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Batch auctions

CoW Protocol collects and aggregates intents off-chain and settles them together in groups, known as batches. The right to settle the orders in a batch is then "auctioned off" through a competition to the solver offering the most surplus for the orders in the batch.

Batch Auctions

Batch auctions provide several benefits:

  • MEV Protection: Batch auctions allow for Uniform Clearing Prices (UCPs), where an asset that appears multiple times across orders in the same batch settles for a consistent price. This makes transaction order irrelevant within the block, undermining the ability for MEV bots to extract value.
  • Coincidence of Wants: When multiple orders trade the same assets within a batch, there may be an opportunity for a peer-to-peer swap that doesn't tap on-chain liquidity. The mechanism of Coincidence of Wants (CoW) relies on batch auctions.
  • Enforcing the Ethereum Best Bid Offer (EBBO): Ensuring that the settlement solution is at least as good as the on-chain price a user could get directly from an AMM.