CoW Swap: MEV protected swapping

Transcript

foreign [Music] 2022 in Berlin and I caught up with Anna George who leads the cow swap team uh hi Anna hi it's good to be here yeah um so yeah for those who don't know about Cal swap tell us what is cow Swap and what does that have to do with cows good yeah is a deck that's currently deprived on ethereum Maynard and a nurses chain and soon hopefully us available on a few other layer twos and yeah essentially what khalsop is it's um it's in a way a meter decks aggregator

so we are able to come to tap into liquidity that is available on amms but also in other decks aggregators and the way we do this is we facilitate an off-chain competition of so-called servers that are basically looking into the orders that get submitted by our users so users they don't send an ethereum transaction but they would rather sign and intend to trade so basically making available information and this is like my sale token this is the limit price I'm willing to accept and like the order how long I want my order to be valid for and then this decentralized solving competition is

optimizing for Surplus that they can generate rate for users so the better the value that they can create for users the more likely they would win the competition and the winning solvers then submitting the transaction on chain and for users it's completely Mev protected and part of the Mev protection is coming from these so-called cows you asked why are we called Kelso and the reason is that we are able to match orders peer-to-peer and and if we do so there's no way to extract any value from the transaction yeah so the way that you are able to achieve this med protection is by like batching transactions in in one transaction so

rather than having like a bunch of transactions showing up in a block the solvers are grouping these transactions into one which is uh eliminating the ability for or at least within within that batch of transactions someone from extracting maybe from from the from the transactions right and if you give like one very simple example let's assume that you have one user that's wanting to sell some dye for Isa and someone else wants to sell Isa for die then you can directly settle these trades against each other so you don't have the need to tap into any unchain existing amm liquidity so no mine no search no black Builder would be able to actually like

inject any transactions in the middle of it yeah and what's the risk of because I think you know people might look at this and say there's because you have these solvers that are looking at the chain what is the incentive for them I mean there's an economic incentive but there could be sort of spam solvers that come onto the system and perhaps censor transactions like what's the risk of that happening and has you know are you like mitigating for that somehow yes so in that sense we have a very similar system to proof of stake so any server who wants put to participate in a competition they have to stake some tokens and only then there would be whitelisted to participate in the competition and in case of exactly the sort of malicious behavior that would be

slashed okay but I mean an actor who who wouldn't be economically incentivized would they be able to I mean of course they would get slashed by like other mechanisms to actually prevent this from happening other than the incentive mechanism or like a state actor for instance that wanted to like censor Cal swap you know um no you would have basically limited money right like in like imagine someone with unlimited money that wants to censor Cal swap is that feasible so there is there's some um components that are still a little bit more centralized that we would like them to be but we're working on a decentralization for this so right now

the whiteness is done by cow daudo so theoretically um this is like this is really like a decentralized framework of ready to like and to ensure where the different place orders if there's some sort of way for them to figure out who is running a server and like trying to take influence on how they're submitting solutions that could theoretically probably still be possible but then I would argue the more decentralized the server competition is meaning the more actors you have who are actually providing technicians the less likely this can actually happen so right now we have about 10 different servers running which is already pretty good but we are aiming to get more and so the bigger the competition the less likely

any yeah anyone can interfere okay and how how big is Castle Rock these days I think me so I I use it quite often I like I've stopped using every other Dex aggregator and just like do all my traces with Castle it's great it's a great product how how much like trading and gets done on cost what's the volumes and so I think across the 15 Bay and Mark and we have around 500 daily users and um and essentially yeah it's going super well um we are planning to deploy another networks like polygon fairly soon we have a huge huge demand for for that I'm sure yeah whatever so hopefully there we can grow the pie a bit more and in terms

of tax aggregator comparison I think we are like similar too much at the moment in terms of volume okay I think one of the things that is going to start proliferating and becoming more mainstream in the next year years is this ability to do like cross chain swapping where you know you have like Ethan ether mainnet and you want to have like I don't know on the uh Geno token on the notice chain and right you know like you could do that yourself by swapping the token and then bridging it over but is are there any plans to like build that into the ux because I think like that's really the Holy Grail right there's definitely one thing that we're currently looking at and so essentially what we could already fairly simply deprive is like a way that the user on

the UI can see if a token has better liquidity available on another Network so let's say users coming to nurses Jane and wants to trade a large amount of whatever your uscc or a different token that has less liquidity on this chain then the UI could show them oh if you're willing to wait for like seven minutes or so then we can offer you 20 better price because it's getting the liquidity from another exchange exactly so it's like a different use okay different use case but valuable one yeah and then the solver essentially would be able to bridge the liquidity over and exchange it on the other network get a better price and Bridge the liquidity back okay this way and what's what do you guys

have any like opinions about the types of like the bridges that would be used there or are you like building your own Bridge or um if any like Building Bridges is not necessarily our expertise so if anything we would probably have some sort of collaboration we have been talking to nurses Jane about it but I think yeah we were mostly most likely not focused on better yeah okay yeah I mean that makes sense right like what what kinds of like bridging Technologies are you most excited about are what what would be more likely to um make its way in like entry Integrations between like ZK Bridges or or some kind of trustless bridge or like

um like a state proof verification Bridge something similar to IBC you have any do you have any like opinions about about this yet um I noticed a really good team currently working on a ZK bridge for nurses chain so that's definitely interesting but I wouldn't call myself an expert to really judge what bridging technology ultimately would be the one that we should be going for okay and um what's do you have any Alpha like what's on the road map did you did I didn't see many talks with did you announce did you make any big announcements here uh we didn't make it as an announcement when I have our Workman planned out and so there's a few so one big feature that a lot of people hope for is to be

working on is limit orders oh yeah so that's gonna come in the next few months and then deployment on polygon and then another feature that's very cow specific is allowing users to wait for the next bigger batch so basically having Canada batches that would take place maybe every 15 minutes oh okay and then users can tap into like basically pretty far and say okay I want to be part of a bigger batch and yeah and return for a better price promise that I would be receiving okay so as a user instead of like swapping now you you sort of defer uh the time at which your trade goes through and you try to like batch everybody at the same time exactly okay that's interesting

it's interesting but it's also kind of like counter-intuitive to crypto right because like in crypto everything's instant and I think a lot of the narratives around crypto has been like like things are instant in the traditional world you have like this t plus one or whatever but here we're kind of coming back to these kind of specific time frames for things to happen I mean like if people want to do that like right so this is an interesting point like we have about half of our users we're requesting like class transactions and the other half was saying no we want to actually be able to wait a bit longer and able to get a better price and there's a lot of Trades that are actually not so time sensitive where people like before they go to bed yeah like if whatever price is reached I I

just wanted to be executed and yeah like it's definitely something that we want to play around with and other questions as like what's a good time frame that people were willing to wait for it so right now we're thinking 15 minutes but potentially reduce it more to like 10 minutes or something it's something to play around with very cool cool well thanks uh thanks for being on the interrupt and uh yeah I love crosswalk I mean I I use it fairly regularly and I love getting the little move don't ever change that maybe add some other sounds yeah okay thanks Anna thank you [Music]