On the base layer, on top of that, there is kind of an approval that you give to our settlement contract. Our settlement contract has the logic built into it that if it gets the request to execute a settlement, it will basically check this blob and verify that er, well, basically, you have authored this before using your funds. And so what we do, as we we the user also specifies a fee amount in the cell token. If the transaction goes through, then the author or the settlement contract can basically keep up a fraction of the of the sold tokens as a reward, ok?
Earlier this week, I did a deep dive on a new DEX trading protocol called CowSwap, which combines many good features into what is possibly the most complete trading experience in Defi.
First, you no longer publish a fee-paying transaction to the public mempool. Instead, you sign a transaction and submit it off-chain to the CowSwap relayer, which handles all the execution. For you, this means you can safely set a very low slippage tolerance because you only ever pay a fee if your trade succeeds.
Second, and this gets us to real innovation, CowSwap looks for so-called “coincidents of wants” or CoWs before sending your order to the regular on-chain exchanges. For example, if one trader wants to buy ETH at a certain price and another wants to sell it, these two can be matched without paying any LP fees. Off-chain solvers can look at this orderbook and submit optimal matchings that among others, guarantee that all trades in a certain batch have to settle at the same uniform price. Because there’s no point in reordering trades that have the same price, this also eliminates MEV as well.
Only after all coincidents have been exhausted, CowSwap sends the rest of the order to the on-chain exchanges via smart routers like 1Inch
If you didn’t get all of that immediately, don’t worry - neither did I, and that’s why I invited Felix Leupold from CowSwap and Gnosis to answer my remaining questions. Please enjoy my conversation on CowSwap with Felix Leupold.
GUEST
https://cowswap.exchange/#/swap
Felix Leupold https://twitter.com/fleupold_
Listen to conversations between Su Zhu, the CEO and CIO of Three Arrows Capital, and Hasu, an experienced crypto researcher and writer. Together with occasional guests, we explore the transformative nature of trust-minimized currency and financial services.
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