Author: BlockBeats
CowSwap is currently the fastest-growing DeFi coin and one of Vitalik's favorite DEXs. It is also a dedicated on-chain platform for large clients to offload their assets and even the preferred DEX of the Trump team.
But many people do not know that behind CowSwap lies an underestimated top incubator in the Ethereum faction—Gnosis. I believe this is the true reason for the surge of $COW.
Recently, a piece of on-chain news about the Trump team's DeFi project World Liberty Financial (WLFI) attracted market attention in the Chinese community. Although $COW is not included in WLFI's asset list, according to on-chain analyst Ai Yi, WLFI's recent token purchases have used CowSwap, which aligns with Ethereum founder Vitalik Buterin's frequent use of CowSwap.
This special on-chain behavior also directly influenced market sentiment. On the 'eve' of Trump's inauguration and amid the dual expectations of political concept coins, the price of $COW skyrocketed by 62% in just one week and soared by 162% within a month.
Behind CowSwap is Gnosis.
Gnosis is the powerful force behind CowSwap.
CowSwap is the predecessor of Gnosis Protocol V1 launched in 2020, which is the first decentralized trading platform to achieve circular trading through a batch auction mechanism. Its unique design allows all orders to share liquidity and efficiently complete settlement.
In 2021, Gnosis Protocol V2 launched an innovative solving mechanism (Solvers) that not only significantly improved order matching efficiency but also successfully addressed the long-standing MEV (miner extractable value) problem that has troubled DeFi traders. That same year, Gnosis Protocol was renamed CowSwap, becoming the aggregation trading platform we know today.
It can be said that CowSwap's rise is inseparable from the deep accumulation of the Gnosis ecosystem. In fact, the story of the Gnosis ecosystem can be traced back to 2015.
Compared to Polymarket, which is now well-known, Gnosis co-founder Martin Koeppelmann began researching decentralized prediction markets much earlier. In 2015, he published his thoughts on the combination of MarketMaker and OrderBook on his forum, making it one of the earliest concepts for decentralized prediction markets in the industry.
Martin Koeppelmann is also one of the earliest Ethereum developers, having joined before the TheDAO period and has maintained close contact with Vitalik in the Berlin office.
Over the years, he has participated in many discussions within the Ethereum development community and often discussed issues related to L2, ZK, and the Ethereum roadmap with Vitalik. From Martin's evaluations on social media, one can also see his level of integration within the community.
It is precisely based on this technological accumulation that Gnosis has gradually developed a complete ecosystem. From the evolution of Gnosis Protocol to CowSwap, Martin and his team further derived products such as Gnosis Chain, Safe, and Gnosis Pay, ultimately forming a highly synergistic ecosystem.
Therefore, mutual integration is a natural outcome. The most representative example is the integration of CowSwap and Safe.
The preferred wallet of the Trump family.
As the star product of the Gnosis ecosystem, Safe is the most popular multi-signature wallet in the Ethereum ecosystem and is also the wallet used by large clients. When Safe released its tokens this year, the top 100 addresses in the airdrop list were almost all project teams or institutions.
That is to say, the early adopters of Safe were mostly project teams, not individual users. This includes OP, Polymarket, Drukula, Worldcoin, Lido, and so on.
Initially, Safe's audience was more DAOs and crypto project teams. But as the crypto industry enters the next stage, traditional finance, traditional institutions, family funds, and old money have successively entered the market. However, the crypto barrier is high, and the safest way to protect funds while playing with on-chain crypto is through multi-signature wallets, and the choice is Safe.
The design of Safe greatly enhances the security of fund management. Through a multi-signature mechanism, funds are stored in a smart contract address, and transactions can only be executed when the pre-set number of signatures is met (e.g., 3/10). This mechanism effectively reduces the risk of single-point failure; even if one signature address's private key is leaked, it is difficult for an attacker to obtain enough signatures to complete a transaction. Furthermore, during the multi-signature confirmation process, the signing operations of pre-signers do not require payment of gas, as the transaction remains in a 'pending execution' state, and only the address that performs the final confirmation execution (e.g., transaction, transfer, etc.) needs to pay gas. This optimization not only reduces usage costs but also makes Safe the optimal choice for institutional users and large clients.
According to Safe guardians, the simplest way to determine whether an on-chain address is a Safe wallet address has two methods: one is 'MultiSig' multi-signature shown on ARKHAM, and the other is that the address below the DeBank page will directly show 'MultiSig:Safe'.
Address of the Trump project.
Vitalik's address
Most importantly, as part of the Gnosis ecosystem, the DEX built into Safe is precisely CowSwap. This is why whales like Vitalik and the Trump team favor CowSwap.
From this perspective, what these large whales like Trump and Vitalik favor may not just be that CowSwap is an MEV-resistant aggregating DEX, but also the synergy exhibited by the Gnosis ecosystem and solutions tailored to meet the real needs of large clients.
From incubator to investment DAO.
As mentioned earlier, the Gnosis ecosystem has been laid out since 2015. Initially a prediction market platform based on Ethereum, it later developed into the Gnosis ecosystem, giving rise to many projects such as Gnosis Chain, Safe, CowSwap, and Gnosis Pay.
Gnosis Chain, a well-known Ethereum sidechain from the previous cycle, focuses on the efficient and secure construction of decentralized applications. According to DefiLlama data, as of the time of this writing, the total value locked (TVL) in Gnosis Chain is $349.31 million, including $71.61 million in native assets and $277.7 million in cross-chain bridge assets. The market cap of stablecoins reaches $119.98 million, with DAI accounting for 74.07%, and trading volume remains stable.
Gnosis Chain data, source: DefiLlama.
Gnosis Pay is an on-chain payment debit card that seamlessly integrates blockchain technology to provide users and institutions with a convenient payment experience, along with CowSwap and the multi-signature wallet Gnosis Safe (now called Safe).
GnosisDAO is the core governance body of the Gnosis ecosystem, promoting the incubation and development of innovative projects through decentralized autonomy. After the ecosystem incubation became increasingly prosperous, GnosisDAO also began to experiment with investment business.
In addition to incubating well-known projects like Safe and CowSwap, GnosisDAO began laying out the blockchain field through its investment department GnosisVS as early as 2019 and has supported over 60 startups.
The projects invested in include: Monerium, an on-chain fiat currency infrastructure for Web3 builders; Naptha AI, a decentralized platform for AI workflows; and Schuman Financial, a MiCA-compliant stablecoin protocol.
This year, the investment business has further expanded. In October, GnosisDAO approved a proposal to launch a $40 million venture capital fund. GnosisDAO contributed $20 million, while the other half came from external limited partners (LPs). This dual structure not only increased the fund's capital volume but also created more opportunities for external collaboration.
The fund is called GnosisVC Ecosystem and will prioritize investments in projects engaged in tokenization of real-world assets (RWA), decentralized infrastructure, and financial payment channels.
Key investment areas include three aspects: 1. Tokenization of real-world assets (RWA): promoting the digitization and on-chain of traditional financial assets through blockchain technology, providing more liquidity and transparency for global financial markets; 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: providing seamless payment capabilities for the DeFi and Web3 ecosystem around payment solutions like Gnosis Pay.
What exactly makes CowSwap strong?
It can be said that the rise of CowSwap is the best embodiment of the collaborative efforts of the Gnosis ecosystem. However, this does not mean that CowSwap itself has not created a new paradigm.
To be more precise, CoW Protocol is a decentralized trading protocol, while CowSwap is a DEX built on CoW Protocol, serving as its front-end interface through which users interact with CoW Protocol.
As the front-end application of CoW Protocol, CowSwap further amplifies the advantages of the protocol. It is known as the 'trading assistant' of CoW Protocol, a Meta DEX aggregator capable of jumping between multiple AMMs and other aggregators to help users find the best prices currently available in the market. Unlike traditional DEXs that require users to compare prices themselves, CowSwap's mission is to use intelligent matching to save users from tedious operations and ensure transactions are completed in the most favorable way. From this perspective, CowSwap solves a long-standing pain point for DeFi users: front-end reliance.
Is the endgame against MEV intention?
Miner Extractable Value (MEV) is a long-standing problem for traders. MEV refers to the additional value extracted by miners or other traders from the trades of ordinary users by manipulating transaction order or front-running. According to a report by Galaxy Digital, it is estimated that MEV bots on the Ethereum network have extracted up to $300 million to $900 million in user benefits.
This is very unfriendly to large clients and whale traders. Even Ethereum founder Vitalik Buterin himself has been troubled by being 'sandwiched' frequently, causing significant headaches. Therefore, the MEV issue is one of the most concerning issues for Vitalik during the construction of Ethereum and is often mentioned in various speeches and Ethereum roadmaps.
CowSwap solves this problem very well.
In traditional DeFi interactions, users' operations (such as asset bridging, swapping, staking, and withdrawing) directly interact with on-chain contracts. This design is not only complex but also exposes users' trading demands, making them easy targets for MEV bot attacks. Therefore, CoW Protocol fundamentally changes this interaction model by moving users' trading demands from on-chain to off-chain processing. This solution is called 'off-chain preprocessing,' which is also known as 'intention trading.'
The process of intention is essentially an off-chain preprocessing black box, where the user's intentions are placed in an 'invisible' preprocessing center. After collecting and preprocessing the user's trading needs, CowSwap introduces third-party 'solvers' off-chain to match and process transactions. This mechanism brings multiple benefits, significantly reducing users' exposure to on-chain risks and optimizing the protocol's liquidity management, making user transactions more efficient, secure, and private.
To be more specific, through intention narratives, CoW Protocol has designed three core protective mechanisms to address the MEV issue:
1. Unified liquidation price batching
CoW Protocol introduces a 'unified liquidation price' mechanism. When the same token pair (e.g., ETH-USDC) is traded multiple times in a batch, all assets from these transactions will be settled at the same market price. This mechanism makes the transaction order irrelevant, fundamentally eliminating the possibility for MEV bots to profit by reordering transactions. More importantly, this mechanism also addresses the price inconsistency issue caused by the constant function market maker (CFMM) model in traditional AMMs (like Uniswap), providing users with a fairer trading environment.
2. Delegated transaction execution
User transactions are executed by guaranteed third-party solvers, avoiding direct exposure to on-chain MEV risks. Solvers must 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-making. This design not only reduces users' price risks but also significantly improves transaction execution efficiency.
3. Demand coincidence model
Compared to traditional automated market makers (AMMs) or centralized limit order books (CLOBs), the advantage of CoW Protocol lies in its core auction mechanism. This mechanism allows multiple transactions to occur simultaneously, like an efficient large market promotion. In this event, whoever finds the best match can gain the greatest benefit. This is what is called the 'coincidence of wants (CoWs)', and the name CoW Protocol is derived from this, cleverly forming the spelling of 'cow'.
Therefore, under the promotion of the Gnosis ecosystem flywheel and CowSwap's own product, CowSwap's trading volume on the Ethereum chain has surged rapidly in the past 30 days.
The past grievances with Uniswap.
Many people do not know that CowSwap has a history with Uniswap. Last year, the DEX leader Uniswap announced UniswapX, which was embroiled in a plagiarism controversy with CowSwap.
After the announcement of the V4 version of Uniswap, it was immediately followed by the announcement of UniswapX. However, the community is very dissatisfied with UniswapX, and there are many discussions. Some directly question: 'What is the difference between UniswapX and CowSwap?' Some even jokingly say, 'UniswapX should thank the open-source spirit of the crypto industry.'
The official account of Curve Finance directly commented: 'To be frank, the game has changed long ago: when 1inch first performed high-quality aggregation and when CowSwap launched the Solvers model. UniswapX is good, but it is neither a pioneer nor even the second player.'
This public opinion pressure has posed significant challenges for Uniswap. In an apparent effort to shake off the title of 'Tencent of the DEX world,' two months ago, Uniswap Labs launched Unichain, an Ethereum Layer 2 network based on OP Stack, managing to 'slightly' turn the tide.
One significant innovation is that Unichain has made innovations in the MEV profit distribution mechanism by using Trusted Execution Environments (TEEs) to directly distribute part of the MEV profits to users or liquidity providers (LPs), achieving 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 for LPs but also encourages more users to participate in ecosystem building.
Wintermute 'walked in on a rainbow.'
From this perspective, it appears that CowSwap's product is good, but there are many ways for good products in the crypto world to 'die,' and not many make it to top trading platforms, let alone experience a 162% rise in a month.
Rewinding to four months ago reveals that the beginning of the rise in the price of COW coincided with the collaboration with Wintermute.
Initially, to increase liquidity on-chain, CoW DAO proposed allocating 10 million $COW tokens to inject liquidity into the ETH/COW market. This proposal included an innovative strategy: part of the $COW tokens would be converted to ETH and injected into a new Function Maximizing AMM (FM-AMM) liquidity pool along with the remaining $COW. FM-AMM differs from traditional AMMs by effectively eliminating most MEV attacks and the high profits of arbitrageurs while reducing risks for liquidity providers (LPs).
However, simply having on-chain liquidity is not enough to meet market demand; the deep market of centralized trading platforms is also very important. After all, the market there is larger, and there is more money. At that time, the only way to obtain $COW was through decentralized channels, with the largest pool being ETH/COW on Balancer on the Ethereum mainnet. Without a CEX trading scenario, many users and institutions could not lay out $COW.
At this moment, Wintermute 'walked in on a rainbow'.
Wintermute proposed borrowing 7.5 million COW tokens from CoW DAO's treasury to support liquidity for decentralized and centralized trading platforms. This proposal received strong support from the community and officially opened a new chapter for $COW liquidity.
As a leading market maker in the crypto industry, Wintermute excels at establishing efficient markets between centralized and decentralized trading platforms. Its founding team previously worked at traditional financial giant Optiver and has rich experience in market depth management.
During the months of collaboration, Wintermute provided depth market support for ETH and other trading pairs for COW, ensuring liquidity and providing a stable trading environment for DeFi aggregators (such as CowSwap, UniswapX, and 1inch). At the same time, Wintermute offered large transaction support for institutions in the OTC market, further expanding the user base of $COW.
This bidirectional market-driving effect directly propelled the price of $COW.
Even in the second month of Wintermute's market-making for it, Coinbase announced that it would include $COW in its listing roadmap and launched the COW perpetual contract three months later. Since then, $COW has begun to successively land on major top trading platforms, with Binance quickly following suit and launching the COW/USDT spot trading pair.
These are, in my opinion, the real reasons for the 162% surge of $COW in a month.
The flywheel effect between the Gnosis ecosystem and Ethereum.
From a more macro perspective of public chains, during a bull market, the Solana ecosystem that Wall Street bets on is growing rapidly, while Ethereum seems a bit fatigued. However, from the on-chain dynamics of the Trump team's WLFI project, Solana still has a lot of room for growth in serving institutional clients, 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 they manage are not even in the same league.
For example, the multi-signature protocol Squads on Solana manages assets worth about $170 million. In contrast, the assets managed by Safe in the Gnosis ecosystem amount to as high as $89 billion.
More importantly, the products of the Gnosis ecosystem are not only impressive in scale but also form a powerful ecosystem capable of serving institutions and large clients through collaboration and deep integration. The security of Safe, the efficiency of CowSwap, and the convenience of Gnosis Pay together help Ethereum catch its breath in this round of public chain competition.
Moreover, and importantly, the products of the Gnosis ecosystem have formed a good ecological circle to serve institutions and large clients through project collaboration, helping Ethereum 'catch its breath' in this round of public chain racing.
It is this synergy that builds the flywheel effect between the Gnosis ecosystem and Ethereum.
