CoW AMM is officially live on Balancer!
This collaboration between Balancer and CoWSwap is one of the most important innovations in DeFi.
Loss-versus-rebalancing (LVR) has long been a problem for LPs. As prices of tokens change, arbitrageurs rebalance liquidity pools, eating into the profits LPs would make. LVR is a bigger source of MEV than frontrunning and sandwich attacks combined.
CoW AMM is the first MEV-Capturing AMM.
How does it work?
- LPs provide liquidity into pools just as they normally would. This can be done directly on
Balancer.fi- Solvers bid to rebalance CoW AMM pools whenever there is an arbitrage opportunity.
- The solver that offers the most surplus to the pool wins the right to rebalance it.
- CoW AMM eliminates LVR by capturing this value for LPs, increasing their yield.
Working together, CoW DAO can tap into Balancer’s network and resources. CoW AMM pools will be eligible to receive both BAL and AURA emissions. For Balancer, they have one of the strongest teams in DeFi building directly on the protocol.
To further align incentives, a BAL-COW token swap was agreed on. To start, $500k of tokens were swapped. Once CoW AMM pools on Balancer reach $50M of TVL, another $1M will be swapped, and when they reach $100M of TVL, a final $1M will be swapped.
Moooo
🐮 Build on Balancer
🛠️ Amplify your Liquidity on Aura
🌊https://x.com/AuraFinance/status/1821540753400570165