CoW Protocol is a completely permissionless trading protocol that uses Batch Auctions to discover prices. CoW protocol runs these batch auctions to strengthen liquidity through Coincidence of Wants (CoWs), while also drawing on all available on-chain liquidity when it’s required. The protocol keeps Batch Auctions active because solvers-the entities responsible for the most advantageous settlement of each batch-compete to complete it. The solver that wins is the one able to increase traders’ surplus by producing the most favorable CoW, sourcing the best liquidity, or merging both advantages into a single settlement.

CoWs are settlements that pool liquidity across every order with matching limit prices. Instead of relying on an AMM or a CLOB, CoW protocol centers batch auctions to enable CoWs. This approach can improve execution prices for individual traders and may reduce costs through better gas fee handling and lower liquidity provider fees. In addition, with Batch Auction uniform clearing prices and CoWs that don’t require direct access to on-chain liquidity, CoW protocol provides a form of MEV protection that other protocols can’t match.

CowSwap is the initial trading interface built on top of CoW protocol. It functions as a Meta DEX aggregator, selecting the most favorable price across aggregators or AMMs based on which venue is most liquid for the trades included in a batch.