CowSwap is the DeFi token with the most significant recent surge and is also one of Vitalik's favorite DEXs. It is a platform specifically for large holders to offload on-chain, and it is even the exclusive DEX for the Trump team.
But what many people don't know is that behind CowSwap lies an underrated top incubator in the Ethereum faction—Gnosis. I believe this is the real reason for the sharp rise of $COW.
Recently, a chain on the Trump team's DeFi project World Liberty Financial (WLFI) attracted market attention in the Chinese community. Although WLFI's asset list does not include $COW, on-chain analyst Ai Yi mentioned that WLFI has used CowSwap for its recent token purchases. This coincides with Ethereum founder Vitalik Buterin's habit of using CowSwap.
This special on-chain behavior also directly influences market sentiment. On the 'eve' of Trump's imminent inauguration and the heated expectations surrounding political concept coins, the price of $COW surged 62% in just one week and skyrocketed 162% within a month.
The people behind CowSwap are Gnosis.
Gnosis is the powerful force behind CowSwap.
CowSwap's predecessor is Gnosis Protocol V1, launched in 2020, which was the first decentralized trading platform to achieve circular trading through batch auction mechanisms. Its unique design allows all orders to share liquidity and efficiently complete settlements.
By 2021, Gnosis Protocol V2 launched an innovative solver mechanism, which not only significantly improved order matching efficiency but also successfully addressed the long-standing MEV problem that has plagued DeFi traders. That same year, Gnosis Protocol was renamed CowSwap, becoming the aggregator 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 the Gnosis ecosystem can be traced back to 2015.
Compared to the now well-known Polymarket, 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, which is 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 DAO period. Living in Berlin, he had close interactions with Vitalik, who was at the Berlin office back then.
Over the years, he has participated in many discussions within the Ethereum development community and often discusses L2, ZK, and Ethereum roadmap issues with Vitalik. From Martin's comments on social media, one can also see his level of integration into the community.
Based on this technological accumulation, Gnosis has gradually developed a complete ecosystem. From Gnosis Protocol evolving into 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 of this is the integration of CowSwap and Safe.
The exclusive wallet of the Trump family.
As the star product in the Gnosis ecosystem, Safe is the most popular multi-signature wallet in the Ethereum ecosystem and is also a wallet specifically for large holders. When Safe issued its tokens this year, nearly all the addresses in the top 100 airdropped addresses were either project parties or institutions.
In other words, the early large holders of Safe were mostly project parties, not individual users. This includes OP, Polymarket, Drukula, Worldcoin, Lido, and so on. Related reading: (Safe is about to trade, an overview of token economics and ecology)
Initially, the audience for Safe was more DAO and crypto project parties. But as the crypto industry entered its next stage, traditional finance, traditional institutions, family funds, and old money have gradually entered the scene. However, the threshold for crypto is high, and the safest way to protect funds while engaging in on-chain crypto is through multi-signature wallets, and that 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 a transaction can only be executed when a predefined number of signatures (e.g., 3/10) are met. This mechanism effectively reduces the risk of single-point failure; even if one signature address's private key is leaked, attackers would still find it difficult to obtain enough signatures to complete the transaction. Furthermore, during the multi-signature confirmation process, the signing operation of pre-signers does not require Gas fees, as the transaction remains in a 'pending execution' state, and only the last signer who confirms the execution operation (e.g., transaction, transfer, etc.) needs to pay Gas. This optimization not only reduces costs but also makes Safe the optimal choice for institutional users and large holders.
According to Safe guardians, the simplest way to determine whether an on-chain address is a Safe wallet address has two indicators: one is the 'MultiSig' multi-signature shown on ARKHAM, and the second is that the address on the debank page will directly display 'MultiSig:Safe.'
The 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 big holders like Trump, Vitalik, and others favor is likely not just because CowSwap is an MEV-resistant aggregation DEX, but also due to the synergy demonstrated by the Gnosis ecosystem, which is a tailored solution that directly meets the real needs of large holders.
From incubator to investment DAO
As mentioned earlier, the Gnosis ecosystem has been laying out since 2015. Initially, it was a prediction market platform based on Ethereum, which later developed into the Gnosis ecosystem, giving rise to many projects such as Gnosis Chain, Safe, CowSwap, and Gnosis Pay.
Gnosis Chain is a well-known Ethereum sidechain from the previous cycle, focusing on the efficient and secure construction of decentralized applications. According to DefiLlama data, as of this writing, the total locked value (TVL) of Gnosis Chain is $349.31M, including $71.61M in native assets and $277.7M in cross-chain bridging assets. The market value of stablecoins reaches $119.98M, 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 provides users and institutions with a convenient payment experience through seamless integration of blockchain technology. Along with CowSwap and the multi-signature wallet Gnosis Safe (now known as Safe). Related reading: (Gnosis Card: The first Visa debit card linked to a wallet is coming soon).
GnosisDAO is the core governance institution of the Gnosis ecosystem, promoting the incubation and development of innovative projects through decentralized autonomy. As ecological incubation flourished, Gnosis DAO also began to explore investment business.
In addition to incubating well-known projects like Safe and CowSwap, GnosisDAO has been laying out in the blockchain field through its investment department, GnosisVS, since 2019 and has supported over 60 startups.
Investment projects include: Monerium, an on-chain fiat currency infrastructure for Web3 builders; Naptha AI, a decentralized platform for AI workflows; and Schuman Financial, a stablecoin protocol compliant with MiCA.
This year, the investment business has further expanded. In October, GnosisDAO approved a proposal to launch a $40 million venture capital fund. GnosisDAO contributes $20 million, while the other half comes from external limited partners (LP). This dual structure not only increases the fund's capital size but also creates more opportunities for external collaboration.
The fund is named GnosisVC Ecosystem and will prioritize investments in projects engaged in real-world asset (RWA) tokenization, 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 realization of traditional financial assets through blockchain technology, providing more liquidity and transparency to global financial markets; 2. Decentralized infrastructure: covering a wide range of areas from node operation to decentralized computing and storage, supporting the efficient operation of next-generation blockchain applications; 3. Payment channels and middleware: providing seamless payment capabilities for DeFi and Web3 ecosystems around payment solutions such as Gnosis Pay.
What is CowSwap's strength?
It can be said that the rise of CowSwap is the best embodiment of the collaborative effort of the Gnosis ecosystem, but this does not mean that CowSwap itself has not created a new paradigm.
To be more specific, CoW Protocol is a decentralized trading protocol, while CowSwap is a DEX built on the CoW Protocol, serving as its front-end interface, where users interact with the CoW Protocol through CowSwap.
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 and acts as a Meta DEX aggregator, capable of jumping between multiple AMMs and other aggregators to help users find the optimal price in the current market. Unlike traditional DEXs that require users to compare prices themselves, CowSwap's mission is to eliminate the cumbersome operations for users through intelligent matching, ensuring that transactions are completed in the most favorable way. From this perspective, CowSwap addresses a long-standing pain point for DeFi users: dependence on front ends.
The ultimate goal of combating MEV is intention?
Miner Extractable Value (MEV) is a long-standing problem that has troubled traders. MEV refers to the additional value extracted by miners or other traders from ordinary users' transactions through manipulating transaction order or front-running. According to a report by Galaxy Digital, MEV bots have extracted up to $300 million to $900 million in user benefits on the Ethereum network alone.
This is very unfriendly to large holders and whale traders. Even Ethereum founder Vitalik Buterin himself has often been 'sandwiched' and has faced considerable trouble and headaches. Therefore, the MEV problem is also one of the most concerning issues for Vitalik during the construction of Ethereum, which he frequently mentions in various speeches and Ethereum roadmaps.
And CowSwap has effectively solved this problem.
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 bots. Therefore, CoW Protocol fundamentally changes this interaction model by migrating users' trading demands from on-chain to off-chain processing. This solution is called 'off-chain pre-processing,' and it has a more familiar name: 'intention trading.'
The intention process is essentially an off-chain pre-processing black box, where users' intentions are placed in an 'invisible' pre-processing center. After collecting and pre-processing users' trading demands, CowSwap introduces third-party 'solvers' off-chain to match and process transactions. This mechanism brings multiple benefits, significantly reducing users' direct exposure to on-chain risks while 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 against MEV issues:
1. Unified clearing price batch
The CoW Protocol introduces a 'unified clearing price' mechanism. When the same token pair (e.g., ETH-USDC) is traded multiple times in one batch, all assets from the trades will be cleared at the same market price. This mechanism makes the order of trades irrelevant, fundamentally eliminating the possibility for MEV bots to profit by reordering trades. More importantly, this mechanism also addresses the price inconsistency issues 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 transaction prices are not lower than the prices signed by users while optimizing liquidity through off-chain matching or private market makers. This design not only reduces users’ price risks but also significantly enhances transaction execution efficiency.
3. Demand Coincidence Model
Compared to traditional automated market makers (AMMs) or centralized limit order book (CLOB) models, the strength of CoW Protocol lies in its core auction mechanism. This mechanism allows multiple trades to occur simultaneously, like an efficient large market promotion. In this event, whoever finds the best match can reap the greatest benefits. This is known as the 'Coincidence of Wants (CoWs),' which is also the origin of the name CoW Protocol, cleverly spelling out 'cow.'
Related reading: (Why did CowSwap surge over 40% in a single day?)
Thus, fueled by the ecological flywheel of Gnosis and the product promotion of CowSwap, CowSwap's transaction volume on the Ethereum chain has surged significantly over the past 30 days.
Past grievances with Uniswap
Many people are unaware that CowSwap has had past grievances with Uniswap. Last year, the leading DEX Uniswap's announcement of UniswapX faced accusations of plagiarism from CowSwap.
After Uniswap announced version V4, it immediately stated that it would launch UniswapX, but the community was very dissatisfied with UniswapX, discussing it extensively, with some directly questioning: 'What’s the difference between UniswapX and CowSwap?' Some even jokingly said, 'UniswapX should thank the open-source spirit of the crypto industry.'
The official account of Curve Finance directly commented: 'With all due respect, the rules of the game changed long ago: when 1inch first performed high-quality aggregation, and when CowSwap launched the Solvers model. UniswapX is good, but it is neither the pioneer nor even the second player.' Related reading: (Mixed reviews, is Uniswap really the 'Tencent of the crypto circle'?)
This public opinion pressure has posed significant challenges for Uniswap, seemingly trying to shake off the title of 'Tencent of DEXes.' Two months ago, Uniswap Labs launched the Ethereum Layer 2 network Unichain based on OP Stack, managing to 'score a small point.'
One of the significant innovations is that Unichain has innovated on the MEV revenue distribution mechanism, using a trusted execution environment (TEE) to directly allocate part of the MEV revenue to users or liquidity providers (LP), achieving a fairer value-sharing.
Additionally, MEV revenues are proportionally injected into the validator and user reward pools. This mechanism not only reduces the participation risks for LPs but also encourages more users to participate in ecological construction.
Wintermute 'walked in on a rainbow.'
It seems that CowSwap's product is good, but there are many 'deaths' for usable products in the crypto circle. Few can land on top trading platforms, and even fewer can rise 162% in a month.
Looking back four months, the beginning of the rise in COW's price coincided with the cooperation with Wintermute.
Initially, to increase on-chain liquidity, CoW DAO proposed to allocate 10 million $COW tokens to inject market liquidity for ETH/COW. This proposal included an innovative strategy: part of the $COW tokens would be converted into ETH and injected into a brand new Function Maximizing AMM (FM-AMM) liquidity pool together with the remaining $COW. FM-AMM differs from traditional AMMs as it effectively eliminates most MEV attacks and the high profits of arbitrageurs while reducing risks for liquidity providers (LP).
However, having only on-chain liquidity is still insufficient to meet market demand; the depth markets of centralized trading platforms are also very important. After all, the markets there are larger, and there’s 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 trading scene in CEX, many users and institutions could not plan for $COW.
At this time, Wintermute 'walked in on a rainbow.'
Wintermute proposed to borrow 7.5 million COW tokens from the CoW DAO treasury 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 a leading market maker in the crypto industry, Wintermute is extremely adept 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 cooperation, Wintermute provided depth market support for COW in ETH and other trading pairs, ensuring liquidity and providing a stable trading environment for DeFi aggregators (like CowSwap, UniswapX, and 1inch). Meanwhile, Wintermute provided large trade support for institutions in the OTC market, further expanding the user base of $COW.
This bidirectional market push effect has directly driven the price of $COW to skyrocket.
Even in the second month of Wintermute's market making, Coinbase announced that it would list $COW on its coin roadmap and launched the COW perpetual contract three months later. Since then, $COW has successively landed on major top trading platforms, with Binance following closely behind, launching the COW/USDT spot trading pair.
These are the real reasons I believe $COW surged 162% in a month.
The flywheel effect between the Gnosis ecosystem and Ethereum
From a more macro perspective on public chains, during a bull market, the Solana ecosystem that Wall Street bets on has grown rapidly, while Ethereum has shown signs of fatigue. However, from the on-chain dynamics of the Trump team's WLFI project, Solana still has significant room for growth in serving institutional large holders, and the performance of multi-signature products is difficult to match the deep accumulation of Ethereum.
While there are multi-signature products on the Solana chain, the assets they manage are not on the same level.
Take Squads, the multi-signature protocol that manages the most assets on Solana, as an example. Its managed funds amount to about $170 million. Meanwhile, Safe in the Gnosis ecosystem manages assets totaling a staggering $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 holders 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, more importantly, the products of the Gnosis ecosystem have formed a good ecological service circle for institutions and large holders through project collaboration and deep integration, helping Ethereum 'catch its breath' in this round of public chain competition.
It is this synergistic effect that has built the flywheel effect between the Gnosis ecosystem and Ethereum.
