebate opportunities. It protects against harmful MEV but doesn't prevent reverts, so timing matters.
    

  

With MEV Blocker, users can match their transaction goals to a routing strategy - and finally take control of how their orders are handled on-chain.
![Endpoints_protection-67030b0090420baaac8caa8a6c45a3ec.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Endpoints_protection_67030b0090420baaac8caa8a6c45a3ec_51346ea583.png)


## How CoW integrates RPC endpoints with a meta-DEX

  

At [CoW Swap](https://cow.fi/cow-swap), protecting users from MEV isn't an afterthought - it's built into the infrastructure. By integrating MEV Blocker's RPC endpoints directly into its trading flow, CoW Swap ensures that [every user transaction benefits from privacy, security, and optimized execution.](https://cow.fi/learn/what-are-cows-on-cow-swap)

  

Here's how it works under the hood:

  

When a user initiates a trade on CoW Swap, the transaction is routed through a private RPC endpoint. This prevents it from entering the public mempool - where it could be exposed to frontrunning or sandwich attacks - and instead channels it through MEV Blocker's protected environment.

  

But the benefits go beyond shielding. CoW Swap uses its RPC layer to power batch auctions, where multiple orders are settled together in tightly timed blocks. This approach enables:

  

-   Improved price discovery
    
-   Reduced slippage
    
-   Efficient gas usage
    

  

Instead of competing with bots, your order joins a group - [and solvers (specialized agents) compete to fill those orders at the best possible rate.](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)

  

Traders can also submit ["intent to trade" messages](https://cow.fi/learn/what-are-cows-on-cow-swap) - statements of what they want to swap, under what conditions. These intents are transmitted via the RPC layer to the CoW Protocol, where solvers then route liquidity from the most efficient source - whether that's a matching user order or a DEX like Uniswap, Balancer, Curve or even private liquidity pools most users wouldn’t be able to access.

  

The result? Users trade on their terms, with better protection, better pricing, and zero need to micromanage execution risk.

  

This isn't just a DEX. It's a meta-DEX - one that uses smart routing and a privacy-first RPC network to reshape how trades are made in DeFi.

## Endpoint architecture: full, light, and archive nodes

Behind every RPC endpoint is a network of Ethereum nodes - each serving a different purpose depending on how much data they store and how fast they can serve it. For traders, understanding this architecture helps clarify why certain endpoints feel faster, offer more context, or provide deeper visibility into past activity.

  

Here's the breakdown:

### Full Nodes

  

These are the workhorses of the RPC world. Full nodes maintain all current blockchain data: recent transactions, token balances, smart contract states, and real-time event logs. They don't store the full history of Ethereum, but they have everything you need to trade, manage positions, and interact with live protocols.

  

CoW Swap's MEV Blocker operates on full nodes - ensuring up-to-date data and fast response times without compromising on MEV protection.

  

Best for: Active trading, portfolio tracking, and real-time DEX interactions.

### Light Nodes

Light nodes play a crucial role in blockchain ecosystems by offering a leaner, more resource-efficient alternative to full or archive nodes. Instead of storing the entire blockchain, light nodes retain only the most essential data, such as block headers. This allows them to verify the validity of transactions without needing the full transaction history or state data.

  

They're key for:

 - **Resource-Constrained Environments:** Ideal for mobile wallets, browser extensions, or lightweight applications where full node storage isn’t feasible.
 - **Quick Access to Basic Blockchain Data**: Useful for fast tasks like checking balances, verifying transaction inclusion, or syncing recent blocks without downloading the full chain.
 - **Interfacing with Full Nodes**: Serve as efficient front-ends that delegate heavy computation and validation to trusted full nodes, enabling low-bandwidth blockchain access.
    
Best for: Traders looking for quick, esay access to simple onchain data. .

### Archive Nodes

  Archive nodes store compressed blockchain data and rely on full nodes to fetch deeper details. But where they shine is in access to historical trading data - past balances, old transactions, and smart contract logs.

They're key for:

 - **Historical market analysis**
 - **Advanced trading strategies**
 - **Deep audit trails and analytics**

**Best for:** Traders doing historical performance reviews, tax reports, or backtesting.

  

Different nodes serve different needs - and the right RPC setup will prioritize node types based on the use case: speed, history, privacy, or resilience.

## Setting up RPC endpoints with MEV Blocker

Getting started with MEV Blocker is a low-friction, high-impact upgrade for any trader or dApp builder looking to protect users from MEV exploitation. Whether you're an active DeFi user or a developer building for others, the setup process is straightforward - and worth doing right.

#### 1. Select the Right Endpoint for Your Needs

Start by identifying what matters most in your trading or application flow:

  

-   Speed? Use the Fast endpoint.
    
-   Privacy and revert protection? Go with Full Privacy.
    
-   Reliability? Choose No-Revert.
    
-   Rebates and value sharing? Try Max Backruns.
    

  

Each endpoint is tuned for a specific tradeoff between protection, performance, and incentives. Choosing the right one ensures you're aligning the tech with your strategy - whether that's sniping a price, safeguarding a large order, or routing user transactions at scale.

#### 2. Integrate the MEV Blocker Endpoint

Once you've chosen your endpoint, integration is as simple as replacing the default RPC URL in your wallet, script, or frontend with the [MEV Blocker URL](https://cow.fi/mev-blocker).

  

Most wallets (e.g., MetaMask, Rabby) allow easy RPC switching. For developers, simply update your Web3 provider or backend config. This swap immediately routes your transactions away from the public mempool and through a privacy-preserving pipeline.

#### 3. Test for Connectivity and Stability

Run a few test transactions or simulated calls through the new endpoint. Confirm that:

-   Transactions are sent and confirmed successfully.
    
-   Gas estimates and responses are accurate.
    
-   No unexpected errors surface in your stack.
    
-   This ensures confidence before putting real capital at risk.
    

#### 4. Monitor Performance and Stay Updated

Set up basic monitoring: track transaction success rates, watch for latency issues, and check logs for abnormalities. CoW.fi may update endpoint availability or add new features - staying informed keeps your connection secure and high-performing.

  

With the right endpoint, a few config changes, and some initial testing, MEV protection becomes not just possible - but effortless and native to your workflow.

## Tips for developers: implementing RPC endpoints

For developers building dApps, trading tools, or wallet integrations, switching to a private RPC endpoint is one of the simplest ways to protect users from MEV and improve transaction reliability. Here's how to implement it with minimal friction - and maximum impact.

#### 1. Evaluate Your RPC Provider Carefully

Not all RPCs are created equal. Choose providers with:

-   High uptime and low latency
    
-   Proven MEV protection features
    
-   Transparent policies around data use
    
-   A solid reputation in the Ethereum dev community
    

  

[MEV Blocker](https://cow.fi/mev-blocker), built by CoW Protocol, is a strong choice - designed to align execution with user interests, not extract value from them.

#### 2. Replace Public RPCs with Private Endpoints

Wherever your app defines its Ethereum provider, swap in a private RPC URL. This can be done in:

  

-   MetaMask settings
    
-   Custom wallet configs
    
-   Backend infrastructure (e.g., INFURA_URL → MEV_BLOCKER_URL)
    

Use endpoint URLs that match your app's priorities: speed, privacy, no-reverts, or rebate-maximization.

#### 3. Integrate with Popular Frameworks Easily

Whether you're using React, Node.js, Web3.js, or Ethers.js, integration is straightforward. For example:

import { ethers } from 'ethers';

const provider = new ethers.JsonRpcProvider('https://rpc.mevblocker.org');

Use vetted documentation and keep implementation lightweight.

#### 4. Follow Transaction Privacy Best Practices

  

Below are the three key areas to think about thinking about preserving privacy.

  

-   Consider transaction batching to reduce exposure.
    
-   Use encrypted connections (https://, not http://).
    
-   Route through private mempools to avoid public broadcast.
    

#### 5. Monitor and Log Endpoint Access

  

Set up logs to track:

-   RPC call volume
    
-   Error rates
    
-   Latency spikes
    
-   Unexpected request patterns
    

  

This helps detect outages, catch anomalies, and ensure users are always protected.

### Next steps

Interested in learning more about [MEV Blocker](https://cow.fi/mev-blocker)? [Try this guide.](https://cow.fi/learn/what-does-an-mev-blocker-do)

  

Want to learn more about how meta-DEXs like CoW can integrate private endpoints? Try these related resources:

-   [A guide to MEV on Ethereum - CoW DAO](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao)
    
-   [What is a Meta DEX - and why should you use it for your trades? - CoW DAO](https://cow.fi/learn/what-is-a-meta-dex-and-why-should-you-use-it-for-your-trades)
    
-   [How to choose a DEX aggregator - CoW DAO](https://cow.fi/learn/dex-aggregator-how-to-choose)

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Learn how Ethereum RPC endpoints impact DEX trading, the benefits of private endpoints like MEV Blocker, and strategies to securely enhance transaction success.

Understanding RPC endpoints for Ethereum

![TWAP-SWAP.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/TWAP_SWAP_7bec784be7.png)
In DeFi, trading is simple-until it's not.

  

You might think executing a trade is just a matter of clicking "Swap" and watching the transaction confirm. And sure, that works... if you're moving a few hundred dollars, market conditions are calm, and you don't mind leaking a little value along the way.

  

But when you're trading size, dealing with volatile assets, or looking to manage your impact on the market, the story changes. Suddenly, execution becomes a strategy in itself.

  

That's where the choice between a spot swap and a [TWAP](https://cow.fi/learn/why-twap?ref=learn_search) (time-weighted average price) trade comes in. Both are powerful tools - but they solve different problems.

  

Spot swaps are fast and decisive. You want in, you get in-immediately. TWAPs are patient. They break your order into smaller chunks, executing over time to reduce slippage and market impact. At CoW DAO, we've built infrastructure that supports both strategies seamlessly - and more importantly, protects every trade with gasless execution and native MEV resistance.

  

So how do you decide when to swap and when to TWAP? This article breaks it down. We'll explore how each trade type works, when to use them, and why CoW Protocol's architecture gives you a serious edge - whether you're dollar-cost averaging into ETH or offloading a DAO treasury position with minimal impact.

  

Because in a world where execution costs can quietly eat into every move you make, knowing how, and when to use the right tool isn't just smart. It's essential.

## Swapping 101: The Instant Trade

  

Let's start with the basics: a swap is your standard, immediate crypto trade. You specify what token you want to sell, what token you want in return, and the trade gets executed at the best available price at that moment. It's fast, efficient, and when done right, cost-effective. Most users in DeFi are already familiar with swapping, and many rely on it as their go-to trade type. But the devil's in the details.

  

In traditional DEX interfaces like Uniswap or SushiSwap, swaps are routed through a single automated market maker (AMM). The trade executes instantly, but that doesn't always mean you're getting the best price. Why? Because liquidity is fragmented across chains and pools - and AMMs don't compete for your order. That's where CoW Swap changes the game.

### How CoW Swap handles swaps differently

  

When you submit a swap on CoW Swap, your order isn't sent straight to a DEX. Instead, it enters a batch auction where professional solvers compete to fill your trade with the best possible execution. These solvers pull liquidity from across multiple sources - including major aggregators like 1inch and Paraswap - ensuring you don't miss a better price elsewhere.

### When swaps shine

Swaps are perfect when:

  

-   You're trading a smaller amount of tokens
    
-   You want immediate execution
    
-   Market conditions are stable
    
-   You're reacting to a short-term price move or narrative
    

  

In other words, swaps are the tool for fast, reactive trading - when you just want to get in or out. But what if you're trading size, or worried about price impact? That's where TWAP comes in. Let's break it down.

## TWAP 101: Time-Weighted Average Price, Explained

  

Let's say you're not trading $500. You're trading $50,000. Or $500,000. Or you're a DAO looking to rotate a treasury position without causing a price swing. Now your trade isn't just a transaction - it's a signal. And if you dump it all at once, the market hears it loud and clear. That's where TWAP comes in.

  

[Time-Weighted Average Price (TWAP](https://cow.fi/learn/why-twap?ref=learn_search)) is a strategy that splits your trade into smaller chunks, executing them gradually over time. It's designed to minimise price impact, reduce slippage, and protect the integrity of your order.

  

TWAP is about patience. Instead of throwing your full trade at the market in one go, it smooths it out-so you're not front-running yourself or triggering volatility.

### How TWAP works on CoW Swap

  

TWAP on CoW Swap isn't a workaround or a bolt-on. It's built directly into the protocol.

You define:

-   The total size of the trade
    
-   How long you want it to execute over
    
-   The frequency of each chunk (e.g. every 5 mins, hourly, etc.)
    

  

Then CoW Swap's solvers go to work. Each chunk is handled just like a standard swap:

-   Routed via solver competition
    
-   Aggregated across liquidity sources
    
-   Executed with built-in MEV protection
    

  

So instead of manually scheduling trades - or relying on opaque, off-chain bots - CoW Swap gives you a decentralised, automated way to execute large trades responsibly.

### Why TWAP matters

  

A good TWAP doesn't just help with slippage - it helps with narrative control. Big moves can trigger copy-trading bots, speculation, and even front-running by market observers. TWAP lets you move size quietly, efficiently, and without tipping your hand.

### When TWAP makes sense

  

TWAP is ideal when:

-   You're trading a large amount of tokens
    
-   You want to avoid price slippage
    
-   You're managing DAO or treasury funds
    
-   You're dollar-cost averaging over time
    
-   You're rebalancing a portfolio
    

  

It's a trade type that values execution quality over speed - and when you're dealing with size, that difference can mean thousands saved.

## 4 Key Differences: Swap vs TWAP

  

Swaps and TWAPs aren't competing strategies-they're tools in the same toolbox. The trick is knowing which one fits your trade.

  

To make it simple, here's how they stack up:

  



  

### The real difference: control vs. fine tuning

  

Swaps are the right call when:

  

-   You need speed
    
-   Market conditions are stable
    
-   Trade size is modest
    
-   You're capitalising on short-term volatility or narrative momentum
    

  

TWAPs are better when:

  

-   You're trading size and care about execution quality
    
-   You want to avoid signalling to the market
    
-   Slippage or volatility is a concern
    
-   You're managing capital over time, not in a rush
    

  

CoW Swap makes both strategies seamless. You don't need a bot. You don't need a script. You don't even need to think about [MEV](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search) - the protocol handles that for you.

  

This is the evolution of execution. And it's not just about saving money-it's about preserving value in every trade.

## When to use each strategy

  

If you've ever stared at your screen wondering whether to just hit "swap" or take it slow-this section is for you.

  

There's no one-size-fits-all rule in DeFi. But there are patterns. Here's how to think about when to use a Swap vs a TWAP, depending on your trading style, size, and goals.

  

Swaps are the move when:

  

-   You're trading small to mid-sized amounts (under ~$10-20k, depending on token liquidity)
    

-   You want to react quickly to news, price action, or an airdrop meta
    

-   The market is relatively stable and you're not worried about slippage
    

-   You're arbitraging or farming and execution speed matters more than microscopic price savings
    

  

Examples:

  

-   Buying $3,000 of ETH after a dip
    
-   Swapping stablecoins to LP into a pool
    
-   Exiting a small speculative position before a token unlock
    

  

CoW Swap wins here because even small swaps get:

  

-   MEV protection
    
-   [Gasless execution (in certain trades)](https://cow.fi/learn/announcing-gasless-approvals-on-cow-swap)
    
-   Price competition across solvers + DEXs
    

  

No rushing through MetaMask approvals..

  

TWAP is your go-to when:

  

-   You're trading a large amount and don't want to move the market
    
-   You're managing DAO funds or making treasury decisions
    
-   You're rebalancing a large position (e.g., rotating from ETH to stETH)
    
-   You want to spread execution over time (e.g., DCA, slow accumulation)
    

  

Examples:

  

-   Selling $250,000 worth of a governance token into stablecoins
    
-   A DAO converting ETH to DAI over 12 hours to fund a grant
    
-   A whale DCAing into stETH using hourly chunks over a weekend
    
-   On CoW Swap, TWAP means:
    

-   Each portion of the trade is MEV-protected
    
-   No bots, scripts, or external infra needed
    
-   Solvers still compete to get you the best rate on every slice
    

  

And all of this is decentralised and trustless - no need to rely on centralised OTC desks or off-chain order managers.Bottom line?

  

-   Use Swap when you want speed and simplicity
    

-   Use TWAP when you want control and capital efficiency
    

  

CoW Swap doesn't just offer both-it optimises both, in ways no other DEX currently does.

## Why It Matters: Slippage, MEV, and Efficiency

  

In DeFi, what you see isn't always what you get. You click "swap" expecting 1 ETH. You receive 0.986. Where'd the rest go? The answer usually lives in three places: slippage, MEV, and execution inefficiency. All of which CoW Swap is built to solve.

### Slippage: The Hidden Leak

Slippage happens when the price you expect is different from the price you get. In fast-moving or low-liquidity markets, even modest trades can nudge the market price enough to cost you value-especially when liquidity is fragmented across DEXs.

  

The bigger the trade, the more pronounced the slippage. Without mitigation, you could end up losing thousands just by executing too quickly. TWAP helps you manage slippage by breaking large trades into smaller parts, letting each chunk execute with less market impact.

  

CoW Swap helps even more by routing each chunk through the most efficient, competitive path - without needing you to think about it.

### MEV: The Attack You Don't See

[MEV (Maximal Extractable Value)](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search) is what happens when bots front-run or sandwich your trade, squeezing value out of your transaction. It's invisible until you check what you should have received. Most DEXs don't protect against MEV. CoW Swap does - by design. That’s because:

  

-   Trades are batched into auctions
    
-   Solvers compete to win orders based on price + protection
    
-   Your transaction isn't broadcast to the mempool, so bots can't exploit it
    

  

This means no front-running, no sandwich attacks, no value extraction. Whether you're swapping or TWAPing, your trade is sealed off from predatory behaviour.

  

[Find out more about MEV here.](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search)

### Execution Efficiency: The Overlooked Edge

Gas costs, failed transactions, route complexity-these are friction points most traders accept without question. But on CoW Swap, they're abstracted away.

  

-   Gasless trades - solvers pay gas on certain trades, you don't
    
-   No manual routing - solver competition handles it
    
-   No approval bottlenecks - trade once, settle cleanly
    

  

You focus on what to trade. CoW Swap handles how to trade it-safely, optimally, and without hidden costs. In DeFi, every basis point counts. Slippage, MEV, and inefficiency may look small in the moment - but over time, they bleed value. CoW Swap protects against all three, whether you're trading fast or slow.

## Why CoW Swap is Built for Both

  

Most DEXs are optimised for one type of trade. You get either fast, single-shot swaps with minimal intelligence... or you get clunky, manual workarounds for large trades that don't scale. CoW Swap is built differently. It doesn't just support swaps and TWAPs-it optimises both at a protocol level, using the same core advantage: competitive solver infrastructure, batch auctions, and MEV-resistance baked in.

  

Here's how that plays out for each trade type:

### Instant Swaps on CoW Swap

  

Whether you're swapping a few hundred dollars or ten grand, you benefit from:

-   Solver competition: Each order is matched through a batch auction, with solvers competing to give you the best execution.
    
-   Aggregator access: CoW Swap taps into liquidity from leading aggregators like 1inch, Paraswap, and DEXs directly. You're not limited to a single pool.
    
-   MEV protection: Orders aren't broadcast to the mempool, so bots can't front-run or sandwich your trade.
    

  

Result? Even small swaps feel institutional. You get execution quality typically reserved for whales and bots-without having to be either.

### TWAP Trades on CoW Swap

  

Large, complex trades demand finesse. With CoW Swap TWAPs, you're getting:

  

-   Fully customisable scheduling: Set the duration and frequency of your TWAP-hourly, daily, or any interval you want.
    
-   Chunk-by-chunk solver optimisation: Every slice of your TWAP gets its own auction, its own protection, and its own price competition.
    
-   Composability with DAOs and smart contracts: TWAPs can be integrated into automated treasury strategies, multisigs, or vaults-without needing external infrastructure or bots.
    

  

And because the same infrastructure powers both trade types, there's no tradeoff between safety and sophistication.

## Why this matters

CoW Swap doesn't just give you options. It gives you better options: whether you're making a one-click swap on mobile or executing a $2M DAI-to-ETH rebalancing over 48 hours. Other DEXs make you choose between speed and strategy. CoW Swap delivers both-without sacrificing protection, efficiency, or control.

## TL;DR: Swap or TWAP? A Quick Decision Guide

Still unsure which trade type is right for you? Here's a no-fluff cheat sheet to help you decide between a Swap and a TWAP on CoW Swap.

### Use a Swap when:

-   You want immediate execution
    
-   You're trading small to mid-sized amounts
    
-   The market is relatively stable
    
-   You're reacting to short-term narratives or price shifts
    
-   You don't want to think too hard-just hit swap and go
    

  

On CoW Swap, you still get:

  

-   MEV protection
    

-   Gasless trades
    
-   Aggregated best-price routing
    

### Use a TWAP when:

-   You're trading large size
    
-   You want to avoid slippage or market impact
    
-   You're managing DAO, treasury, or whale-level funds
    
-   You want to accumulate or offload slowly
    
-   You need a custom execution strategy over time
    

  

On CoW Swap, your TWAP gets:

-   Solver competition on every slice
    
-   Built-in MEV shielding
    
-   Full flexibility, no bot needed
    

### TL;DR Decision Flow:

-   Trading small and fast? → Use a Swap
    
-   Trading big or over time? → Use a TWAP
    
-   Want best execution and protection either way? → Use CoW Swap
    

## Ready to trade smarter?

  

Head to [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) and try a swap or TWAP-gasless, MEV-free, solver-optimised. Because in DeFi, every basis point counts. And CoW Swap was built to protect all of them.

  

Interested in learning about TWAP orders?

Check out the below.

-   [Getting to Grips with Time-Weighted Average Price (TWAP) orders](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders?ref=learn_search)
    
-   [How to use CoW Swap’s TWAP orders via Safe Wallet](https://cow.fi/learn/how-to-use-cow-swap-twap-orders-via-safe-wallet?ref=learn_search)
    
-   [Why TWAP?](https://cow.fi/learn/why-twap?ref=learn_search)

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We'll explore how each trade type works, when to use them, and why CoW Protocol's architecture gives you a serious edge.

When to Swap and when to TWAP

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This guide explores MEV in the context of cross-chain interactions, examining how it works, who it impacts, and what solutions may lie ahead.

Understanding Cross-Chain MEV

As decentralized finance (DeFi) continues to evolve, a new breed of algorithmic traders has emerged: MEV bots. MEV, or Miner Extractable Value (now more broadly referred to as Maximal Extractable Value), has become a critical concept in understanding the economics of blockchain networks, particularly Ethereum. These bots exploit the mechanics of block production to extract profits, often in ways invisible to the average DeFi user.

This article explores what MEV bots are, how they operate, the strategies they use to earn profits, and the risks they pose to the DeFi ecosystem.

### What Is MEV?

MEV refers to the value that can be extracted from a blockchain transaction beyond standard fees. This extraction is done by reordering, inserting, or censoring transactions before they are confirmed on-chain.

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

There are lots of different ways MEV can take place on Ethereum, which we'll explore further down in the article. But for now, it's important to understand the mechanics of MEV, and their presence on many chains like Ethereum.

### What Are MEV Bots?

MEV bots are automated programs - or "searchers" - designed to scan the mempool for profitable opportunities and execute transactions that maximize extractable value. These bots typically run with low latency, operating within milliseconds to front-run, back-run, or sandwich user transactions.

They are often connected directly to validators or use private relay networks like Flashbots to gain preferential access to blockspace and avoid detection or retaliation.

### How MEV Bots Operate

MEV bots scan the mempool for patterns that can be exploited. Once a profitable transaction is identified, the bot crafts a bundle of transactions that captures the value and submits it for inclusion in the next block.

Bots are designed with specialized algorithms capable of:

-   Monitoring decentralized exchanges (DEXs) for price discrepancies.
    
-   Simulating transaction outcomes using blockchain state.
    
-   Submitting arbitrage, liquidation, or manipulation transactions with precision timing.
    

Many MEV bots use private relays like Flashbots, which provide a way to send transaction bundles directly to validators without exposing them to the public mempool.

## MEV Bot Strategies

#### 1. Arbitrage

MEV arbitrage bots identify and exploit price differences for the same asset across different decentralized exchanges or DEXes. This is also known as loss versus rebalancing. These bots look for a token price to be higher or lower on different exchanges, and then exploit the price difference between the two. Many liquidity providers haven't even heard of LVR, but it costs them 5-7% of their liquidity, resulting in hundreds of millions lost each year. In fact, when accounting for LVR, many of the largest liquidity pools are not profitable for LPs at all.  [Learn more about LVR.](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr)

#### 2. Sandwich Attacks

Sandwich attacks occur when a user's transaction gets trapped, or "sandwiched," between two hostile transactions - one before and one after. As a result, the original transaction executes at a much higher price than necessary, leading to an inflated price for the original trader and a profit for the malicious trader placing the two extra trades (known as a "searcher").  [Learn more about sandwich attacks.](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself)

#### 3. Liquidation Hunting

Liquidation bots specialise in monitoring lending platforms looking for undercollateralized loans. If a borrower's collateral falls below a required threshold, these bots execute liquidation transactions to claim rewards.

#### 4. Backrunning

Backrunning is a specific type of MEV (Maximal Extractable Value) which causes some traders to miss out on potential profit opportunities from their trades. In practice, backrunning involves strategically executing a transaction immediately after another, high-value transaction. By doing this, the backrunning transaction capitalizes on the arbitrage opportunity left over from the  [price impact](https://cow.fi/learn/cow-protocol-glossary#:~:text=Price%20impact)  of the initial transaction.  [Learn more about backrunning.](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained)

## Key Characteristics of MEV Bots

#### 1. Gas Fee Optimization

A fundamental challenge for MEV bots is managing gas fees. To successfully position a profitable transaction, a bot must bid just enough gas to be included quickly, but not so much that it eats into its margins. If it underbids, the opportunity may be lost to a faster competitor. The constant push-pull between speed and efficiency is critical in highly competitive mempool environments.

#### 2. Smart Contract Intelligence

Modern MEV bots aren't just reactive, they're analytical. Using complex algorithms, these bots dive deep into smart contracts, evaluating liquidity pools, token behaviors, and execution logic. They can assess the feasibility and profitability of complex trades across multiple contracts, even in split-second windows.

#### 3. Autonomous Execution

Speed is everything in MEV. These bots are designed to operate independently, constantly monitoring conditions, identifying patterns, and executing trades without human intervention. This autonomy enables them to react instantly when profit windows appear, making decisions at a speed no manual trader could match.

#### 4. Mempool Surveillance

MEV bots are essentially mempool watchers. They observe unconfirmed transactions, analyze them for profitable setups, and react accordingly. Depending on the strategy, a bot may look for large trades it can sandwich, vulnerable loans it can liquidate, or price discrepancies it can exploit through arbitrage. Their ability to see - and act on - these pending transactions is what makes them so effective.

## Real-World Examples of MEV in Action

One of the most well-known MEV incidents involved a bot that  [earned more than $1 million in ETH from](https://cryptorank.io/news/feed/7035e-ethereum-mev-bots-profitable-days)  reproducing and front-running an incoming hack in the Curve stablepools. This event showcased not only the profitability of MEV but also its potential to destabilize markets when unchecked.

Since 2020, crypto users have lost  [more than $1.8 billion](https://www.esma.europa.eu/sites/default/files/2025-01/ESMA75-453128700-1391_Joint_Report_on_recent_developments_in_crypto-assets__Art_142_MiCA_.pdf?utm_)  to malicious  [Maximal Extractable Value](https://www.ccn.com/education/crypto/mev-maximal-extractable-value-in-crypto-explainer/)  (MEV) extraction - not through dramatic hacks or bold heists, but through systematic exploitation happening in plain sight.

Flashbots, a research and development organization, has brought some transparency to MEV practices by facilitating ethical MEV extraction through private relays and promoting open dialogue.

## Risks and Criticism of MEV Bots

While MEV bots create efficiencies for some market participants, they also introduce significant risks:

-   Front-running and unfair advantage: MEV bots can effectively "steal" value from unsuspecting users by exploiting transaction ordering.
    
-   Network congestion: Intense MEV competition can drive up gas prices and clog the network.
    
-   Centralization risks: Reliance on private relays and preferential validator access may contradict the decentralized ethos of blockchain.
    
-   Volatility and slippage: Sandwich attacks distort prices and increase slippage for users.
    

## Mitigating MEV Risks

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

### Reduce Slippage on Ethereum

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

Transactions with a lower slippage tolerance give MEV bots less room to exploit trades. For users who aren't utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it's by no means a complete solution.

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

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

### Use a Custom RPC Endpoint on Ethereum

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

One of the most popular specialized RPC endpoints is  [MEV Blocker](https://cow.fi/mev-blocker).

As the name suggests, MEV Blocker provides protection against MEV across all of Ethereum. The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool.

These searchers cannot frontrun or sandwich user transactions.

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

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

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

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

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

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

### Conclusion: The Dual Nature of MEV Bots

MEV bots occupy a fascinating and controversial space within DeFi. They represent the cutting edge of blockchain innovation, showcasing what's possible when technical sophistication meets economic incentive. But their existence also raises ethical and structural questions about fairness, transparency, and the future of decentralized markets.

As DeFi matures, understanding MEV - and the bots that exploit it - is crucial for anyone building or trading on open financial protocols. Whether seen as opportunistic predators or necessary arbitrageurs, MEV bots are here to stay. The real question is how we, as a community, design systems that encourage ethical behavior while preserving the integrity of decentralized finance.

Interested in learning about MEV and what measures you can deploy to help keep yourself protected? Check out the below.

-   [Understanding MEV Protection](http://cow.fi/learn/understanding-mev-protection)
    
-   [How to avoid MEV bots](http://cow.fi/learn/how-to-avoid-mev-bots)
    
-   [MEV Bots: switch from searcher to solver](http://cow.fi/learn/mev-bots-switch-from-searcher-to-solver)

large_MEV-bots-how-do-they-make-money?.png

medium_MEV-bots-how-do-they-make-money?.png

small_MEV-bots-how-do-they-make-money?.png

thumbnail_MEV-bots-how-do-they-make-money?.png

MEV-bots-how-do-they-make-money?.png

MEV bots are algorithmic traders in DeFi that exploit blockchain mechanics to extract profit during block production. This article explains how they work, their profit strategies, and the risks they pose to Ethereum and the broader DeFi ecosystem.

What are MEV bots, and how do they make money?

![AMM (1).png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/AMM_1_75dbb6998d.png)
The cryptocurrency space can often feel overwhelming, especially when you're just starting out. Between technical jargon, rapidly evolving technology, and a firehose of new platforms and tools, it's hard to know where to begin. One of the foundational innovations of decentralized finance (DeFi) that's worth understanding early on is the Automated Market Maker, or AMM.

In this guide, we'll break down what AMMs are, how they differ from traditional market makers, and how innovations like  [CoW AMM](https://cow.fi/cow-amm)  are taking this technology even further - making decentralized trading more secure, efficient, and fair.

## What Is an Automated Market Maker?

Let's start with the basics.

In traditional finance, when you want to buy or sell a stock, your trade is matched through an order book - a system that pairs buyers and sellers. This system usually requires market makers - typically large institutions or traders - who provide liquidity by offering to buy and sell assets at certain prices. Their job is to ensure smooth trading and reduce volatility.

In contrast, Automated Market Makers (AMMs) are a decentralized alternative. Instead of relying on human market makers or order books, AMMs use smart contracts (self-executing code on a blockchain) to enable peer-to-peer trading.

### Enter Liquidity Pools

Here's how it works in simple terms:

AMMs rely on liquidity pools - essentially shared pots of tokens. These pools are filled by users called liquidity providers (LPs) who deposit two tokens into the pool in equal value. For example, a common trading pair might be ETH/USDC, where someone deposits an equal dollar amount of Ethereum (ETH) and the stablecoin USDC.

These deposited tokens then become available for others to trade against. Rather than matching with another individual trader, users trade against the pool itself, and a mathematical formula adjusts the price based on the ratio of the two tokens.

### Example: The Constant Product Formula

Most AMMs, like those used in Uniswap, use a formula that looks like this:

x * y = k

Where:

-   x = amount of Token A
    
-   y = amount of Token B
    
-   k = constant (remains unchanged)
    

If someone wants to buy Token A, they must add Token B to the pool. This shifts the balance, increasing the price of Token A slightly, creating the supply-and-demand curve that you'd expect in any market.

This method ensures there's always a price and always liquidity - even if no one else is around to trade.

There are other types of pool that use different formulas to create what are called weighted pools, but in this example we're going to stick with the most common type of AMM.

## Why Are AMMs a Big Deal?

AMMs are at the heart of DeFi because they remove the need for intermediaries. Here's why they're a major innovation:

### 1. They're Always Open

Unlike centralized exchanges, which might have downtime or rely on limited liquidity during off hours, AMMs are available 24/7. As long as there's liquidity in the pool, you can trade.

### 2. Anyone Can Provide Liquidity

In traditional finance, only big players act as market makers. In AMMs, anyone with crypto can contribute to a liquidity pool and earn fees from trades - democratizing access.

### 3. They're Non-Custodial

You never give up control of your assets to a centralized platform. Everything happens on-chain, and your wallet always holds your funds until you actively interact with a smart contract.

## The Downsides of AMMs

AMMs aren't perfect. As with any tool, there are trade-offs:

### Impermanent Loss

If you provide liquidity to a pool and the price of one token changes significantly compared to the other, you might end up with less money than if you'd simply held onto your tokens. This phenomenon is called impermanent loss.

### MEV (Maximal Extractable Value)

Here's where things get a bit tricky: On public blockchains, anyone can see pending transactions. Some sophisticated bots and traders use this visibility to front-run trades - they jump ahead in line and profit from the price movements that your trade causes.

This is part of a broader problem called  [Maximal Extractable Value](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search)(MEV) - where someone extracts value from a block by strategically ordering transactions. And unfortunately, regular users and liquidity providers often lose out in this process.

Find out more about  [MEV and how it works here.](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search)

### Loss Versus Rebalancing (LVR)

[LVR](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr?ref=learn_search)  is a form of arbitrage that occurs whenever an AMM has an outdated (stale) price in comparison to some other trading venue. Arbitrageurs exploit this difference by trading from the AMM to the more liquid exchange (usually a centralized exchange like Binance), correcting the arbitrage and extracting value from LPs in the process.

Find out more about  [LVR and how it works here](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr?ref=learn_search).

## Introducing CoW AMM: A New Kind of AMM

This is where  [CoW AMM](https://cow.fi/cow-amm)  comes in - a novel approach developed by  [CoW DAO](https://cow.fi/)  that addresses some of the most pressing issues facing current AMM models.

Let's explore how this system works and why it might represent the next evolution in decentralized trading.

What Makes CoW AMM Different?

### Protection from MEV

[CoW AMM](https://cow.fi/cow-amm)  tackles MEV head-on by using batch auctions and intent-based trading.

Rather than letting every trade hit the chain instantly (and visibly), CoW AMM allows multiple trade "intents" to be submitted off-chain. Then, these intents are matched and executed together in a single batch.

Because all trades are processed simultaneously, there's no opportunity for front-running - bots can't jump ahead and exploit your trade.

This process happens through a solvers network - specialized bots that compete to offer users the best execution. It's a win-win for both users and liquidity providers.

### Capital Efficiency & Enhanced Yield

Traditional AMMs spread liquidity across the entire possible price range. That means your tokens might sit unused if no trades happen near their price.

CoW AMM allows LPs to concentrate their liquidity into targeted price ranges - making better use of capital and increasing the chance that they'll earn trading fees.

It works similarly to how index funds concentrate around certain market segments. That's why a CoW AMM - once new features have been deployed - acts as an "enhanced index fund" for DeFi - your funds are passively managed, but smartly deployed for better returns.

## Real-Life Example: CoW AMM in Action

Let's say you want to swap 1 ETH for USDC using CoW AMM.

1.  You submit an "intent to trade" - a request that says, "I want to swap 1 ETH for the best possible amount of USDC."
    
2.  Your intent goes into a batch with many others.
    
3.  CoW Protocol's solver network analyzes the best path for execution - across multiple pools, DEXs, or even aggregators.
    
4.  The batch is executed, and you receive your USDC - with less slippage, no MEV, and often a better price than on a traditional AMM.
    

As a result, users trade with confidence, and LPs see better yields.

## Why This Matters (Especially for Beginners)

CoW AMM's design brings professional-level optimization to everyday users. You don't need to understand complicated strategies or monitor the markets constantly. Just deposit tokens, or trade when you need to - and the system handles the rest with fairness and efficiency.

For beginners, this means:

-   No need to worry about front-running or being "gamed"
    
-   Easier, smoother trades with better pricing
    
-   A safer and more welcoming introduction to DeFi
    

## Traditional Market Makers vs. AMMs vs. CoW AMMThe cryptocurrency space can often feel overwhelming, especially when you're just starting out. Between technical jargon, rapidly evolving technology, and a firehose of new platforms and tools, it's hard to know where to begin. One of the foundational innovations of decentralized finance (DeFi) that's worth understanding early on is the Automated Market Maker, or AMM.

In this guide, we'll break down what AMMs are, how they differ from traditional market makers, and how innovations like  [CoW AMM](https://cow.fi/cow-amm)  are taking this technology even further - making decentralized trading more secure, efficient, and fair.

## What Is an Automated Market Maker?

Let's start with the basics.

In traditional finance, when you want to buy or sell a stock, your trade is matched through an order book - a system that pairs buyers and sellers. This system usually requires market makers - typically large institutions or traders - who provide liquidity by offering to buy and sell assets at certain prices. Their job is to ensure smooth trading and reduce volatility.

In contrast, Automated Market Makers (AMMs) are a decentralized alternative. Instead of relying on human market makers or order books, AMMs use smart contracts (self-executing code on a blockchain) to enable peer-to-peer trading.

### Enter Liquidity Pools

Here's how it works in simple terms:

AMMs rely on liquidity pools - essentially shared pots of tokens. These pools are filled by users called liquidity providers (LPs) who deposit two tokens into the pool in equal value. For example, a common trading pair might be ETH/USDC, where someone deposits an equal dollar amount of Ethereum (ETH) and the stablecoin USDC.

These deposited tokens then become available for others to trade against. Rather than matching with another individual trader, users trade against the pool itself, and a mathematical formula adjusts the price based on the ratio of the two tokens.

### Example: The Constant Product Formula

Most AMMs, like those used in Uniswap, use a formula that looks like this:

x * y = k

Where:

-   x = amount of Token A
    
-   y = amount of Token B
    
-   k = constant (remains unchanged)
    

If someone wants to buy Token A, they must add Token B to the pool. This shifts the balance, increasing the price of Token A slightly, creating the supply-and-demand curve that you'd expect in any market.

This method ensures there's always a price and always liquidity - even if no one else is around to trade.

There are other types of pool that use different formulas to create what are called weighted pools, but in this example we're going to stick with the most common type of AMM.

## Why Are AMMs a Big Deal?

AMMs are at the heart of DeFi because they remove the need for intermediaries. Here's why they're a major innovation:

### 1. They're Always Open

Unlike centralized exchanges, which might have downtime or rely on limited liquidity during off hours, AMMs are available 24/7. As long as there's liquidity in the pool, you can trade.

### 2. Anyone Can Provide Liquidity

In traditional finance, only big players act as market makers. In AMMs, anyone with crypto can contribute to a liquidity pool and earn fees from trades - democratizing access.

### 3. They're Non-Custodial

You never give up control of your assets to a centralized platform. Everything happens on-chain, and your wallet always holds your funds until you actively interact with a smart contract.

## The Downsides of AMMs

AMMs aren't perfect. As with any tool, there are trade-offs:

### Impermanent Loss

If you provide liquidity to a pool and the price of one token changes significantly compared to the other, you might end up with less money than if you'd simply held onto your tokens. This phenomenon is called impermanent loss.

### MEV (Maximal Extractable Value)

Here's where things get a bit tricky: On public blockchains, anyone can see pending transactions. Some sophisticated bots and traders use this visibility to front-run trades - they jump ahead in line and profit from the price movements that your trade causes.

This is part of a broader problem called  [Maximal Extractable Value](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search)(MEV) - where someone extracts value from a block by strategically ordering transactions. And unfortunately, regular users and liquidity providers often lose out in this process.

Find out more about  [MEV and how it works here.](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search)

### Loss Versus Rebalancing (LVR)

[LVR](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr?ref=learn_search)  is a form of arbitrage that occurs whenever an AMM has an outdated (stale) price in comparison to some other trading venue. Arbitrageurs exploit this difference by trading from the AMM to the more liquid exchange (usually a centralized exchange like Binance), correcting the arbitrage and extracting value from LPs in the process.

Find out more about  [LVR and how it works here](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr?ref=learn_search).

## Introducing CoW AMM: A New Kind of AMM

This is where  [CoW AMM](https://cow.fi/cow-amm)  comes in - a novel approach developed by  [CoW DAO](https://cow.fi/)  that addresses some of the most pressing issues facing current AMM models.

Let's explore how this system works and why it might represent the next evolution in decentralized trading.

What Makes CoW AMM Different?

### Protection from MEV

[CoW AMM](https://cow.fi/cow-amm)  tackles MEV head-on by using batch auctions and intent-based trading.

Rather than letting every trade hit the chain instantly (and visibly), CoW AMM allows multiple trade "intents" to be submitted off-chain. Then, these intents are matched and executed together in a single batch.

Because all trades are processed simultaneously, there's no opportunity for front-running - bots can't jump ahead and exploit your trade.

This process happens through a solvers network - specialized bots that compete to offer users the best execution. It's a win-win for both users and liquidity providers.

### Capital Efficiency & Enhanced Yield

Traditional AMMs spread liquidity across the entire possible price range. That means your tokens might sit unused if no trades happen near their price.

CoW AMM allows LPs to concentrate their liquidity into targeted price ranges - making better use of capital and increasing the chance that they'll earn trading fees.

It works similarly to how index funds concentrate around certain market segments. That's why a CoW AMM - once new features have been deployed - acts as an "enhanced index fund" for DeFi - your funds are passively managed, but smartly deployed for better returns.

## Real-Life Example: CoW AMM in Action

Let's say you want to swap 1 ETH for USDC using CoW AMM.

1.  You submit an "intent to trade" - a request that says, "I want to swap 1 ETH for the best possible amount of USDC."
    
2.  Your intent goes into a batch with many others.
    
3.  CoW Protocol's solver network analyzes the best path for execution - across multiple pools, DEXs, or even aggregators.
    
4.  The batch is executed, and you receive your USDC - with less slippage, no MEV, and often a better price than on a traditional AMM.
    

As a result, users trade with confidence, and LPs see better yields.

## Why This Matters (Especially for Beginners)

CoW AMM's design brings professional-level optimization to everyday users. You don't need to understand complicated strategies or monitor the markets constantly. Just deposit tokens, or trade when you need to - and the system handles the rest with fairness and efficiency.

For beginners, this means:

-   No need to worry about front-running or being "gamed"
    
-   Easier, smoother trades with better pricing
    
-   A safer and more welcoming introduction to DeFi
    

## Traditional Market Makers vs. AMMs vs. CoW AMM
![Screenshot 2025-04-15 at 15.48.20.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_04_15_at_15_48_20_233ef525c4.png)

## Final Thoughts: The Future of AMMs

Automated Market Makers are one of the pillars of decentralized finance. They've allowed people to trade without centralized exchanges, earn passive income through liquidity provision, and create more open financial systems.

But as with any technology, innovation is key.

[CoW AMM](https://cow.fi/cow-amm)  represents a next-generation evolution of this idea - one that's more secure, more capital efficient, and more user-friendly. By solving key problems like MEV and improving how liquidity is deployed, CoW DAO is helping build a DeFi ecosystem that truly works for everyone.

Whether you're a beginner exploring DeFi for the first time or a seasoned user looking for better tools, AMMs - and especially  [CoW AMM](https://cow.fi/cow-amm)  - are worth your attention.

### 📚 Want to Learn More?

-   [CoW DAO: The First MEV-Capturing AMM](https://cow.fi/learn/cow-dao-launches-the-first-mev-capturing-amm?ref=learn_search)
    
-   [Why CoW AMMs Act as Enhanced Index Funds](https://cow.fi/learn/why-cow-amms-act-as-enhanced-index-fund?ref=learn_search)

large_AMM (1).png

medium_AMM (1).png

small_AMM (1).png

thumbnail_AMM (1).png

AMM (1).png

AMMs power the DeFi world, but how do they work? In this guide we'll explore what makes them tick, as well as different types. 

Understanding Automated Market Makers: A Beginner’s Guide to DeFi Liquidity

![MEV attacks.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/MEV_attacks_25da5820e4.png)
Maximal Extractable Value (MEV) attacks have become a significant concern for crypto traders. Whether you’re a beginner or an experienced trader, understanding MEV attacks is essential to protecting your transactions and ensuring fair trading practices.

In this article, we explain what MEV attacks are, how they work, and the best strategies for safeguarding yourself against them.

## MEV Attacks Go Beyond Standard Transaction Fees

Crypto traders are familiar with structural fees, such as:

-   Exchange fees – Charges applied by centralized or decentralized exchanges.
    
-   Execution fees – Costs associated with executing trades.
    
-   Gas fees – Payments made to blockchain miners or validators for processing transactions.
    

However, MEV attacks differ from these standard fees. Rather than being inherent costs of using the blockchain, MEV attacks exploit vulnerabilities in the transaction processing model to extract additional value at the expense of traders.

## “Inevitable” MEV vs MEV Attacks

### What is MEV?

MEV refers to the value that can be extracted from a blockchain transaction beyond standard fees. This extraction is done by reordering, inserting, or censoring transactions before they are confirmed on-chain.

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

  

There are lots of different ways MEV can take place on Ethereum, which we’ll explore further down in the article. But for now, it’s important to understand the mechanics of MEV, and their presence on many chains like Ethereum.

### The MEV Debate: Good or Bad?

Some argue that MEV is a natural incentive mechanism compensating searchers and validators for optimizing transaction sequencing. Others see it as an unfair exploitation that degrades user experience and creates hidden costs.

Want to read more about this debate? [We have an article that explores the pros and cons in more detail.](https://cow.fi/learn/is-mev-good-or-bad)

MEV makes money for searchers, block builders, and Ethereum validators at the expense of regular users, especially beginners who don’t know how to protect themselves. As of the time of writing, sandwich attacks on AMMs and aggregators alike generate [almost $1 million in profit for searchers each week](https://eigenphi.io/mev/ethereum/sandwich).

  

Over time, persistent MEV erodes market confidence as traders realize they are at a constant disadvantage to more sophisticated actors. Ultimately, MEV may pose an existential threat to blockchain ecosystems like Ethereum, so it’s imperative for solutions to emerge that protect everyday traders from price exploitation.

  

The reality is, there is little appetite to change the design of chains like Ethereum, meaning MEV is here to stay. While it does help prices remain consistent across different liquidity pools, it creates a hierarchy between sophisticated actors looking for arbitrage and regular users unaware that their transactions could be exploited.

## What is an MEV Attack?

An MEV attack is a deliberate manipulation of transaction ordering in a way that unfairly profits a searcher at the expense of traders. MEV attacks actively exploit transaction sequencing vulnerabilities.

## Overview: How Searchers Implement an MEV Attack

MEV attacks exploit the mempool, a public waiting area where transactions reside before being confirmed. Here’s how searchers implement an MEV attack:

1.  Transactions enter the mempool before being included in a block.
    
2.  MEV searchers monitor the mempool for profitable opportunities.
    
3.  Searchers select, reorder, or delay transactions to maximize their gains.
    
4.  They execute transactions that benefit from market movement, often at the expense of regular traders.
    

### Example of an MEV Attack

Imagine a trader places a large buy order for a token. A searcher detects this order in the mempool and inserts their own buy order first. Once the trader’s transaction pushes the price up, the searcher sells the token at a higher price—pocketing the profit at the trader’s expense.

## Common Types of MEV Attacks

### Frontrunning Attacks

  

[Frontrunning](https://cow.fi/learn/what-is-frontrunning) is when a bot sees a profitable transaction in a public mempool, duplicates it, and places their own order in front of the victim transaction, extracting its value for themselves.

  

If you’re interested in understanding frontrunning more fully, check out our [frontrunning blog post](https://cow.fi/learn/what-is-frontrunning).

### Backrunning Attacks

  

These attacks are similar to frontrunning but in reverse. In [backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained), the attacker places a transaction after the victim transaction to capitalize on any arbitrage left by the victim’s order. Frontrunning and backrunning transactions are not very common by themselves, but a combination of the two, known as a “sandwich attack,” accounts for most MEV.

  

If you’re interested in understanding backrunning more fully, check out our [backrunning blog post.](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained?ref=learn_search)

### Sandwich Attacks

  

[Sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself) combine frontrunning and backrunning, placing a buy order before the victim transaction and a sell order directly after. This creates a “sandwich” of the victim transaction.

  

If you’re interested in understanding sandwich attacks more fully, check out our [sandwich attacks blog post.](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself?ref=learn_search)

### Loss-Versus-Rebalancing (LVR)

LVR is a sophisticated strategy where MEV searchers exploit the difference between a DEX’s price and an external market price.

Targeting liquidity providers, LVR is a form of 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.

If you’re interested in understanding LVR more fully, [check out our LVR blog post.](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr?ref=learn_search)

## How MEV Attacks Hurt Crypto Traders

Maximal Extractable Value (MEV) attacks pose serious risks to both individual traders and the broader decentralized finance (DeFi) ecosystem. These attacks allow validators, miners, or other privileged actors to manipulate transactions for their own gain, leading to inefficiencies, increased costs, and a loss of trust in DeFi markets.

The negative impacts of MEV can be categorized into four major areas: unexpected losses and slippage, compromised trade execution, distorted market conditions, and a general erosion of confidence in decentralized trading platforms.

We explore each of these in turn below.

### Unexpected Losses and Slippage

One of the most immediate consequences of MEV attacks is that traders often experience worse-than-expected execution prices. This occurs due to front-running and sandwich attacks, two common forms of MEV exploitation.

-   **Front-running:** A validator or miner sees a pending trade and inserts their own transaction ahead of it, profiting from price changes before the original trade is executed. This forces the original trader to buy at a higher price or sell at a lower price than anticipated.
    
-   **Sandwich attacks:** This occurs when an attacker places one trade before and another trade after a target transaction. By manipulating prices through these additional transactions, the attacker forces the victim to complete their trade at a disadvantageous rate, profiting from the resulting price changes.
    

Both types of attacks create additional transaction costs, leading to unnecessary losses for unsuspecting traders. Even small-scale traders who frequently engage in swaps and liquidity provision can suffer from repeated losses over time, making DeFi trading less attractive.

### Compromised Trade Execution and Price Distortion

MEV attacks undermine the integrity of decentralized markets by interfering with the natural process of price discovery. Price discovery refers to the process by which market prices are determined based on supply and demand dynamics. However, when MEV bots and validators manipulate transactions, the resulting prices are no longer purely organic.

For example, large MEV attacks can lead to artificial price swings that do not reflect actual market sentiment. Traders making decisions based on manipulated prices may enter trades under false assumptions, increasing their risk of losses. Additionally, compromised trade execution makes it harder for traders to place orders with confidence, as they cannot be certain their transactions will be processed fairly.

### Skewed Markets and Artificial Inefficiencies

MEV-driven market manipulation can introduce significant inefficiencies that distort normal trading activity. Instead of functioning as a free and competitive environment, DeFi markets become skewed in favor of those who have privileged access to transaction data.

As a result, the markets may experience:

-   Reduced liquidity, as traders hesitate to provide liquidity, knowing they may be exploited.
    
-   Increased volatility, due to sudden and unpredictable price swings caused by MEV bots.
    
-   Barriers to entry for new traders who cannot compete with sophisticated MEV strategies.
    

These inefficiencies hinder DeFi’s ability to serve as a viable alternative to traditional finance.

### Erosion of Trust in DeFi

Finally, MEV attacks contribute to growing distrust in decentralized finance. When traders repeatedly experience unexplained losses, poor execution, and unfair market conditions, they begin to question whether DeFi is truly decentralized and transparent.

If MEV exploitation continues unchecked, DeFi platforms risk losing users, stalling adoption, and facing increased regulatory scrutiny. Therefore, addressing MEV challenges is crucial to ensuring a fair and sustainable DeFi ecosystem.

## Protect Yourself Against MEV Attacks

### MEV Blockers

MEV blockers reduce vulnerability to attacks by protecting transactions from manipulation. They work by preventing transactions from being publicly visible in the mempool, making it harder for searchers to exploit them. Read more about MEV blockers here.

### How CoW Swap Mitigates MEV Attacks

CoW Swap gives traders the tools they need to protect themselves from MEV, so when you’re trading through [https://swap.cow.fi/](https://swap.cow.fi/) you’re protected from the majority of opportunistic searchers, regardless of the size or type of trade.

  

CoW Swap relies on 3 main features to keep you safe from MEV:

1.  Delegated Trade Execution
    
2.  Coincidence of Wants
    
3.  Uniform Clearing Prices
    

  

Let’s dive in!

### Delegated Trade Execution

  

On CoW Swap, all transactions are routed through a decentralized network of “solvers” — independent algorithms that are responsible for finding the best execution price for your trades.

  

When you submit a trade on CoW Swap, rather than initiating a blockchain transaction like you would on a platform like Uniswap, you instead submit a signed “intent to trade” message. This means that CoW Swap can perform optimizations on your trade that would not be possible if you submitted the transaction directly to the blockchain.

  

These optimizations include finding Coincidences of Wants, adjusting the slippage tolerance dynamically, and completing your trade at an optimal price during the time of execution.

  

Since it is the solvers who execute your trade on your behalf, you are never directly exposed to the public mempool, meaning that you are protected from MEV at all times.

  

Whatever price solvers quote you at the time you place your order is actually the worst price that your order will be executed at (it may complete at a better price if solvers find a better execution path). All risk of MEV is taken on by the solver itself.

### Coincidence of Wants

  

CoW Swap’s delegated trade execution mechanism has another major advantage — it can match your orders off-chain.

  

Any time you submit a trade on CoW Swap, solvers start looking for the best way to execute it. Before checking on-chain liquidity, solvers check other incoming orders on CoW Swap’s current batch auction to see if your trades can be matched peer-to-peer.

  

Here’s how it works:

  

Let’s say you’re looking to trade ETH for USDC. You submit your order and solvers see that someone else in that batch is actually looking to trade USDC for ETH — the opposite of your trade — at the same time. These two trades will be matched with each other in a “Coincidence of Wants” (CoW) which allows traders to swap their assets with each other directly (one to one or many to many), thereby saving on gas fees, liquidity provider fees, price impact, and also bypassing MEV risks.

  

CoW Swap’s founders were inspired by the potential for Coincidence of Wants to provide lower prices for everyday Ethereum users (it’s in the name!). This mechanism is one of the cheapest and most secure ways to make a DeFi trade, and since you’re not using on-chain liquidity pools, your Coincidence of Wants trade cannot be subject to MEV attacks.

### Uniform Clearing Prices

As a third line of defense against MEV, CoW Swap ensures all orders complete under a “Uniform Clearing Price” (UCP).

  

Upon submitting your trade, your order gets included in a batch auction alongside other pending orders in the queue. All of the orders within a batch trade for the same price on the blockchain, a phenomenon referred to as “Uniform Clearing Price” (UCP).

  

To understand how UCP works on CoW Swap, we first have to consider how DeFi trading works on traditional DEXs. On a normal decentralized exchange, if 8 people want to trade ETH for USDC, each of their trades clears at a slightly different price since DEXs process trades in a sequential manner even though they might be happening concurrently (within the same Ethereum block).

  

This leaves room for MEV because the order in which transactions are processed heavily impacts the prices that users get. Searchers are constantly monitoring DEX trades, looking for opportunities like these where they can reorder transactions to their advantage.

  

On CoW Swap, if the same 8 people are making that trade, as long as they are in the same batch auction, each order will be settled for the same clearing price when it goes on-chain. This leaves no room for MEV attacks since all prices are the same, meaning that transaction ordering becomes irrelevant.

[Learn how CoW Swap solves the MEV problem.](https://cow.fi/learn/dex-aggregator-how-to-choose)

## Final Thoughts

MEV attacks exploit transaction sequencing for profit, often at the expense of everyday traders. While some MEV activities may be considered an unavoidable part of DeFi, MEV attacks actively harm market fairness.

Understanding these attacks and using tools like MEV blockers and fair trading platforms can help protect your transactions and ensure a more equitable DeFi ecosystem.

Interested in learning about MEV and what measures you can deploy to help keep yourself protected? Check out the below.

-   [Understanding MEV Protection](http://cow.fi/learn/understanding-mev-protection)
    
-   [How to avoid MEV bots](http://cow.fi/learn/how-to-avoid-mev-bots)
    
-   [MEV Bots: switch from searcher to solver](http://cow.fi/learn/mev-bots-switch-from-searcher-to-solver)

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An introduction to MEV attacks, including specific strategies: frontrunning, backrunning, loss-versus-rebalancing, and sandwich attacks. 

Understanding MEV attacks


![Dex-aggregator.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Dex_aggregator_599a3c5b01.png)
There are more than [130 decentralized exchanges](https://www.alchemy.com/dapps/best/decentralized-exchanges-dexs) (DEXes) currently in operation. That’s a lot of choices when it comes to picking where to trade in DeFi. To cope with the explosion of DEXes, a new industry emerged: DEX aggregators. These unique projects search lots of decentralized exchanges on your behalf to find the best prices for your trades.

  

This has been a game changer for people looking to find the best prices for their trades. But with the proliferation of DEX aggregators comes a conundrum: how to choose the right one for you?

  

There are lots of different factors to consider before choosing to trade with a specific aggregator. That’s why in this article we’re going to walk you through the key features of DEX aggregators, and how to decide which one is right for you.

### The DEX aggregator advantage over traditional DEXs

  

A DEX aggregator is a platform that searches multiple decentralized exchanges to find the best prices for your trades. In the world of crypto, the price of an asset will vary depending on where, when and what medium you use to make a trade.

  

But finding the best price manually can be time-consuming. This is where a DEX aggregator comes in. They provide a single platform where multiple options for buying and selling can be seen on one page. They search platforms such as Balancer, Uniswap, and others for the best price for your trade, and you can complete a trade without having to visit those sites yourself. Typical examples include, 1inch, Matcha, or ParaSwap.

  

DEX aggregators offer a number of advantages over just using DEXs:

-   **Liquidity access:** Because  aggregators pull liquidity from multiple DEXs, they are better able to find the deepest liquidity for your trade. That means less slippage, and a higher trade success rate.
    
-   **Cost efficiency:** Aggregators pick the best route for your trade, which means you can find the best price for your trade with the lowest fees.
    
-   **Convenience:** A DEX aggregator does the hard work for you of searching multiple exchanges to find the best  route for your trade, all within one interface.
    
-   **Advanced features**: DEX aggregators often layer unique features on top of the DEXs they aggregate. Things like MEV protection, batch auctions, and gas optimizations are all options you can utilise.
    

## Evaluating a DEX aggregator

Before picking the DEX aggregator for you, there’s a few things you need to consider:

  

Defining your trading needs: are you a whale or a minnow? Do you only trade popular tokens or are you looking to up your meme coin game? Are you looking for the next big project or looking to make marginal gains on more established ones? These questions can help you work out the best DEX for you. That’s because each DEX, and each DEX aggregator has strengths, but also weaknesses, depending on what you’re looking to trade.

  

How simple are they to use? If you’re a pro and used to navigating the intricacies of DeFi, you’ll be happy to get into the weeds of creating advanced order types and parameters. But if you’re a newbie who just wants to do simple swaps, some platforms may not be suitable.

  

Where do they source their trades from? Each DEX aggregator will have a preference for where and how it finds the best route for your trade. While some will only source from the larger DEXes, others will focus on less well known channels, while some will be able to look into private liquidity pools for the best ways to execute your trade. We’ll explain more about that one later.

## What to consider when choosing a DEX aggregator

Below we’ll explore what you need to consider before choosing the DEX aggregator that works for you.

### Your specific goals and needs

What tokens do you trade across what blockchains? Some DEX aggregators specialise in certain trading pairs or networks, so make sure to check to see if that particular aggregator suits your specific need. Another point to consider: are you looking for specific tools or customisation features for your trades? Some DEX aggregators are more technical than others.

### Transaction fees and cost efficiency

Analyze the aggregator’s fee structure. Each DEX and DEX aggregator will have their own way of charging for their services. Some will charge gas fees, while others may charge platform fees, or a percentage of the trade.

  

Then there are other features such as gasless trading, where users can pay fees in the tokens they are trading instead of having to hold ETH to pay for gas.

  

Then there are other costs such as MEV. Looking for a DEX aggregator with MEV protection can help you avoid losing a percentage of your profits to MEV bots.

### Advanced features and tools

Do you need advanced trading features to help you manage your portfolio? DEX aggregators have different feature sets to suit different types of traders. For example, at CoW Swap there are lots of different order types, including [Market orders](https://docs.cow.fi/cow-protocol/concepts/order-types/market-orders), [Limit orders](https://docs.cow.fi/cow-protocol/tutorials/cow-swap/limit), [TWAP orders](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders), [Programmatic orders](https://docs.cow.fi/cow-protocol/concepts/order-types/programmatic-orders#:~:text=CoW%20Protocol's%20Programmatic%20Order%20Framework,elapsed%2C%20and%20much%20more), [Milkman orders](https://cow.fi/learn/what-is-milkman-cow-swaps-solution-for-delayed-execution-trading), and [CoW Hooks](https://docs.cow.fi/cow-protocol/concepts/order-types/cow-hooks), giving users the freedom to trade their way.

### Security and support

  

While the world of DeFi is non-custodial, there are still security issues to consider. Doing your research on whether a DEX aggregator regularly has its smart contracts audited is vital. DEX aggregators [can and do get hacked](https://www.bleepingcomputer.com/news/security/okx-suspends-dex-aggregator-after-lazarus-hackers-try-to-launder-funds/) so checking what security assurances they offer is an important step when considering who to trade with.

  

Other protections to consider are whether the DEX aggregator protects you from MEV exploits like front-running and sandwich attacks. These exploits take hundreds of millions from traders every year, but there are DEX aggregators that do offer protection, like CoW Swap. While some DEX aggregators don’t.

### Research and reviews

Any crypto citizen knows the importance of DYOR. Taking your time to read user testimonials and reviews can help you decide which DEX aggregators are better than the rest. But there are a number of other areas you should look out for too. The first is customer support. Whether its places like GitHub or Discord, checking out how well projects handle complaints or bugs can help increase your trust in a project.

  

Then there are things like roadmap activity, security updates and features. If a project is consistently upgrading, refining and releasing features, it’s a sign of a healthy ecosystem. If things have gone quiet? Tread with caution.

## Popular DEX aggregators to consider

While there are lots of DEX aggregators out there, below are four of the biggest when it comes to trading volume.

  

**[1inch](https://1inch.io/)**
    

-   Multiple chain support
    
-   Advanced features for sophisticated traders
    
-   Gasless swaps
    

**[Paraswap](https://www.paraswap.xyz/)**
    

-   Support for both ERC-20 and BEP-20 token standards.
    
-   Integration with popular wallets including MetaMask and Ledger.
    
-   Built in private market maker liquidity pools
    

**Kyberswap**
    

-   Split trade feature to allow multiple sources to complete one order for optimal prices.
    
-   Real time access to multiple trading paths.
    
-   Tiered liquidity pools allow LPs to concentrate liquidity in certain trading pairs.
    

**[CoW Swap](https://cow.fi/cow-swap)**
    

-   Best-in-class MEV protection.
    
-   Profit optimization via batch auctions and fee savings.
    
-   Transparent and secure token handling.
    
-   Intent-based trading ensures best prices (more on that below)
    

## The vulnerabilities of DEXes and DEX aggregators

While DEX aggregators have helped people navigate the dizzying world of DeFi, there are some areas where they still struggle to deliver the best prices possible. Below are a few areas where DEX aggregators are vulnerable to poor performance

-   **MEV:** Maximum Extractable Value is where [malicious actors manipulate transactions](https://cow.fi/learn/what-is-mev) to extract profits. MEV costs traders hundreds of millions of dollars every year. This increases the cost of trading.
    
-   **Liquidity fragmentation:** With more than 130 DEXes currently trading, liquidity has become increasingly fragmented meaning traders increasingly suffer from failed transactions and higher slippage costs.
    
-   **Security:** DeFi, like many parts of the crypto space has its challenges when it comes to security. From coding errors, to unaudited smart contracts, DEX aggregators have been exploited in the past for gaps in their security.
    
-   **Centralization:** While you might think DeFi doesn’t suffer from centralization, there are certain areas where it does. One of those is oracles. These are price feeds that help exchanges determine what price they should charge for certain assets. These oracles can be prone to vulnerabilities and attack. Most famously in 2023 when a price feed used by QuickSwap, a DEX was hacked and used to manipulate the price of tokens leading to losses of $188,000.
    

## Intent-based DEX aggregators minimize the risk

Intent-based aggregators operate differently from other DEX aggregators. That’s because instead of placing orders by signing a raw transaction that executes directly on-chain (i.e. as happens on Uniswap or SushiSwap), CoW Swap users place orders by signing an "intent to trade" message that specifies parameters like the assets and amounts they would like to trade. The intent is a signed message which allows the solvers to execute a trade on behalf of the user using their specified assets and amounts.

Let’s take an example. When you use Uniswap and you want to make a trade, once you’ve chosen the tokens you want to trade with and hit ‘swap’ that order is submitted to the ‘mempool’ a public list of transactions awaiting validation. This is [where MEV creeps in](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search). Because the mempool is public, anyone can see your trade waiting and manipulate conditions around it to their benefit.

With an intent-based DEX however, your intent to trade is not made public, but remains private inside a pool of selected individuals who attempt to find the best trade on your behalf. That lowers the risk of your trade being manipulated.

  

There are other security benefits, too:

-   **Less smart contract risk:** Because solvers take on the risk of interacting with smart contracts and AMMs, you as a trader don’t have to worry.
    
-   **Increased gas efficiency:** All trades are credited directly to user accounts without withdrawals or deposits into an exchange contract. That means less is spent on executing your trade.
    
-   **Better security:** Funds can only be transferred if a trader has approved the contract and signed an order to sell the given token for another.
    
-   **Order expiry dates:** Signed orders have an expiry date and they can be cancelled on-chain, preventing exploits where orders can be re-executed by relying on old approvals.
    

### Intent-based DEX vs traditional aggregators

Intent-based DEXes have a number of important distinctions over traditional aggregators. Below we explain some of the key differences.

  

-   Execution model:
    

**Traditional:** Trades are often routed through predefined on-chain paths, meaning you might not be getting the best price for your trade.
    
**Intent-Based:** Solvers organically go and search for the most efficient execution strategy for your trade.
    

-   Liquidity access:
    

**Traditional:** Relies solely on on-chain DEX liquidity. Many DEX aggregators solely rely on liquidity they can find on-chain.
    
**Intent-Based:** Intent-based aggregators can and do search both on-chain liquidity and off-chain sources. They can also explore peer-to-peer matching, too. More on that below.
    

-   MEV protection:
    

**Traditional:** Your intent to trade goes into the mempool, meaning searchers are able to identify ways of making a profit from your trade through a number of different [MEV attacks.](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search)
    
**Intent-Based:** Your intent to trade is hidden, and is only committed to the blockchain once the order has been filled. This means no one can prey on your trades to make an easy profit.
    

## Beyond liquidity aggregation: the CoW Swap approach

  

CoW Swap is not built like other aggregators. That’s because it relies on third parties known as "[solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)" to find the best execution paths for trade intents — signed messages that specify conditions for executing transactions on Ethereum and EVM-compatible chains. Let’s explain this a bit more.

  

When a trader signals their intent to trade, the CoW Protocol, the execution layer beneath CoW Swap, groups that intent to trade along with other intents into what’s called a [batch](https://docs.cow.fi/cow-protocol/concepts/introduction/batch-auctions). That batch is then turned into an auction where solvers compete to find the best price for the trades in the batch.

  

One method they do is by trying to find what’s called a [Coincidence of Wants (CoW)](https://docs.cow.fi/cow-protocol/concepts/how-it-works/coincidence-of-wants). This is when two traders want to make the same trade but from opposite sides. So a user with USDC wants to swap to ETH and another user with ETH that wants to swap it to USDC can be paired together in a Coincidence of Wants, or CoWs. CoWs allow users to bypass liquidity provider (LP) fees and also reduce gas fees since orders only interact with CoW Protocol's smart contracts.

  

If those solvers can’t find a CoW in the batch, they search all available on-chain and off-chain liquidity to find the best price for a set of trade intents within a batch.

Liquidity sources include:

-   AMMs (e.g. Uniswap, Sushiswap, Balancer, Curve, etc.)
    
-   DEX Aggregators (e.g. 1inch, Paraswap, Matcha, etc.)
    
-   Private Market Makers - yes, our solvers can access private liquidity to help execute your trade.
    

  

Because your intent to trade is not published into the mempool, trading on CoW Swap also ensures you’re [protected from MEV](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao?ref=learn_search): a hidden tax on all types of Ethereum transactions. That means any time you want to transact in DeFi: from buying or selling an NFT, lending tokens to a liquidity pool, or swapping one token for another, a group of opportunistic users known as “searchers” have the opportunity to see your trade, and manipulate the criteria surrounding your trade to ensure they make profit, at your expense. Not with CoW Swap.

  

Another feature found in a meta DEX like CoW Swap is different order types. Most DEXes have some order type functionality, CoW Swap goes further. Below is a list of the different types of orders you can do with CoW Swap.

-   [Market orders](https://docs.cow.fi/cow-protocol/concepts/order-types/market-orders) - buy or sell tokens as soon as possible at the current market rate.
    
-   [Limit orders](https://docs.cow.fi/cow-protocol/tutorials/cow-swap/limit) - set your own parameters for how much you are willing to buy and sell.
    
-   [TWAP orders](https://cow.fi/learn/getting-to-grips-with-time-weighted-average-price-twap-orders) - allows traders to spread their trade over a specified period of time.
    
-   [Programmatic orders](https://docs.cow.fi/cow-protocol/concepts/order-types/programmatic-orders#:~:text=CoW%20Protocol's%20Programmatic%20Order%20Framework,elapsed%2C%20and%20much%20more).) - create conditional orders that execute when certain on-chain conditions are met (such as asset prices, wallet balances, time elapsed, and much more)
    
-   [Milkman orders](https://cow.fi/learn/what-is-milkman-cow-swaps-solution-for-delayed-execution-trading)- delayed execution trading: set and forget your trades for optimum conditions.
    
-   [CoW Hooks](https://docs.cow.fi/cow-protocol/concepts/order-types/cow-hooks)- allow users to pair any Ethereum action (or set of actions) with an order on CoW Protocol, leveraging the [solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers) to execute the actions together in the sequence.
    

  

In summary, CoW Swap brings you class-leading MEV protection, liquidity access and custom order types to let you do more with less worry.

### Next steps

As you can see, CoW Swap takes a very different approach to helping find the best route for your trade.

  

Another element that sets it apart from all the rest is its use of a [Coincidence of Wants](https://docs.cow.fi/cow-protocol/concepts/how-it-works/coincidence-of-wants) as one way to execute a trade.

  

This term, which comes from economics, involves two parties - each holding the asset that the other needs - exchanging assets directly in an equivalent barter. Let’s break this down a bit further.

  

Any time you submit a trade on CoW Swap, solvers start looking for the best way to execute it. Before checking on-chain liquidity, solvers check other incoming orders on CoW Swap’s current batch auction to see if your trades can be matched peer-to-peer.

  

If someone wants to do a trade in the opposite direction to what you want, you are paired together, and the whole thing is executed gas free!

  

Want to know more? Check out our explainer on [Coincidence of Wants.](https://cow.fi/learn/what-are-cows-on-cow-swap)

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Discover how to choose the best DEX aggregator – minimize vulnerabilities, maximize profitability, and avoid MEV exploitation

How to choose a DEX aggregator

![MEV-arbitrage.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/MEV_arbitrage_b49adb9ce0.png)
Arbitrage at its simplest, is a strategy where an investor or entity buys and sells an asset in different markets, taking advantage of the difference in price between those two markets.

  

Popular in the world of TradFi, it’s a big part of the crypto ecosystem, too. But this isn’t the only form of exploitation of market inefficiencies.

  

MEV, or maximal extractable value, is a hidden tax on all types of Ethereum transactions.

  

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

  

In DeFi, MEV and arbitrage go hand in hand: they take advantage of price differences. In this post, we’ll explain the relationship between arbitrage and MEV, how traders are made vulnerable to them, and how you can keep yourself protected.

## Arbitrage basics for the crypto market

Diving a bit deeper into the definition of arbitrage: the price of an asset varies depending on which exchange you are buying or selling it from. With more than 250 crypto exchanges, that means there’s a lot of opportunity for traders to make a profit from finding assets with different prices.

  

Why are prices higher or lower on different exchanges? The simple reason is demand. If one exchange has many buyers and not many sellers, the price will go up. While on another exchange, if there are lots of sellers but not many buyers, prices will fall.

  

But there are other reasons for price discrepancies.

  

Liquidity: Exchanges with higher trading volumes tend to have more stable prices, while lower-volume exchanges can experience more pronounced price swings.

  

Geography: Demand for specific cryptocurrencies can vary across regions, leading to price differences. So a typical example: USDC on an exchange based in Asia will have a fractionally different price on a European exchange.

  

Fiat Currency Differences: The use of different fiat currencies on different exchanges can also contribute to price discrepancies. Explaining this further, exchange rates for fiat currencies as well as where the buyer is in the world, create added variation in the price of an asset.

  

Market Fragmentation: As we touched on earlier, there are a lot of crypto exchanges, meaning there are more opportunities for arbitrage.

  

Let’s take a look at how arbitrage can take place using Ethereum as an asset.

### Ethereum arbitrage

Ethereum is one of, if not, the most available crypto assets to buy. That means there are lots of opportunities to find price differences.

  
Below you can [see a screenshot of the price of Ethereum across different exchanges.](https://coinranking.com/coin/razxDUgYGNAdQ+ethereum-eth/exchanges)
![Screenshot 2025-03-14 at 15.11.59.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_03_14_at_15_11_59_bb42303236.png)


Using the above example, a buyer looking to buy cheap and sell high would buy from Coinbase, where the price of Ethereum is $1,920.16, and then sell on DigiFinex, where the price is $1,934.41.

  

If the buyer bought 1 whole ETH, they would have made around $14 just by exploiting this difference in price - minus fees of course.

  

But this is just one type of arbitrage. In the next section we’ll look at other ways of exploiting price differences.

## Common types of arbitrage in crypto

There are lots of different ways of exploiting arbitrage across crypto markets. Here are the most common:

  

-   **Triangular arbitrage:** price differences between three currencies on an exchange. This sounds complicated but in reality, it’s targeting three currencies that allow you to make a profit based on price differences between them. So for example, you hold USDC, and you use it to buy Bitcoin. You notice that a Bitcoin/Ethereum trading pair gives you more Ethereum than simply trading USDC/ETH, so you swap your Bitcoin for ETH. Lastly you convert the ETH back to USDC at a higher rate pocketing the difference.
    
-   **Cross exchange:** buying on one exchange and selling on another at a higher price. So this is the example we explained above.
    
-   **Spatial:** exploiting price differences across different locations. So as we mentioned earlier, different locations globally will have different prices based on supply and demand.
    
-   **MEV:** A slightly different type of arbitrage, MEV creates an artificial arbitrage opportunity by increasing or decreasing a token price around a single trade. We’ll explain this in more detail in the next section.
    

  

There are lots of other types of arbitrage that can take place in crypto, but for now we’re going to turn our attention to MEV.

## How MEV exploits arbitrage opportunities

MEV or “maximal extractable value” is, as we explained earlier, a unique feature to the world of crypto. Whenever you make a trade, buy or sell an NFT, or lend tokens to a liquidity pool, people can see what you’re trading and take advantage.

  

To date, billions of dollars worth of value has been lost on Ethereum, making it problematic, particularly for new users. There are several key ways MEV can take place on Ethereum:

  

-   [Frontrunning](https://cow.fi/learn/what-is-frontrunning) - Frontrunning occurs when an MEV bot monitors the mempool for a trader’s pending transaction. Spotting a potential trade, the bot quickly duplicates the users transaction so that they can be the one to get the tokens or the opportunity that the user detected.
    
-   [Backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained) - When a trader places a large trade that artificially inflates the price of an asset on an AMM, an MEV bot can backrun the trade and profit from the arbitrage.
    
-   [Sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself) - Sandwich attacks occur when a user’s transaction gets trapped, or “sandwiched,” between two hostile transactions — one before and one after. As a result, the original transaction executes at a much higher price than necessary, leading to an inflated price for the original trader and a profit for the malicious trader placing the two extra trades.
    

  

For all of these types of MEV, speed is vitally important. That’s because the length of time a pending transaction remains in the mempool can be seconds.

  

That means searchers often rely on bots to execute MEV attacks.

## Most DEXs are vulnerable to MEV arbitrage

MEV is possible because validators are free to order blockchain transactions as they see fit in order to maximize their profits. Proof-of-stake (PoS) blockchains such as Ethereum use parties known as “validators” in order to ensure that the consensus rules of the blockchain are followed by all participants.

  

Validators get randomly selected to add the next block to the blockchain. In this process, they determine what transactions are included in the block, and in what order.

  

When you submit a transaction on Ethereum, it does not immediately get added to the next block. Instead, it first goes into the “mempool” which is the collection of all pending transactions. Validators then pull transactions from the mempool and add them to the next block when it’s time for it to be built.

  

Here is where the opportunity to extract value through MEV comes in.

  

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

  

But while MEV is common place, it’s not impossible to avoid.

Traders can protect themselves with [MEV blockers and defensive measures,](https://cow.fi/learn/understanding-mev-protection) but MEV is still a threat on most DEXs.

  

Let’s take a look at how it works.

### Frontrunning

  

Here’s a simplified look at how frontrunning works.

  

1. **Monitoring Pending Transactions:** A bot monitors the mempool looking for a pending transaction it can create an arbitrage opportunity. It finds one: User A intends to swap 2 ETH for $BOB tokens

  

2. **Selecting Profitable Transactions:** The bot identifies this amount of ETH would create a significant impact on token price. This means there’s an opportunity for arbitrage: exploiting the difference between the pre-trade and post-trade states of the token being traded.

  

3. **Placing A New Transaction:** The bot submits its own transaction paying higher gas fees to be positioned before user A’s transaction in the block. As a result, user A received fewer tokens than they were hoping for. Meanwhile the bot has sold the tokens at an elevated price, earning itself a healthy margin in the process.

  

If you’re interested in understanding frontrunning more fully, check out our [frontrunning blog post](https://cow.fi/learn/what-is-frontrunning).

## The bottom-line: consequences of MEV arbitrage

MEV is a controversial subject in the crypto space. While some argue it helps keep markets running more smoothly, CoW DAO takes the position that [MEV is a bad thing.](https://cow.fi/learn/is-mev-good-or-bad)

  

Sophisticated actors familiar with the mechanics of blockchains like Ethereum have developed numerous ways to exploit users with less knowledge.

  

MEV makes money for searchers, block builders, and Ethereum validators at the expense of regular users, especially beginners who don’t know how to protect themselves. As of the time of writing, sandwich attacks on AMMs and aggregators alike generate [almost $1 million in profit for searchers each week](https://eigenphi.io/mev/ethereum/sandwich).

  

Over time, persistent MEV erodes market confidence as traders realize they are at a constant disadvantage to more sophisticated actors.

  

While in many parts of DeFi, arbitrage opportunities can feel inevitable, there are a few spots where MEV arbitrage can’t hurt your trades.

## Meta-DEX aggregator solution to MEV exploitation

You’ll no doubt be familiar with a decentralized exchange, or DEX. These are the backbone of the DeFi world, acting as a bedrock underpinning all trades.

  

DEX aggregators meanwhile, bundle all the DEXes up into one platform to allow a user to search all the DEXes looking for the best price for their trade.

  

A Meta DEX Aggregator is different again. As the “meta” name implies, they aggregate DEX aggregators. This leads to better liquidity coverage across more venues, while still providing users with a single interface for their trades.

  

Why would you want to aggregate an aggregator? There are many reasons. The first is that DEX and DEX aggregators have strong points and weak points. Some are better for large trades, others for small trades, and some are better across certain trading pairs. There’s a good bit of research on the strengths and weaknesses of DEX aggregators [here](https://jumper.exchange/learn/dex-aggregator).

  

A meta DEX negates those weak points, by routing your trade to the DEX that is strong for the type of trade you’re trying to do. In essence, a Meta DEX takes the guesswork out of finding the right DEX for your trade.

  

Another key reason for a Meta DEX Aggregator is that it can integrate features not found on the DEXes themselves. Such as MEV protection: one of the baked in goodies found in CoW Swap.

  

We dive into that, and the other features of what makes CoW Swap so special.

### The CoW Swap approach

CoW Swap was built from the ground up with MEV protection in mind.

  

CoW Swap relies on 3 main features to keep you safe from MEV:

-   **Delegated Trade Execution** - On CoW Swap, all transactions are routed through a decentralized network of “solvers” — independent algorithms that are responsible for finding the best execution price for your trades. That means those MEV bots we spoke about earlier can’t see your trades, and therefore, can’t arbitrage your profits away.
    
-   **Coincidence of Wants** - Any time you submit a trade on CoW Swap, solvers start looking for the best way to execute it. Before checking on-chain liquidity, solvers check other incoming orders on CoW Swap’s current batch auction to see if your trades can be matched peer-to-peer. If someone wants to do a trade in the opposite direction to what you want, you are paired together, and the whole thing is executed gas free!
    
-   **Uniform Clearing Prices** - On other DEXes, whenever a lot of people want to trade the same token, each of those trades are treated individually, meaning each trade is executed at a slightly different price. This allows MEV to creep in, as trades can be slotted in between that queue of swaps to make the most money. On CoW Swap, if the same people are making the same trade, as long as they are in the same batch auction, each order will be settled for the same clearing price when it goes on-chain. This leaves no room for MEV attacks since all prices are the same, meaning that transaction ordering becomes irrelevant.
    

  

Want to understand CoW Swap’s unique feature set more fully? Check out this blogs:

-   [What is a Meta DEX - and why should you use it for your trades? - CoW DAO](https://cow.fi/learn/what-is-a-meta-dex-and-why-should-you-use-it-for-your-trades)
    
-   [MEV Bots: Switch From Searcher to Solver - CoW DAO](https://cow.fi/learn/mev-bots-switch-from-searcher-to-solver)

large_MEV-arbitrage.png

medium_MEV-arbitrage.png

small_MEV-arbitrage.png

thumbnail_MEV-arbitrage.png

MEV-arbitrage.png

Discover how MEV and arbitrage affect crypto trading, learn the risks of exploitation on DEXs, and find out how Meta-DEX aggregators can protect your trades.

MEV and arbitrage: predatory but avoidable

![gasless-swaps.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/gasless_swaps_d95cdec808.png)
Gas fees are an integral part of the blockchain ecosystem. At their simplest, they are the fees a user pays to validate transaction on a blockchain. That fee goes to either a miner or validator to help process transactions in a block.

  

The price of gas on networks can vary widely. In 2020, gas fees on Ethereum reached record highs due to network congestion. While prices have come down since, the volatility of prices can have a major impact on your trading.

  

That’s why in this article we’re going to explain that thanks to CoW Swap, you can perform gasless swaps on Ethereum in a few simple steps.

## The burden of gas fees in crypto trading

On Ethereum, gas is required for you to perform most actions. From the buying and selling of cryptocurrencies, to trading NFTs, to staking, most actions will typically require you to pay a gas fee.

  

However, because of the fluctuating nature of gas fees, for many traders, maintaining enough ethereum to pay gas fees on trades can sometimes mean you miss out on making trades at the optimal moment.

  

This is because if you do not have enough Ethereum to pay your gas fee, the transaction will not complete. Or, if your trading requires you to execute your trade quickly, during busy times you may have to pay considerably more to ensure your trade can complete in time. The below chart demonstrates the [fluctuating nature of gas fees](https://ycharts.com/indicators/ethereum_average_gas_price) over the last five years.
![Screenshot 2025-03-07 at 10.48.58.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_03_07_at_10_48_58_60623bcbf0.png)


The amount of gas you pay, especially during busy times, can add up. There are countless examples of the high gas fees users have paid to transact on Ethereum. Last year, one [user paid $700,000 for a single Ethereum transaction.](https://cointab.com/user-paid-700k-ethereum-transaction/) Other famous examples included a [$23.5 million fee to move just 100,000 in Tether](https://cryptonews.com/news/the-most-expensive-transaction-on-ethereum-cost-usd-23-million/), and another user paid [$108,000 paid for a single transaction](https://u.today/shockingly-big-fee-paid-for-single-ethereum-transaction-details) in late 2024. It’s not Ethereum traders feeling the gas fee pinch.

  

Over on Bitcoin, one user [paid $3.1 million in transaction fees](https://www.coindesk.com/business/2023/11/23/bitcoin-sender-struck-with-31m-transaction-fee-largest-in-history), demonstrating that trading during busy times can be prohibitively expensive. But there are ways you can avoid getting caught out by gas fees, as we’ll explore below.

## What are gasless approvals?

Gasless approvals, or meta transactions as they are sometimes referred to, means that a third-party, called a relayer, or on CoW Swap, a solver, can send another user’s transaction on their behalf, covering the cost of gas in the process.

  

In a normal transaction, when you want to trade, you sign a transaction that is then added to the upcoming block in what is called the mempool. To find out more about mempools, and some of the risks that come with it, check our [guide to MEV on Ethereum](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao).

  

Digging a bit deeper, a user ‘signs’ a message that contains an intent to trade, along with the details of the type of trade and what token they want to transact in.

  

The solver is then responsible for paying the gas fee. How does this all work? Gasless approvals rely on [ERC-2612: Permit Extension for EIP-20 Signed Approvals](https://eips.ethereum.org/EIPS/eip-2612). This upgrade to how Ethereum works creates a signature that can call approvals directly on behalf of the owner.

  

This allows a third party, such as a solver, to spend funds on behalf of the user.

Each Ethereum transaction has a minimum fixed transaction cost associated with it. When executing transactions individually, this cost is usually higher per action than if users bundle multiple transactions together. So, in addition to creating a better user experience for traders, gasless approvals also lower the overall cost of trading on CoW Swap.

  

With gasless approvals, CoW Swap now allows users to sign a message (gas free!) that gives [solvers](https://docs.cow.fi/solvers/solvers) permission to execute the approval transaction on their behalf. Solvers then bundle the approval transaction with the first swap, and users pay fees in the sell token.

  

The result? Users can now do an entire swap, even for a new token, without spending a gwei in ETH, or even holding any ETH in their wallet at all. That’s a smoooooother (and cheaper) user experience. Moo-gnificent!

  

All of this means that for end users, there are lower fees, a more streamlined process and better security. We go into more detail on the benefits in the next section.

## Why gasless swaps are a game changer for Ethereum

Gasless swaps on Ethereum means that traders can execute their trades without having to worry and factor in volatile gas prices. There are a range of other benefits, too.

  

-   Fully ETH-less swaps: New users and fresh wallets can complete swaps end-to-end without needing ETH — that’s especially nice for airdrop farmers and privacy seekers.
    
-   Faster trades: CoW Swap users don’t have to wait for an approval transaction to execute before the swap — traders can now swap right away, even with tokens they haven’t traded before.
    
-   Bundling efficiency: Approval transactions execute alongside orders, in the same block — shielded from fluctuating gas prices, for a more cost-efficient experience overall.
    
-   Enhanced security: Only an approved spender can execute transactions on behalf of a trader — users can trust that [CoW Swap](https://cow.fi/cow-swap) is as secure as ever.
    

  

Ready to execute your first gasless swap? We will tell you how in the next section.

## How to execute gasless swaps on Ethereum using CoW Swap
    

### Step 1: Connect your wallet

Navigate to the [swap.cow.fi](http://swap.cow.fi/). Once you’re there, you’ll need to connect your wallet to the swap interface.

  

In the top right hand corner of your screen, you’ll find a “connect wallet” button. Click that and an interface will pop up.
![Screenshot 2025-03-07 at 12.46.48.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_03_07_at_12_46_48_cdc4fed40c.png)
Select the wallet of your choice and follow the instructions from your wallet provider.
![Screenshot 2025-03-07 at 12.46.04.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_03_07_at_12_46_04_72946aa346.png)
### Step 2: Select your trading pair

Once you're all connected and ready to go, select the trading pair you would like to share. You can pick from the drop down menus on the right hand side, as you can see below.
![Screenshot 2025-03-07 at 12.44.45.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_03_07_at_12_44_45_6e3f714fbd.png)
Once you’ve picked the one you want, enter the amount you want to swap. Once selected CoW Swap does its magic, working out the best price available to you. 
![Screenshot 2025-03-07 at 12.54.15.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Screenshot_2025_03_07_at_12_54_15_296726bd6a.png)
### Initiate the Swap with gasless approval

CoW Swap has gasless trading on more than 150 token pairs. To find out if your token pair can be gasless, CoW Swap will highlight if it is, as it appears below.
![Capture d’écran 2025-03-07 à 14.52.20.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Capture_d_ecran_2025_03_07_a_14_52_20_4339a5b910.png)
### Step 4: Confirm and monitor your transaction

Ready to confirm? Hit the trade button and let CoW Swap’s solver network do the rest, via CoW Swap’s Order Flow Auctions. This is a process where solvers compete to fulfil trades. The aim is to ensure users capture as much value from each swap or trade, while also being protected from [Maximal Extractable Value (MEV).](https://cow.fi/learn/what-is-mev)

  

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

  

So not only are you able to trade gaslessly, CoW Protocol’s solver network competes to give you the best deal possible.

## Next Steps

Curious about gasless swaps on Ethereum? We have plenty of resources you can use to understand the concept more fully. Here are a few more resources to get started:

-   [Announcing Gasless Approvals on CoW Swap](https://cow.fi/learn/announcing-gasless-approvals-on-cow-swap)
    
-   [EIP-1271 explained](https://cow.fi/learn/eip-1271-explained)
    
-   [CoW Swap launches TWAP Orders - a guide to how special order types on CoW Swap use gasless swaps on Ethereum.](https://cow.fi/learn/cow-swap-launches-twap-orders)
    

  

Ready to trade without paying gas? Head to [CoW Swap](https://cow.fi/cow-swap) to start trading.

large_gasless-swaps.png

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small_gasless-swaps.png

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gasless-swaps.png

In this article we’re going to explain that thanks to CoW Swap, you can perform gasless swaps on Ethereum in a few simple steps. 


How to: Gasless swaps on Ethereum

George Hristov

## Update as of 08/02/2023

The barter solver who got hacked already [refunded the losses it caused.](https://etherscan.io/tx/0x61a5196468b276bcedc3aab2f2fe255c2d54ca1c655523f4b25c99b1a224e715?source=post_page-----2faa9f918e29--------------------------------)

Next steps for CoW DAO are to [decide on the slashing process and to judge whether the Barter Solver can be re-added to the solver competition.](https://forum.cow.fi/t/cip-draft-slashing-of-the-barter-solver-responsible-for-a-hack-causing-cow-dao-a-loss-of-1-week-fee-accrual/1440?source=post_page-----2faa9f918e29--------------------------------)

## TL;DR

On February 7th 2023, CoW Swap’s settlement contract suffered an exploit wherein a hacker was able to drain  [~$166K](https://dune.com/queries/1975506)  from the contract. Although still an exploit, it is important to highlight two crucial facts regarding this hack:

-   User funds  **WERE NEVER AT RISK**  and have  **NOT**  been  **COMPROMISED**.
-   The protocol  **WILL RECOVER**  the stolen funds through its solver bonding pool mechanism, which is intended to mitigate such incidents.

To recap: as a trader, there is  **NO**  reason to worry or revoke approvals. CoW Swap never takes custody of your funds, since all trades are purely atomic. In order to have your funds compromised through CoW Swap, a hacker would need to obtain a signature from your private keys or have direct access to them.

## Background information

CoW Swap engages in a so-called “solver competition”, where external parties develop an algorithm to compete against other solvers to find the best execution route for CoW Swap users. Each solver team is independent from each other, and is able to deploy the necessary measures for their algorithm to perform in the best possible way.

In the hunt for better prices, solvers are allowed to tap into the CoW Swap settlement contract’s funds (called the “buffers”) to replace certain AMM interactions and thus save on gas. The  [settlement contract](https://etherscan.io/address/0x9008D19f58AAbD9eD0D60971565AA8510560ab41)  holds the buffer funds and allows the solver teams to tap into them whenever needed. These buffers accrue from fees that users pay in their sell token and are periodically drained into the protocol’s reward Safe.

In order to prevent malicious behaviour on the part of solvers and to recover from any exploits, in  [CIP-7](https://snapshot.org/#/cow.eth/proposal/0x267edf7a0bd3c771cfca763322f011ee106d8d5158612c11da29183260d1dba7)  CoW Swap implemented a bonding pool mechanism by which each solver needs to deposit $500,000 worth of cUSDC and 1.5M COW tokens as collateral for these sorts of scenarios. In the event of malicious behaviour or a hack, solvers would then get slashed and part of their bond is removed to cover for such events.

## How did it all happen?

On January 27th, 2023 a new solver entered the competition: the  [Barter solver](https://etherscan.io/address/0x55a37a2e5e5973510ac9d9c723aec213fa161919). The process was typical: after some time in staging and the depositing of the bond in the pool, the solver was allowlisted and moved onto production. Shortly after being allowlisted, the Barter solver set an  [approval](https://etherscan.io/tx/0x92f906bce94bab417cccc87ae046448d7fb8c2c0350b7ed911545577acb3bfc1)  to a contract they developed, called SwapGuard.

The aim of the intermediary SwapGuard contract is to limit the amount of tokens that can be lost in a single transaction due to slippage The goal for the Barter solver when interacting with this contract was to prevent their settlements from being exploited by MEV when submitted on-chain.

In this  [batch settlement](https://etherscan.io/tx/0x92f906bce94bab417cccc87ae046448d7fb8c2c0350b7ed911545577acb3bfc1)  that the Barter solver won, we can see that they performed a series of swaps and a single approval when executing the batch settlement. This approval is the reason for the incident.

![1-how-did-it-all-happen.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_how_did_it_all_happen_6d61046a45.webp)
[https://phalcon.blocksec.com/tx/eth/0x92f906bce94bab417cccc87ae046448d7fb8c2c0350b7ed911545577acb3bfc1](https://phalcon.blocksec.com/tx/eth/0x92f906bce94bab417cccc87ae046448d7fb8c2c0350b7ed911545577acb3bfc1)

![1-1-how-did-it-all-happen.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_1_how_did_it_all_happen_e90af26bd7.webp)
[https://twitter.com/peckshield/status/1622801412727148544/photo/1](https://twitter.com/peckshield/status/1622801412727148544/photo/1)

The SwapGuard contract was previously approved to spend the settlement contract’s DAI as part of a settlement. Because of a security issue that allowed arbitrary call execution from the SwapGuard contract, the attacker was able to leverage the existing approval to transfer funds from the settlement contract to their account ([address 1](https://etherscan.io/address/0xc0e82c1ed4786f8b7f806d1b8a6335ec485266ff)  and  [address 2](https://etherscan.io/address/0x94b6F400df694D0de29F600B15BAeed83E95658C)). The  [Barter solver](https://etherscan.io/address/0x55a37a2e5e5973510ac9d9c723aec213fa161919)  made the mistake of approving a vulnerable contract with the maximum value of DAI to SwapGuard, which is the root cause of the attack. This meant that since the contract had an interface for an arbitrary call, any informed hacker could call upon this function to drain the token allowances with the correct permissions.

It appears that the hacker was aware of the CoW Swap solver process, as they waited until the last day of fee accrual before performing the attack. Fees are usually withdrawn once a week on Tuesdays.

Once the issue came to light, the Barter team and the CoW Swap team hit the ground running to mitigate any possible damage or side effects. After some debugging, the issue was discovered and mitigated. All approvals for the ‘bad contract’ have been revoked, and the Barter Solver has upgraded to a new  [contract](https://etherscan.io/address/0xCce534eE5eba0bC94ddBB2B831D264AD86a5FFf4#code)  which has no arbitrary execution code functionality built in.

## What are the next steps?

As mentioned before, all approvals for the bad contract have been revoked, and no more funds are at risk. As per the rules defined by  [CIP-7](https://snapshot.org/#/cow.eth/proposal/0x267edf7a0bd3c771cfca763322f011ee106d8d5158612c11da29183260d1dba7), CoW DAO will slash the barter solver to compensate for the losses and will denylist the solver until full repayment is done.


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CoW Swap Solver Exploit— Post mortem 07/02/2023

On February 9th, 2023, After a successful  [governance vote](https://www.tally.xyz/gov/ens/proposal/45461903078948131870051132081249892009497709518413744958551889217805827301425)  from ENS, CoW Swap processed a large trade for the ENS DAO using the exchange’s signature intent-based trading design and Milkman contract.

## Trade Details

[ENS DAO sold 10,000 ETH](https://twitter.com/CoWSwap/status/1623680760522612738)  in exchange for USDC in order to reduce its exposure to ETH.

-   **USD value of the trade**: $16,145,549.60
-   **Slippage tolerance:**  2%
-   **Actual slippage**: 0.5%
-   **Price surplus**: $80,992.87

## Why CoW Swap?

CoW Swap’s solver competition ensured that ENS received the best possible execution price, even after announcing trade details publicly in a governance proposal ahead of time.

CoW Swap provided several benefits for a trade of this size:

1.  Protection from attack vectors caused by the delayed execution
2.  Allowing ENS to create a governance proposal that includes the exact swap parameters and protects the trade with a price checker — guaranteeing that the trade receives some minimum amount determined at the moment of swap execution (not during the creation of the governance proposal)
3.  Use of the Milkman bot for protection against MEV, slippage, and re-entrancy risk

## Milkman

The CoW Grants Program-funded, and Yearn.fi-developed  [Milkman bot](https://github.com/cowprotocol/milkman-bot)  was critical to the ENS trade.

The Milkman bot ensures that trades execute for the real-time price or better by utilizing a price checker, such as a Uniswap v3 pool, Chainlink oracles, or a custom price checker. Instead of setting a slippage tolerance, DAOs can utilize Milkman to determine a maximum percentage deviation from the price checker, guaranteeing that their trade will finalize at a fair market price. Milkman also simplifies governance for trades as DAOs don’t have to define a fixed price re-vote if the market moves significantly.

For this swap, ENS DAO chose to use a Uniswap v3 ETH/USDC pool, with a maximum slippage of 2%, guaranteeing that they would receive no less than the minimum specified in the governance proposal.

## CoW Swap: The leader in DAO trading

The largest DAO trades take place on CoW Swap, and the exchange is single-handedly responsible for more than 30% of all DAO trades. Check out  [CoW Swap for DAOs](/learn/cow-swap-for-daos)  to learn why DAOs such as  [Aave](/learn/aave-trade-breakdown),  [Nexus Mutual](/learn/nexus-mutual-trade-breakdown), and more trust CoW Swap with their large trades.

If you’re a DAO looking to make a large trade on CoW Swap, get in touch with us on  [Twitter](https://twitter.com/CoWSwap)  or through our  [Discord](https://discord.com/invite/cowprotocol). You can check out CoW Swap for yourself  [here](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=ENS-trade).



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


ENS Trade Breakdown

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

Wait? Smart contract wallet?

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

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

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

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

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

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

## What is a Safe fallback handler?

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

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

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

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

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

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

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

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

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

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

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

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

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



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

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

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

  

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

  

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

  

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

  

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

### What is MEV?

  

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

  

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

### What is a MEV Bot?

  

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

  

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

  

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

### How Does a MEV Bot Work?

  

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

  

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

  

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

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

Here is where MEV bots come in.

  

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

  

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

  

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

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

  

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

  

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

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

## The key features of MEV Bots

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

### Gas Fee Optimization

  

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

  

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

### The ability to analyse smart contracts

  

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

  

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

  

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

### Trading autonomy

  

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

  

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

### Mempool Monitoring

  

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

  

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

## How to beat MEV bots?

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

### Reduce Slippage on Ethereum

  

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

  

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

  

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

  

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

  

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

  

### Use a Custom RPC Endpoint on Ethereum

  

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

  

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

  

These searchers cannot frontrun or sandwich user transactions.

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

  

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

  

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

  

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

  

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

  

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

### In summary

  

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

  

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

  

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

  

You just have to know where to look. 👀

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


What is an MEV Bot?

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

  

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

## What is MEV?

  

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

  

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

## How Does MEV Work?

  

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

  

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

  

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

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

  

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

  

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

## The Different Types of MEV on Ethereum

  

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

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

  

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

## Frontrunning on Ethereum

  

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

  

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

  

This happens in three distinct steps:

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

  

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

  

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

## Backrunning on Ethereum

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

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

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

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

  

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

## Sandwich Attacks on Ethereum

  

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

  

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

  

This happens in four distinct stages.

  

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

  

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

  

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

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

  

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

  

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

  

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

  

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

  

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

## Is MEV on Ethereum a bad thing?

  

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

  

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

  

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

## How to Protect Yourself from MEV on Ethereum

  

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

## Reduce Slippage on Ethereum

  

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

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

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

  

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

  

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

## Use a Custom RPC Endpoint on Ethereum

  

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

  

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

  

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

  

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

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

  

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

  

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

  

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

## In summary

  

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

  

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

  

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

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

A guide to MEV on Ethereum

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

  

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

## What are multisig wallets?

  

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

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

  

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

## Why would you use a multisig wallet?

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

  

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

  

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

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

  

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

  

Many DAOs mint their own governance tokens and are responsible for allocating treasury funds. But when it’s time to make trades with these funds, DAOs and other multi-sig wallet users face unique challenges not encountered by other types of traders.

  

These issues stem from a variety of factors:

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

  

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

  

Below we explore how CoW Swap can alleviate these issues.

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

  

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

  

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

  

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

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

  

DAO trades are usually large transactions that move the market, leading to worse prices for the DAO overall. On CoW Swap, price impact is mitigated through several factors:

  

-   When CoW Swap finds a Coincidence of Wants opportunity, the order may be filled without accessing on-chain liquidity at all, and thus without creating a price impact
    
-   For trades that are not fully filled by a CoW, CoW Swap makes use of multiple on-chain liquidity sources and quotes from market makers to spread out the price impact
    
-   Special order types like partially fillable limit orders and TWAP orders spread trades out over time, further reducing price impact
    

  

The CoW Swap [solvers](https://docs.cow.fi/off-chain-services/solvers) automatically search for Coincidences of Wants and optimize the routing of each order to on-chain liquidity. All DAOs have to do is simply place their order. Special order types have to be selected in the CoW Swap UI, however, it just takes a few clicks to add them to a trade as well.

## Gasless approvals make multi-sig wallets more efficient

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

  

CoW Swap now allows users to sign a message (gas free!) that gives [solvers](https://docs.cow.fi/solvers/solvers) permission to execute the approval transaction on their behalf. Solvers then bundle the approval transaction with the first swap, and users pay fees in the sell token.

  

The result? Users can now do an entire swap, even for a new token, without spending a gwei in ETH, or even holding any ETH in their wallet at all. That’s a smoooooother (and cheaper) user experience.

  

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

  

-   Fully ETH-less swaps: New users and fresh wallets can complete swaps end-to-end without needing ETH — that’s especially nice for airdrop farmers and privacy seekers
    
-   Faster trades: CoW Swap users don’t have to wait for an approval transaction to execute before the swap — traders can now swap right away, even with tokens they haven’t traded before
    
-   Bundling efficiency: Approval transactions execute alongside orders, in the same block — shielded from fluctuating gas prices, for a more cost-efficient experience overall
    
-   Enhanced security: Only an approved spender can execute transactions on behalf of a trader — users can trust that CoW Swap is as secure as ever
    

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

  

DAO and other multi-sig managers have a duty to their stakeholders to execute trades at the best possible prices. According to [karpatkey](https://www.karpatkey.com/), who works with ENS, Balancer, Gnosis, Lido and CoW treasuries, fulfilling this obligation is easy on CoW Swap because all trades, whether large or small, almost always receive better prices than they would through individual liquidity pools or DEX aggregators.

  

On CoW Swap, the [solver](https://docs.cow.fi/off-chain-services/solvers) that provides the most value to the user wins the right to settle the trade; this is in contrast to the default Ethereum model where the searcher that provides the most MEV profits to the validator decides how transactions should be ordered.

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

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

  

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

  

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

  

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

  

Let’s say you want to sell 1000 ETH for USDC, but you want to do it far in the future. To protect yourself from volatile price movements, you can ask Milkman to create the order and specify a minimum amount you’re willing to accept for the trade. Milkman tracks prices using oracles.

  

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

It’s why DAOs like [Aave](https://cow.fi/learn/aave-trade-breakdown) and [ENS](https://cow.fi/learn/ens-trade-breakdown), have already used Milkman to trade over $20M worth of tokens.

  

Beyond allowing these DAOs to count on reliable prices, Milkman lets them reduce their overall number of governance votes and gives them standard CoW Swap benefits like best price execution and [best-in-class](https://eigenphi.substack.com/p/sandwich-mevs-impact-on-cow-swap) MEV protection — critical for large trades.

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

  

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

  

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

  

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

  

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

  

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

  

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

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

  

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

  

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

  

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

  

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

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

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

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


Why is CoW Swap the best choice for multisig wallets?

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

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

  

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

  

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

## What is MEV?

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

  

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

  

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

  

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

  

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

  

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

  

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

  

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

  

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

## How to create your own MEV resistance

  

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

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

  

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

  

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

## Using an RPC endpoint to help protect against MEV

  

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

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

  

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

  

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

  

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

  

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

  

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

  

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

## Baked in MEV Resistance

  

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

  

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

  

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

  

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

  

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

  

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

  

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

  

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

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

  

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

  

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

  

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

  

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

  

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

  

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

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

What is MEV Resistance?

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

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

  

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

## What are limit orders?

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

  

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

  

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

## How are limit orders different from other trades?

  

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

  

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

  

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

## Why should I use limit orders?

  

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

  

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

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

  

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

  

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

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

  

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

  

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

  

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

  

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

  

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

  

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

  

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

  

Below is an overview

### Customize your input field orders

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

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

### Auto-calculate limit price for your trades

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

### Set limit prices in USD

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

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

### Preview estimated fill price before placing a trade

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


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

  

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

  

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

  

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

  

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

### Extended Order duration

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

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

### More customization options than ever

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

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

  

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

  

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

  

Moooooo 🐮

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


Limit Orders Explained

CoW DAO develops the most user-protective products in Ethereum - so you can do more with less worry.

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