CowSwap fees

Protocols & Adapters Fee Revenue
#1

With the CowSwap protocol doing up to US$17.5 million of trades in a day recently on some days, I think it is time to have a discussion about adding CowSwap to our list.

CowSwap uses a “Coincidence Of Wants” (COW) methodology so that many trades in the batch get made with zero slippage, as many don’t need to be routed to various decentralized exchange protocols to be executed; so the Liquidity Provider middleman is cut out in some cases.

The Gnosis team building CowSwap are also doing a great job reducing MEW extraction. CowSwap is advanced by the Gnosis DAO and runs on the Gnosis Protocol. Good stuff.

May be time to list them in cryptofees.info list.

#2

Thanks for the suggestion @0x711!

Do you have any information about who receives the fees from CowSwap trades? I don’t believe CowSwap has its own liquidity pools, so I’m curious where this revenue is directed.

#3

I think that most fees go to what CowSwap calls “solvers.”

It’s decentralized, so anyone can choose to provide the service and, essentially, compete against other solvers for the best “coincidence of wants” solution to the various “wants” that are expressed in each solution period.

I believe a small amount is kept by CowSwap, and probably accrues to the benefit of the Gnosis Protocol, or the Gnosis DAO, that is behind the development and support of CowSwap as a protocol.

Here’s their “About”
https://cowswap.exchange/#/about

#4

And here is their FAQ
https://cowswap.exchange/#/faq

Where one of the questions is “What is CowSwap’s fee model?”

Each executed order has a fee which is captured by the protocol. Part of the fee is paid to solvers (entities which provide order settlement solutions) to incentivize their participation.

The fee consists of the “base cost to execute the trade” and the “protocol fee” (although it is only exposed to the user as one fee). As a user, you are only signing a message to submit your trade and the underlying solver will end up submitting the transaction for you. Essentially you are paying this “base cost to execute the trade” aka “gas costs” with your sell token and the cost is already included in your price estimation. The protocol is currently subsidizing a portion of the gas costs, while the protocol fee is currently switched off.

Note that you will only have to pay fees IF your trade is executed. No more gas-costs on any failed transactions!

#5

So if I’m reading this right, since they say “the protocol fee is currently switched off.”, it looks like “the solvers” may be the answer to your question about “where is this revenue directed.”

#6

Cool, sounds like that fee model fits our listing requirements.

Next step would be finding a good data source. I didn’t see any subgraphs for the protocol, their “info” link goes to Dune Analytics, maybe it’s possible to port those queries into a subgraph.

I’ll message some people on the CowSwap team to see if they have any input.

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