Gnosis Protocol v2 Fighting the MEV Crisis with Batch Auctions one CoW at a time

"Gnosis Protocol v2 (GPv2), which launched in April this year, is a front-running and MEV resistant exchange protocol that taps into all of Ethereum’s on-chain liquidity. It got attention under the name CowSwap, the first Dapp built on top of the protocol which is designed to give users a Uniswap like experience while protecting their trades from MEV. This is achieved by batching orders off-chain and running a traders’ surplus maximizing competition between so called “solvers''. All trades that occur in the same block are given the same clearing price (independent of tx ordering within the block). Trade are attempted to be matched directly against one another (so called ""coincedence of wants"" or CoW), and if not possible the excess is matched with the best on-chain liquidity using tight slippage. The central operator is replaced by a decentralized competition of ""solvers"" who are incentivized to provide the best solution to earn rewards in the form of fees. In this talk we will quickly recap on how MEV hurts traders today and how batch auctions with uniform clearing prices are a mechanism against MEV. We will recap our learnings from Gnosis Protocol v1, which was mainly used for front-running resistant IDOs (and which we presented at EthCC 2020). We will show how we improved v1 shortcomings, describe the mechanism of v2 in more detail and if time permits outline our plan to full decentralization and compare ourselves to other MEV resistant projects (such as ArcherDAO or KeeperDAO). "