Introducing surplus-capturing limit orders from CoW Protocol, now accessible through the CoW Swap UI
The CoW has no limits 📈
Surplus-capturing limit orders from CoW Protocol are a giant leap forward for decentralized trading. Starting today, users can place limit orders as flexibly as they would on a centralized exchange, with all the benefits of decentralized trading — and a lot fewer frictions.
Limit orders are orders to buy or sell tokens at a specified price within a specified time horizon. If the available price hits the target price within the time horizon, the order executes. Placing a limit order is like setting a trap for the price you want to get for your trade.
Limit orders from CoW Protocol differ from other limit orders products in DeFi because they are built on top of CoW Protocol’s unique architecture. We say that CoW Protocol limit orders are, in fact, UN-limited, because they offer:
- Unlimited order management → traders can manage orders without paying fees, meaning they can set and cancel limit orders as much as they’d like without paying for gas (like they do on other exchanges)
- Unlimited order placement → traders can use the same crypto balance to place many orders at once that can stay active for up to a year; CoW Protocol fills orders as they hit their limit prices, and stops filling them once a wallet runs out of sell tokens (when that happens, traders can top up their wallets to keep the orders flowing)
- Unlimited order surplus → traders get the price at execution time, so if a price falls below the trigger price, the upside belongs to them and not the order taker. Additionally, any price improvement generated by solvers finding more-optimal execution paths (i.e. finding a Coincidence of Wants) belongs to the trader
All together, CoW Protocol now offers the most-flexible limit order experience in DeFi. This experience is uniquely achievable thanks to CoW Protocol’s specific architecture, which leverages batch auctions to deliver fair and efficient outcomes for traders.
When placing market orders with CoW Protocol, users sign trade intents rather than actual transactions on-chain. CoW Protocol collects these intents into batches, and settles them in the most-efficient way possible (by auctioning them via a decentralized network of solvers). Limit orders leverage this same innovative architecture, and it is because users sign intents rather than transactions that we are able to offer such a flexible, gasless limit orders product.
Another benefit unique to limit orders on CoW Protocol is that they are surplus-capturing.
Surplus-capturing means that the protocol can improve prices above-and-beyond what users expect when they place their limit orders. CoW Protocol generates surplus on behalf of its users by matching Coincidences of Wants within batches, and by capturing favorable price movements between the time orders are sent and the time they are settled on-chain.
As an aside: this also means that if you accidentally place an order much below market price, CoW Protocol’s smart contract will protect you from your mistake and execute the order at the best available price it can find.
CoW Protocol takes its fees from the surplus it generates (only when orders execute) and passes the rest on to its users — ensuring that traders always get the token amounts they ordered at the limit prices they set, or better.
Of course, limit orders come with all the other benefits you’ve come to expect from CoW Protocol: protection from MEV, gasless trading, safety and reliability, DEX aggregation, etc. The worst price you’ll get on CoW Protocol is the best price available elsewhere — and we’ll often do better.
Thanks to the extreme modularity of limit orders on CoW Protocol, anyone can build a wide variety of innovative products on top of it — for example: token buybacks, stop losses, options, and more. Limit orders, in combination with ERC-1271 smart orders, offer an endless world of possibilities for programming all sorts of order types directly from smart contracts.
If you are interested in building some of these ideas, or have other thoughts about how we can improve the current limit orders product, talk to the CoWs. Join our forum / Discord or apply directly for a grant — we need your ideas.
So go try limit orders on CoW Swap now. We’ve written a how-to guide to guide you through the experience. And get in touch with the team.
Thank moo! 🐮
About CoW DAO
CoW DAO is an open organization of developers, traders, market makers, and other community members focused on building, maintaining, and advancing fair and decentralized trading systems — principally through its work on CoW Protocol.
CoW Protocol is a DEX aggregation protocol that powers a network of independent solvers which, in turn, enable trustless and efficient peer-to-peer trading. Leveraging batch auctions uniquely positions CoW Protocol as native trading infrastructure for discrete-time settlement layers like Ethereum and enables fair and accessible trading to its users.
🌐 Website | 🐦 Twitter | 📒 Documentation | 💬 Discord | 📊 Analytics | 📸 Snapshot
