CoWSwap - coincidence of wants auction mechanism
saintsal last edited by
Coincidence Of Wants (what makes bartering work) is being used here to create a peer-to-peer settlement layer using a batch auction mechanism. This avoids MEV (loss to arbitrage/sniping) in AMMs because it uses signed messages for orders instead of an on-chain transaction, but then settles on-chain in batches.
It uses signatures to keep the off-chain messages trustable, and link them back to on-chain settlement. It’s an application of an interdependence architecture and is maybe an interesting mechanic for multiple, simultaneous use too.
There’s also a fun play on decentralisation here. Ethereum is architecturally and politically decentralised (assuming enough distribution in mining power) but not logically decentralised since it is the single source of truth.
This logical centralisation leaves a weakness: the lag in the consensus mechanism. Sniping on AMMs takes advantage of this centralisation weakness. CoWSwap decentralises that, creating an off-chain consensus layer in each auction batch. It feels like it’s moving in the direction of BitTorrent or ScuttleBot to me.