Source: Block Rhythm

CowSwap is the DeFi currency with the strongest growth recently. It is also one of Vitalik’s favorite DEXs. It is also a dedicated on-chain platform for large-scale shipments. It is even the DEX used by the Wang team. .

But what many people don’t know is that behind CowSwap lies an underestimated top incubator in the Ethereum faction-Gnosis. In my opinion, this is the real reason why $COW is skyrocketing.

Recently, a piece of on-chain news in the Chinese community about the Trump team’s DeFi project World Liberty Financial (WLFI) attracted market attention. Although WLFI’s asset list does not include $COW, according to on-chain analyst Ai Ai, WLFI has used CowSwap for several recent token purchases. This coincides with Ethereum founder Vitalik Buterin’s habit of frequently using CowSwap.

This special on-chain behavior also directly affects market sentiment. Under the dual expectations of the "eve" of Trump's upcoming inauguration and the popularity of concept coins, the price of $COW It soared 62% in just one week and 162% in one month.

The person standing behind CowSwap is Gnosis

Gnosis is the powerful force behind CowSwap.

CowSwap’s predecessor is Gnosis Protocol V1 launched in 2020. This is the first decentralized trading platform to implement ring transactions through a batch auction mechanism. Its unique design allows all orders to share liquidity and complete settlement efficiently.

In 2021, Gnosis Protocol V2 launched an innovative solving mechanism (Solvers), which not only greatly improved the order matching efficiency, but also successfully dealt with the MEV (Miner Extractable Value) that has been plaguing DeFi traders for a long time. )question. In the same year, Gnosis Protocol was renamed CowSwap and became the aggregation trader we know today.

It can be said that the rise of CowSwap is inseparable from the deep accumulation of the Gnosis ecosystem. In fact, the story of Gnosis ecology can be traced back to 2015.

Gnosis co-founder Martin Koeppelmann began researching decentralized prediction markets earlier than what is now known as Polymarket. In 2015, he published his thoughts on the combination of MarketMaker and OrderBook on his forum, which was one of the earliest decentralized prediction market ideas in the industry.

Martin koeppelmann was also the earliest Ethereum developer and had already joined before the DAO period. Because he lived in Berlin, he had close contacts with Vitalik who was in the Berlin office at that time.

Over the years, he has participated in many discussions on the Ethereum development community page, and often discusses issues such as L2, ZK, and the Ethereum roadmap with Vitalik. Martin’s comments on social media also show how integrated he is in the community.

It is based on this accumulation of technology that Gnosis has gradually developed a complete ecosystem. Evolving from Gnosis Protocol to CowSwap, Martin and his team further derived products such as Gnosis Chain, Safe and Gnosis Pay, ultimately forming a highly collaborative ecosystem.

So integrating each other is natural. The most representative one is the integration of CowSwap and Safe.

Understand the royal wallet of the Wang family

As the star product of the Gnosis family bucket, Safe is the most popular multi-signature wallet in the Ethereum ecosystem and is also a wallet dedicated to large households. When Safe issued coins this year, almost all of the top 100 airdrop addresses were project parties or institutions.

In other words, the big users of Safe in the early days were project parties, not individual users. Including OP, Polymarket, Drukula, Worldcoin, Lido and more.

At first, Safe’s audience was more DAO and currency project parties. But as the encryption industry enters the next stage, traditional finance, traditional institutions, family funds and old money have entered the market one after another. However, the encryption threshold is high. In order to protect funds and use on-chain encryption, the safest way is to use a multi-signature wallet. Choice is Safe.

Safe’s design greatly improves the security of fund management. Through the multi-signature mechanism, funds are stored in smart contract addresses, and transactions can only be executed after a preset number of signatures (such as 3/10) is met. This mechanism effectively reduces the risk of a single point of failure. Even if the private key of a signing address is leaked, it will be difficult for the attacker to obtain enough signatures to complete the transaction. In addition, during the multi-signature confirmation process, the pre-signer does not need to pay Gas for the signing operation, because the transaction is still in the "pending execution" state, and only the last address to sign and confirm the execution operation (such as transaction, transfer, etc.) needs to pay Gas. . This optimization not only reduces the cost of use, but also makes Safe the best choice for institutional users and large customers.

According to Safe Guardian’s disclosure to Rhythm BlockBeats, it is the easiest way to determine whether the address on the chain is a Safe wallet address.There are two methods: one is "MultiSig" multi-sign displayed on ARKHAM, and the other is "MultiSig:Safe" will be displayed directly below the address on the debank page.

Address of Trump Project

Vitalik's address

And most importantly, as part of the Gnosis family bucket, the DEX built into Safe is CowSwap. This is why whales like Vitalik and Team Trump favor CowSwap.

Because from this perspective, Trump, Vitalik and other big whales may not only favor CowSwap because it is an MEV-proof aggregated DEX, but also Gnosis. The synergy effect shown by FamilyMart is a tailor-made solution that directly meets the real needs of large households.

From incubator to investment DAO

As mentioned above, the Gnosis ecosystem has been laid out since 2015. Originally a prediction market platform based on Ethereum, it later developed a Gnosis ecosystem and spawned many projects such as Gnosis Chain, Safe, CowSwap, and Gnosis Pay.

Gnosis Chain, which is a well-known Ethereum side chain in the previous cycle, focuses on the construction of efficient and secure decentralized applications. According to DefiLlama data, as of the time of writing this article, the total value locked (TVL) of Gnosis Chain is $349.31M, including $71.61M of native assets and $277.7M of cross-chain bridge assets. The market value of stablecoins reaches $119.98M, of which DAI accounts for 74.07%, and the trading volume remains stable.

Gnosis Chain data, source: DefiLlama

And Gnosis Pay is an on-chain payment debit card. By seamlessly integrating blockchain technology, it provides users and institutions with a convenient payment experience. As well as CowSwap and the multi-signature wallet Gnosis Safe (now called Safe).

GnosisDAO is the core governance institution of the Gnosis ecosystem, promoting the incubation and development of innovative projects through decentralized autonomy. After ecological incubation became more and more prosperous, Gnosis dao also began to try investment business.

In addition to hatchingAs early as 2019, GnosisDAO began to deploy well-known projects such as Safe and CowSwap through its investment arm GnosisVS, and has supported more than 60 startups.

Invested projects include: Monerium, an on-chain fiat infrastructure for Web3 builders; Naptha AI, a decentralized platform for artificial intelligence workflows; and Schuman Financial, a MiCA-compliant stablecoin protocol.

This year, the investment business has been further expanded. In October this year, GnosisDAO approved the proposal and launched a $40 million venture capital fund. GnosisDAO invested US$20 million, and the other half of the capital came from external limited partners (LPs). This dual structure not only increased the fund's capital volume, but also created more opportunities for external cooperation.

The fund, called GnosisVC Ecosystem, will prioritize investments in projects engaged in the tokenization of real-world assets (RWA), decentralized infrastructure and financial payment channels.

There are three key investment areas: 1. Tokenization of Real World Assets (RWA): Promote the digitization and on-chain of traditional financial assets through blockchain technology to provide more liquidity and Transparency; 2. Decentralized infrastructure: covering a wide range of areas from node operations to decentralized computing and storage, supporting the efficient operation of next-generation blockchain applications; 3. Payment channels and middleware: focusing on payment solutions such as Gnosis Pay solution to provide seamless payment capabilities for DeFi and Web3 ecosystems.

What is the strength of CowSwap?

It can be said that the rise of CowSwap is more like the best embodiment of the collaborative efforts of the Gnosis ecosystem, but this does not mean that CowSwap itself has not created a new paradigm.

To put it into more detail, CoW Protocol is a decentralized trading protocol, and CowSwap is a DEX built based on CoW Protocol. As its front-end interface, users interact with CoW Protocol through CowSwap. .

As the front-end application of CoW Protocol, CowSwap further amplifies the advantages of the protocol. It is called CoW Protocol’s “trading assistant” and is a Meta DEX aggregator that can jump between multiple AMMs and other aggregators to help users find the best price in the current market. Unlike traditional DEX, which allows users to compare prices by themselves, CowSwap's mission is to save users from tedious operations through intelligent matching and ensureTransactions are completed at the best possible price. From this perspective or that, CowSwap solves a long-standing pain point faced by DeFi users: the front-end dependency problem.

The endgame against MEV is intention?

Miner Extractable Value (MEV) is a long-standing issue that has plagued traders. MEV refers to the additional value that miners or other traders extract from ordinary users' transactions by manipulating the order of transactions or inserting orders. A Galaxy Digital report estimates that MEV bots have extracted as much as $300 million to $900 million in user interest on the Ethereum network alone.

This is very unfriendly to large investors and whale traders, and even Ethereum founder Vitalik Buterin himself has caused a lot of trouble and headaches because he is often "trapped". Therefore, the MEV issue is also one of the issues that Vitalik is most concerned about during the construction of Ethereum, and it is often mentioned in various speeches and Ethereum roadmaps.

CowSwap solves this problem very well.

In traditional DeFi interactions, user operations (such as asset bridging, exchange, staking and withdrawal) interact directly with on-chain contracts. This design is not only complex, but also exposes the user’s transaction needs, making it an easy target for MEV robot attacks. Therefore, CoW Protocol fundamentally changes this interaction model by migrating users' transaction needs from on-chain to off-chain processing. This solution is called "off-chain preprocessing", and it also has a more familiar name called "intent transaction".

The intention process is essentially an off-chain pre-processing black box. The user's intention will be placed in an "invisible" pre-processing center. After collecting and pre-processing the user's transaction needs, CowSwap Third-party "Solvers" are introduced off-chain to match and process transactions. This mechanism brings multiple benefits, not only greatly reducing the risk of users directly contacting the chain, but also optimizing the liquidity management of the protocol, making user transactions more efficient, secure and private.

To be more specific, through intention narrative, CoW Protocol has designed three core protection mechanisms for the MEV problem:

1. Unified clearing price batches

CoW Protocol introduces the "unified clearing price" mechanism. When the same token pair (such as ETH-USDC) is traded multiple times in a batch, all traded assets will be liquidated at the same market price. This mechanism makes the order of transactions irrelevant, essentially eliminating the possibility for MEV bots to profit from reordering transactions. More importantly, this mechanism also solves the price inconsistency problem caused by the constant function market maker (CFMM) model in traditional AMMs (such as Uniswap), providing users with a fairer trading environment.

2. Entrusted transaction execution

Users’ transactions are executed by guaranteed third-party solvers (Solvers), avoiding direct exposure to MEV risks on the chain. Solvers need to ensure that the transaction price is not lower than the price signed by the user, while optimizing liquidity through off-chain matching or private market makers. This design not only reduces users’ price risks, but also greatly improves transaction execution efficiency.

3. Demand coincidence model

Compared with the traditional automatic market maker (AMM) or central limit order book (CLOB) model, the advantage of CoW Protocol lies in its core auction mechanism . This mechanism allows multiple transactions to proceed simultaneously, like an efficient large-scale marketing promotion. In this event, whoever can find the best match will gain the greatest benefits. This is the so-called "Coincidence of Wants (CoWs)", which is where the name CoW Protocol comes from, cleverly spelling out the word "cow".

Therefore, driven by Gnosis’ ecological flywheel and CowSwap’s products, CowSwap’s transaction volume on the Ethereum chain has been very rapid in the past 30 days.

Past grievances with Uniswap

Many people don’t know that CowSwap and Uniswap have some past grievances. Last year, UniswapX, announced by Uniswap, the leader of DEX, was involved in the CowSwap plagiarism controversy.

After Uniswap announced the V4 version, it immediately announced that it would launch UniswapX. However, the community was very dissatisfied with UniswapX and there was a lot of discussion. Some people directly asked: "What is the difference between UniswapX and CowSwap?" Some even jokingly said, "UniswapX We should thank the open source spirit of the encryption industry."

Curve Finance. The official account commented very directly: "With all due respect. The rules of the game have changed a long time ago: when 1inch first performed high-quality aggregation, and when CowSwap launched the Solvers model. UniswapX is good, but it is not pioneering. The other player is not even the second player."

This kind of public opinion pressure has caused Uniswap to face a lot of challenges. It seems that in order to get rid of the title of "DEX Tencent", the two months ago Uniswap Labs launched the Ethereum Layer 2 network Unichain based on OP Stack, which finally made a "little" comeback.

One of the big innovations is that Unichain has innovated on the MEV revenue distribution mechanism, through the Trusted Execution Environment (TEE), allocate part of MEV income directly to users or liquidity providers (LP) to achieve fairer value sharing.

In addition, MEV earnings are proportionally injected into the validator and user reward pools. This mechanism not only reduces the participation risk of LP, but also encourages more users to participate in ecological construction.

Wintermute "steps on seven-color clouds" and comes

From this point of view, CowSwap's products are good, but there are many "methods" for easy-to-use products in the currency circle, and not many can be used on top trading platforms. , not many can rise 162% in a month.

If you go back in time 4 months ago, you will find that the beginning of the rising price of COW currency was the cooperation with Wintermute.

Initially, in order to increase on-chain liquidity, CoW DAO proposed to allocate 10 million $COW tokens to inject market liquidity into ETH/COW. This proposal includes an innovative strategy: part of the $COW tokens will be converted into ETH and injected into a new Function Maximizing AMM (FM-AMM) liquidity pool together with the remaining $COW. FM-AMM is different from traditional AMM in that it can effectively eliminate most MEV attacks and high profits of arbitrageurs, while reducing risks for liquidity providers (LPs).

However, on-chain liquidity alone is still not enough to meet market demand. The deep market of centralized trading platforms is also important. After all, the market there is bigger and the money is more. At the time, the only way to obtain $COW was through decentralized channels, and the largest pool was ETH/COW on Balancer on the Ethereum mainnet. Without the CEX trading scenario, many users and institutions are unable to deploy $COW.

At this time, Wintermute came "stepping on seven-color clouds".

Wintermute proposes to lend 7.5 million COW tokens from the treasury of the CoW DAO to support liquidity on decentralized and centralized trading platforms. This proposal received strong support from the community and officially opened a new chapter in $COW liquidity.

As the leading market maker in the crypto industry, Wintermute is extremely good at building efficient markets between centralized and decentralized trading platforms. Its founding team has worked at the traditional financial giant Optiver and has rich market experience. In-depth management experience.

In the months of cooperation, Wintermute has provided COW with deep market support for ETH and other trading pairs, ensuring liquidity, as well as DeFi aggregators such as CowSwap, UniswapX and 1inch. Stable trading environment. at the same time,Wintermute provides large transaction support for institutions in the OTC (over-the-counter) market, further expanding $COW’s user base.

This two-way market driving effect directly drives the price of $COW to soar.

Even in the second month after Wintermute made the market for it, Coinbase announced that $COW would be included in the currency roadmap and launched the COW perpetual contract three months later. Since then, $COW has been listed on major top trading platforms one after another, and Binance followed suit and launched the spot trading pair of COW/USDT.

These are the real reasons why I think $COW surged 162% in one month.

The flywheel effect between Gnosis ecology and Ethereum

From a more macro public chain perspective, in a bull market, the Solana ecology that Wall Street bet on grew very rapidly, while Ethereum showed a slight weakness. . However, judging from the on-chain dynamics of the Trump team's WLFI project, Solana still has a lot of room for growth in serving large institutions, and the performance of multi-signature products is difficult to match the deep accumulation of Ethereum.

Although there are multi-signature products on the Solana chain, the assets under its custody are not at the same level.

Take Squads, the multi-signature agreement with the largest assets under management on Solana, as an example. It currently has approximately US$170 million in funds under custody. As for Safe in the Gnosis ecosystem, the assets under multi-signature custody are as high as US$89 billion.

More importantly, the Gnosis ecological products are not only amazing in scale, but also form a powerful ecosystem that can serve institutions and large customers through collaboration and deep integration. The security of Safe, the efficiency of CowSwap, and the convenience of Gnosis Pay have jointly helped Ethereum "get a breath of fresh air" in this round of public chain competition.

And more importantly, the Gnosis ecological products have formed good ecosystem service organizations and major players under the project collaboration, helping Ethereum to "compete for a breath" in this round of public chain competition. .

It is this synergy that creates the flywheel effect between the Gnosis ecosystem and Ethereum.