• Trades via batch auctions

• User orders are consolidated in order book before sending to a driver who acts as a auctioneer. Orderbook and the driver are centralised component in the cowswap architecture.

• Solvers compete to create a solution to a batch maximising the total surplus for users. Surplus = Execution price - Limit price

• Solvers sends their results back to the driver who sorts and ranks them and settles the winning batch on chain

• Solvers can use any liquidity source or strategy to win the auction, can use their own inventory or private orderflow

• CoW - Coincidence of Wants , when buyers and seller can be matched directly. This is cheaper, more price efficient for parties but happens rarely as of now

• CoW Hooks

  • we can take multiple DeFi actions: swapping, bridging, staking, depositing, borrowing, and more — & group them all together into one single intent!
  • CoW Hooks are arbitrary Ethereum “calls” that attach to an order and execute before and/or after the order. Developers and advanced traders can use code to express an intent that performs some action before a swap (pre-hooks) and after a swap (post-hooks).
  • Pre Hooks - validating on chain signature or setting the require approvals through an EIP 2612 permit. Post-hooks provide an opportunity to put the funds to use immediately through staking, liquidity providing, bridging tokens to L2s, etc.
  • Example
    • Pre-hooks: Use a pre-hooks action to approve the token for a swap
    • Swap: Use CoW Swap to swap your USDC to the token you would like
    • Post-hooks: Send your new tokens to the bridge contract as a post-hook

  Hooks Use cases

• Repaying a debt and staking

• Opening a LP position (Swap some assets for eth, open a liquidity provider position in the post hook)

• NFT sniping and selling

• unstaking and restaking

1inch Fusion

• In April of 2022, solving was dominated by aggregators like 1inch, 0x, CoW’s aggregator, and paraswap. Today, it’s dominated by professional solvers like Barter, Otex, Laertes, Seasolver and more.
• As DEX aggregators like 1inch lost market share, 1inch responded by creating 1Inch Fusion.
• Fusion is similar to CoW Swap, the main difference being that Fusion utilizes Dutch auctions vs. CoW Swap’s Single Block Batch Auctions.
• Fusion which went live at the end of 2022 has 15% of 1Inch volume. Fusion is the default at their front end.
• In Fusion, users sign off-chain orders (intents) which are then sent to a network of solvers who can fill the Dutch auction at any time. In a Dutch Auction, prices start high and then decline over time.
• 1inch sets slippage dynamically.