Full MEV Protection from CoW Protocol within Swapr’s Eco Router.
A fully decentralized front end integration for the CoW Protocol on Gnosis Chain and Mainnet.
In July, Swapr integrated with CoW Protocol. Since this integration, users have been enjoying the option to choose MEV protected trades right from within the Swapr front end through the Eco Router. This integration is a gigantic leap forward for traders and a monumental win for decentralization! Let’s dive into the details to see what MEV is and how you are protected against it and why we are so excited.
What is MEV?
While this explanation is rather rudimentary, it lays out the basics for an understanding of how MEV works, the disadvantages you could experience and also how it could threaten decentralization. If you want to take a deeper dive into MEV, you can find some more reading on the subject here.
MEV stands for Maximal/Maximum Extractable Value (it used to stand for Miner Extractable Value during the Ethereum Proof of Work days). It refers to the maximum value that can be extracted from block production in excess of the standard block reward and gas fees by including, excluding, and changing the order of transactions in a block.
What does this mean?
For all on chain activity, there is a delay from the time a transaction is sent to the network and when it is actually mined and then enters and affects the market. These transactions that are received and “waiting” to be mined, enter what is known as the “mempool”, which stands for “memory pool”. To be clear, there is no single big mempool, rather each node has its own mempool and combined they form the global pool. However, at any given time, there can literally be thousands of pending transactions broadcasted to the network waiting to be added to a block and mined. This market affecting information is now available to a select group of participants before those transactions actually enter and affect the market. It is at this stage when the transactions are “sitting” in the mempool that MEV attacks happen.
There are numerous types of MEV attacks. For example arbitrage — this is the simultaneous purchase and sale of the same asset in different markets in order to profit from the differences in the asset’s listed price. Another popular one is front running — where a transaction is copied and submitted with a higher gas fee so that it gets executed on-chain before the one that was copied. The original transaction fails, leaving the original submitting participant without the fulfilled transaction, but gas and fees are still paid. There are more types of MEV attacks, but in short, MEV harms participants by, in a sense, imposing a sort of invisible tax on users. An even greater risk is that it could lead to harming the Ethereum ecosystem when large MEV rewards encourage consensus instability among MEV participants.
The Players bringing you MEV Protection and how they do it.
CoW Protocol is an extremely powerful and effective trading protocol that uses Batch Auctions as its price finding mechanism to facilitate its peer to peer trading via Coincidence of Wants (CoW), or tapping into your favorite AMMs and DEXs when no CoW is found. In short, CoW Protocol gives users permissionless, price effective trading by allowing them to swap their assets at the best rate possible, while still enjoying full MEV protection.
Swapr is a fully decentralized, permissionless and immutable AMM and is home to the Eco Router. The Eco Router is a chain-level aggregator that introduces external liquidity into Swapr from other reputable DEXs, AMMs and aggregators, at no additional fee to users. Users are guaranteed the best possible price on their trade without ever having to leave the safety of Swapr. Swapr is a product of DXdao that owns its own front ends, and is therefore able to provide traders with one of the safest font ends in the web3 environment.
How it’s put together to give you MEV Protection.
Swapr’s Eco Router is a feature that immediately goes to work and combs through a variety of AMMs and aggregators for the best value trades as soon as you have connected your wallet and chosen the tokens you wish to trade. Once it has completed its search, the Eco Router then displays exactly what you need in a single, easy-to-read list, automatically raising the best option to the top of the display and auto-selecting that trade — all in one simple, quick and easy request.
With the integration of Swapr and CoW Protocol, one of the options that the Eco Router will return is now going to be an “MEV protected CoW trade”. The decentralized Swapr front end communicates directly with the relevant CoW protocol and executes the swap exactly as if you were doing the swap directly through CoW Swap. Swapr’s integration creates a fully decentralized front-end integration of CoW Protocol.
A monumental win for decentralization
Suffice it to say, this integration of CoW Protocol directly into the Swapr Eco Router is an unprecedented union of best-price trading, safety and security. It marks the first fully decentralized front end integration of CoW Protocol on Gnosis Chain and Mainnet. DeFi traders are now able to access the CoW Protocol through a truly decentralized and permissionless front end ensuring their trades are MEV protected. The combination of a decentralized front end and a decentralized batch settlement layer is bound to take DeFi to a whole new level.
In light of recent events in crypto we’d like to thank you as a user of Swapr and for the role you play. With Swapr’s decentralization first approach, your use of Swapr validates decentralization, supports Swapr, and directly contributes to the long-term success of the decentralized cryptocurrency ecosystem.
On the horizon…
It is still in the process of being developed, but we figured a little preview will be just what the doctor ordered, but we do also think there has to be a “limit” to that “order”…
“wink wink, nudge nudge”…
About Swapr: Swapr is a multi-chain automated market maker (AMM), deployed on Ethereum mainnet, xDai, and Arbitrum. Swapr is the first AMM to allow for adjustable swap fees through governance, as well as the first DAO deployed DeFi protocol on Ethereum; developed organically within the DXdao community.