Two Protocols, One DEX: Introducing the Balancer-Cow-Protocol (BCP)
Two of Ethereum’s leading protocols join forces, creating a new DEX to deliver the best experience for traders.
Balancer-Cow-Protocol (BGP) is officially live and Balancer users are immediately able to take advantage of BGP as it is now the default on balancer.fi. On October 21 at LisCon, Balancer Protocol and Cow Protocol announced the launch of the Balancer-Cow-Protocol, combining the Vault system of Balancer V2 with Cow Protocol’s revolutionary price-finding mechanism. Balancer joins CowSwap to provide users benefits such as on-chain liquidity, MEV protection, better trading prices, and optimized gas costs.
“Cow Protocol brings unparalleled transparency and value to DeFi, focusing on user experience and enhancing industry growth. The combination of these two protocols will allow users to obtain the best benefits of Cow Protocol and Balancer, such as gasless trading, better overall prices, and MEV protection.” — Fernando Martinelli, Balancer Labs CEO & Co-Founder.
One DEX, Endless Benefits
Users of BGP can benefit from:
- MEV protection
- Best on-chain prices available
- No gas fees charged for failed transactions
- Transaction management that a professional third party handles
“The collaboration with Balancer is a natural fit, the native integration of Balancer’s V2 architecture allows us to achieve even better prices for the end-users and provide a smooth UX across the two platforms. It’s an important milestone towards our mission to build an infrastructure layer that protects traders.” — Martin Köppelmann, Gnosis CEO & Co-Founder.
Miner Extractable Value (MEV) Protection
Miner Extractable Value, or MEV, is the measure of profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. To date, more than $730 million has been extracted from users by bots front-running transactions, exploiting the slippage users allow in a trade. The Balancer-Cow-Protocol leverages batch auctions with uniform clearing prices for all trades in the same batch, protecting traders from value extraction.
Balancer Protocol users are introduced to Cowswap’s price-finding mechanism based on gasless orders and smart order routing. The batch auctions trading mechanism can match the trader’s liquidity in an off-chain style, and if needed, tap into all on-chain available liquidity to settle the unmatchable off-chain liquidity, all within the same settlement transaction. Instead of sending an executable transaction with a predetermined execution path, users will now sign an off-chain message with their intent to trade. The additional third-party executes trades, matching against whichever on-chain liquidity offers the best price.
Coincidence of Wants — hence the CowSwap name
Coincidence of Wants refers to an economic phenomenon in which peer-to-peer trades are settled directly without using an AMM, therefore without incurring any slippage and fees. CowSwap, the first trading interface built on Cow Protocol v2, allows users to buy and sell tokens using gas-less orders settled peer-to-peer or into any on-chain liquidity source while providing MEV protection. BGP uses Coincidence of Wants, removing the need for an external market maker or liquidity provider; this allows users to save on gas costs, slippage tolerance, and protocol fees.
About Balancer Protocol
Balancer Protocol allows for automated portfolio management and provides liquidity turning the concept of an index fund on its head: instead of paying fees to portfolio managers, you collect fees from traders who rebalance your portfolio by following arbitrage opportunities. Developers leverage Balancer as a permissionless building block to innovate freely and create new treasury management systems. Balancer Lab’s mission is to become the primary source of DeFi liquidity by providing the most flexible and powerful platform for asset management and decentralized exchange.
To learn more, please visit https://balancer.fi/.
About Cow Protocol
Cow Protocol’s price finding mechanism is based on batch auctions which allow for a few significant benefits for users, including MEV protection, better on-chain prices, and gas optimizations. Instead of sending executable orders to the miners, traders send intents to trade to a set of professional 3rd parties that compete amongst each other to find the most optimal settlement solution. These parties, the solvers, bundle trades into batches, which can offer MEV protection, off-chain liquidity matching and gas cost savings. Gnosis Protocol’s mission is to protect traders and offer fair prices by building the ultimate batch layer on Ethereum.