Fair Combinatorial Auctions in Intent-Based DeXs — Mariia | CoW DAO

Anytime I deliver a talk or a presentation before I ask myself what is the idea I want to deliver to the audience today. Would this idea benefit the audience or only me and the company? The idea for today for today's presentation which I would like to share with you is how can we make defy safe, seamless and included for all. Hi everyone, my name is Maria Scoska and today I'm very grateful to be here and provide you with more information about the idea to give you an overview about our products we have and solvers as well and maybe even motivate you to become one of them. I would like to provide you with more information about something unique which we recently implemented and super proud of at cow is feric commit auction which we worked on for decent amount of time around a year.

We did we did lots of research. We dive deeper into different papers and found out how can it benefit the users. the market and how can we make the mass adoption closer. Before we move on, I would like to provide you a very brief overview of the products we have and who we are. We are cow decentralized autonomous organization of developers, market makers and community members with a mission to make defy safe and seamless for everyone which is very similar to the goal and to the idea of my presentation.

We have three products. The first one is cow protocol with famous cow swap you on top of it. What is that? Cow protocol is leading intentbased trading protocol. Shortly I will provide you with more information what intent based trading protocol means.

The second product we have is COMM. The first MV capturing AMM deployed on Ethereum. Shortly it's a liquidity pool. The third one is MA blocker which is leading RPC protection mechanism on Ethereum. If you are not trading on cow protocol, you can use mu blocker to get protection from uh front end, backend or sandwich attacks and uh to ensure that you save your assets and your trade is safe.

Cal protocol. What is intense and why do we need it? What is the fericcom auction and what is the MU protection? All of those things we will dive deeper today. But this is something what C protocol holds and we are very proud of that we are working towards users.

We are providing the best price possible. We care about them. We make the inclusion. We make the simpler UI for them. So they don't need to think about the ex execution path but no matter if they have an experience with a web or they're new to the space they still still can find it out and they can benefit out of the trades.

What is intentbased architecture? When the user comes to cow protocol cow swap you are on top of it what they do they def they define their intent. So they specify their sell token, the buy token they want to get, the amount want to sell and also the slipage to tolerance without choosing a specific execution pass that by purpose they don't need to think about what execution path they need to take. On other part of the protocol we have solvers. The one who are competing between each other to fulfill the order for the user and to provide with the execution pass and with the best price possible.

With that they eliminate all the risks from the users and bear themsel. You might ask why intents matter. We often talk about the defy, what can get better, what is working well, what is still needed to get closer to the mass adoption that more and more users use uh the defy understand all the benefits out of it. With the intense we resolve I personally believe multiple pro uh multiple sides of it. The one I would like to highlight is first of all simpler UX.

This is one of the biggest in my opinion issues in the market which should be solved and with the intense you can make it simpler. The second one is fist trading. All gas fees are paid from in the cell tokens. So, uh you can um sorry, gasless trading, right? I I I missed that one.

So, gasless trading it means that it doesn't mean that you don't need to you don't pay for the gas, but means that it can be taken from your cell token and you don't need to use your ETH. The next one is no fees for failure transactions. Obviously, we don't want to pay for something what didn't happen. The next one is execute multiple traits at once. And of course, the ecosystem innovation.

So, we truly believe that intense is something would benefit the ecosystem and there are lots of ways and reasons of that. The next things uh thing I mention is that cow protocol protects from mess. Let me give you a bit more information what actually me stands for. M stands for maximum extracted value and when you execute a trade there are different bots who try to exploit your transaction and they run front end backend or sandwich attacks for that to basically manipulate the market. The mess gives you the protection of it and uh that's the solution which we found.

Today we will speak about the surplus and how the solvers deal with that. Let me give you a little bit more information what surplus means. When you go on cow protocol, you choose the minimum amount uh you are buy you would like to buy the certain token for and the actual um and the actual amount received thanks to the solvers always finding the better path to execution. In simpler way, solvers always are motivated to give you something on top. You could see the real example of it.

Let's say um you received the transaction you received the successful transaction of 0 0.42 ETH. So uh the 0.002 is surplus. So something what not necessarily uh was meant to happen but because solvers were able to find the best possible price for you um on the market you received the surplus on top of it.

Solver competition one of my favorite and juicy parts. I really like to dive deeper into the solver part that we have um our UX of the of the product work and to understand all the logics behind. This is the UI which you see when you go on cow swap and you try and you make a trade, right? It looks super straightforward, super super simple, but what's happening behind this the scene indeed is very very complex. This is the part of the what's happening behind this this the scene.

Of course, there are still many many things, but I would like to give you a slightly better understanding how it works. So first of all the solver competition is happening all offchain and the winning solutions they executed onchain. Once you go to cow swap what you do you specify what and how what you want to sell and what you want to receive. You send an intent. So we can see we we have multiple intents there who are trading at the same time.

They are trading various amount various tokens. Some of them very very well known some of them are new to the market and what's happening next all the intents are gathered into the order book. From the order book to the order book there is another mechanism is involved and connected which is autopilot and in that afterpilot happening the solver competition. The solvers basically are competing between each other to provide you with the best possible solution. There are various ways how they can do it and some of them are to connect your intent to the liquidity pool or to another peer that's actually have the what acronym acronym of cow means and stands for cow stands for coincidence of wants when you have what I want and I have what you want.

So basically we can match the peers because they can literally swap between each other or we can have ring trades partially coming from the liquidity pool partially coming from the peer traings. There some other things are happening in the solver competition. So let me explain you in a in a second. In the end, the winning solutions, they are submitted on chain through the driver and the user receives their um transaction done. In the past or I mean still we are transitioning to the new solution in the solver competition was part of the badge auction.

So the order book connected to the afterpilot and in the afterpilot the batch auction was happening and solver competition is the part of the batch auction just for you to to link those two things. What is the batch auction? Batch auction is a trading mechanism where multiple orders are collected and they basically put it all together and from that batch auction we execute them in the real time individually. There are some benefits actually many benefits of the batch auction. For example, multiple trade in intents can be uh auctioned simultaneously.

So you don't need to do it like in the Dutch auction individually, right? You can just put everything together and you can proceed with the execution. Each solver proposes a price for each trade in the batch. Each solver can propose only one price, only one solution. Right?

This is something I would like you to pay attention on and I will speak uh about that in a while. The best solution wins. Only one solution can can win and of course we uh always stands for fairness which is part of the batch auction. The problem here is that traditional batch auction se selects a single winning solution which can limit the number of trades executed in the parallel with uh some other potential solutions. So let's say if one solver has potentially few solutions, one of them is straightforward and easy to to execute and some other are more creative, more engaging but they have less confidence that they will win in this competition.

They will obviously submit the first one. Right? So those are creative one they will put on pause and say okay maybe next time. Right? Which is not ideal because the whole point of the intentbased um architecture and solver competition is provide with the best possible solution with the best possible price and we want to include the creative solutions as well.

We found a solution which we've been working on quite some time and this solution is moving from batch auction to the fair commit auction. The goal is to increase the protocol throughput and provide stronger fairness guarantees to traders to the users. This is something what took us some time. We did lots of research. We look looked into pros and cons, how can we make it better and so on.

But um this months we started the transition in the end of this month we already started a transition to the Fercom auction. Actually the last month it's already June right in the in the end of May we start the transition. We couldn't be happier because um there are lots of benefits of the fericcom auction and let's check them out. The first one is um better prices. That's also the whole point of the name the feral uh fer commit auction.

It's fair for the solvers and it's also fair for the users. and uh we believe is having various solutions we can provide better prices for the users. It's also includes faster execution. I'm not sure um if um by the way how many people who are here trading on cow swap. Okay, perfect.

So you might experience if you are trading bigger amount it takes some time to execute the trade and with this we solve uh this problem providing faster execution to the trades and also stronger fairness guarantees we are solving one of the problems which we had is surplus distribution distribution issue I'll give you an example We have two intents who are trading the exact amount at the exact same time. Quite sometimes solvers were unsure okay what sur do we need to provide the same surplus or not. Basically mechanism couldn't um capture that and uh often it was happening that users were receiving different amount of surplus at the same despite that they were trading in the same time and the same amount of tokens. So with this fair computer auction we resolve this problem. The next one is multiple winners per auction.

This is a huge one. In this auction, the solvers can submit multiple bits and there can be multiple winners. Many creative solutions can be part of that and we are super proud of it. Winner selection algorithm enables to have only one order book across all the chains. We are under multiple chains.

Despite that we still need to proceed with the proper deployment for each chain. We can have uh only one order book for all the server solvers which will simplify uh the work and um having all the data all the information all the solutions and so on. Let's sum it up. So in this engine which you see under the solvers would be happening the ferometer auction uh I mean this is the picture of the of afterpilot but instead of the batch auction we are moving to the ferometer auction which uh will change a lot in the protocol. This is again I would like to highlight a big thing for us.

we are super proud of and it doesn't mean that all the problems are solved but this is definitely the next step for us to ensure that we can make the device space simpler, seamless, unified, better for all. I was talking about the solver competition that solvers compete between each other. You might think why do we need actually them to compete with each other right so the purpose of the solver competition is um there are few things the one I want to highlight is rapid execution decentralization and reability so it's decentralized we have various solvers they are like separate they are not um something what uh we control or so. So they provide their own solutions, they work on their own engine and so on. And also we are solving complex challenges.

There are more and more new coins on the market and it's not always easy and super straightforward to include them and to understand how they work and the solvers are the one who are motivated about that and who are finding the best possible uh solutions for that. I'm very thrilled to say that last year when I was on the stage I was talking about solvers and uh Dows D grants how to become a solver and so so on. We had only 14 solvers back then. Right now we have 31 and still counting. And uh we are on four chains.

the mainet goes the uh Gnosis chain base and arbitum. We are planning to launch on many other chains. So stay tuned with us and you also can see how many solvers are on the single chain and a multiple chain. I made this graph I took this graph um a few week ago so few weeks ago. So the data also might be slightly different.

Um but there are more and more solvers who are more active on the multiple chains instead of the single one. Just briefly how to become a solver. We don't need to dive deeper in case you're interested and um would like to explore it in the future. So first of all why to become the solver? Each solver who compete in the solver competition, they receive the rewards.

They provide better impact to the ecosystem and of course the better prices for the users. You could see the amount of the rewards we as a DA provided to the solvers. The fir cow protocol exists for in the solver competitions for for three years. This is the the fourth one and um independently I mean uh before um we were part of of DAO and uh during the first two years during the first year we provided 20 million of cows in uh for the rewards for the second and for the third we provided 16 millions. You might ask why the amount is smaller but actually it's bigger because the C token price grew up to become a solver uh you need to talk to the core team to us in the end of the talk I will provide you the link and with um all the information necessary for that you also need to set up the bonding pool uh which is um half a million of USDC See and 1.

5 million of cow. You might see that the amount is not small especially for those solvers who are individual and who might not have this amount but um I want this to have as a blocker for you. We have also a existing cow dow pool which you can join and uh you can start using once you I'll just keep those uh those those slides um once you join the cow existing pool you are with us sometime then you can join also the reduced bonding pool if you would like to still have your your oven your oven pool and I would like to uh just provide you a bit more understanding why the bonding pool needed at all. So first of all solvers they have access direct access to settlement contract and to some sensitive information of the users and since we care about the safety and we want to ensure that the users are the one who are protected and they don't they don't need to be worry about that. We have to have on a place bon pool and also we want to avoid any malicious actions on on that uh side.

Another thing what I want to highlight that you could see that on the previous slide that we have 31 solver and um any solver join us okay almost uh almost all the solvers who join us from the beginning or they join us on the way they stay they stayed with with us only few solvers at the very beginning they um left the competition but all the rest are staying this is another factor which is super important for us and we are proud of it. Those are the references with all the QR codes which uh feel free to scan with all the helpful links you can find. I'll give you a second or even few of them to scan it. I like the uh the way when you introduce me like Maria from cow dao do doing people operations but going to talk about the technical stuff. Yeah I like to talk about the technical stuff not only about the people side.

Uh but since I have this opportunity why not to use it guys we are hiring. So if you are interested in joining our herd, please uh scan this QR code, talk to me and um let's see what the what are the opportunities. We also have cow grunts which you can explore. We also have the referral program uh which is up to 6K if you would like to refer someone who might be suitable for us and let's um stay in touch. This is my cure code with my contacts.

If you would like to stay in touch, Telegram, Twitter, LinkedIn. Yes, I still use LinkedIn for people purposes. Please um feel free.

Okay, let's give a big applause. Great talk, Maria. Like uh anyone technical here will know how much it means when people ops is this much technical and is able to explain the whole product. So cow is an amazing company to work in.

We have time for one question. So uh let's let's make it two. Yeah. Yeah. Okay.

Hi. So you showed um amount of solvers per chain we have right now. But obviously the in my understanding the how good of the price we're going to get also depends on how many intents there on a certain chain and liquidity. So is there any breakdown of uh how many what is the user activity per chain? So not only solos but also user activity or in the other words which is the best chain to use for swap to have the best uh possible results.

Thank you so much for the question.

I used only mainet because I'm a boomer but I'm really interested in uh other chains.

Yeah. So um let me maybe let me divide your question into few parts. Um first of all if I understood it correctly about the solvers side not only about the user side. So solvers the most of the solvers they are on the mainet because that's the chain where we have the most users right on the arbitrum nosis chain and on base we have less users. We have all the uh data about that you can um check it out on our website.

I don't recall the numbers by heart but answering your question uh the mainet has for us the biggest amount of users we track it we see the progress on all the chains we also do the work for that you uh the second part you ask about the better price was it for for the use did I understand correctly

yeah exactly overall so my understanding is that the how good the price we're going to get obviously depends how many solars they're competing to find the best price but also how many intents are that solvers can match to get you a good deal. So like what is the I guess you guys know the numbers like how is mainet still the best for trading or how far are the other chains relative to the mainet

right we do our best to have the best price on all the chains no matter how many solvers we have it's true that on mainet we have the biggest amount of solvers and more solutions but the new solvers who join we always want to them to join the um new chains which we added recently. I'm talking about the arbitum and base and the reason why because the also solver competition is um smaller there so they can just try it out get used to that. It takes some time for the solvers to be fully on boarded and to understand how everything works and on that uh part they are creative very creative with their solutions and they really try their best to provide with the best possible price for for everyone. That's why I would say the answer on your question, you could have the best possible price on all the chains no matter how many solvers we have at this certain moment.

Okay. Uh let's try to squeeze in one more question.

Um okay, I have one more thing to add. So please stay. I just like to Yeah, please the question. So thank you for the speech Maria. I wanted to ask you about like the solvers.

Are you working only with uh device solutions or you also working with some centralized exchange instance swaps and so on?

Uh so if we have um integrations

we do have integrations with different wallets. We we do have integr integration with different access where you can uh use uh cow swap. Uh yeah no I mean but you work with unis swap, pancake swap and so on but do you also work with different liquidity providers from central exchanges?

Yes we do work with different uh liquidity providers which are crucial. Yeah for us we gather liquidity from various sources let's put this way.

So you like work with offchain as well am I right?

Yes.

Okay thank you. Okay, let's squeeze in what you wanted to say.

Can we come back to the last slide?

Uh, can we Yeah. Yeah.

I'm sorry. We can cut this part actually in the recording, but uh the last uh the before last where is my QR code. Guys,

can we move the

another news is this that tomorrow is my birthday and I'm very glad to be here with all of you and I like to give presents to the people. Uh recently I become an ICF certified coach which I'm very proud of and I would like to give to first five people who reach me out um free uh coach session. The direction I'm uh working on is career development, leadership and executives. So feel free to reach me out or talk uh to me or give it to anyone else you think uh who might benefit out of it. So not necessarily you but someone who uh can benefit out of it can also reach me out and send me even like the picture from today's talk so I'm familiar where is that person coming from.

I'd raise for that fast fast fast. Thank you so much and let's give big round of applause to the organizers to everyone who put so much efforts to me to make this great conference work. You guys are enormous. Thank you so much.

Thank you. Now applause to Maria

and congratulations