Crypto Basics

News

Governance

Guides

Product Info

large_mev-stop-the-bots-traders-explained.png

medium_mev-stop-the-bots-traders-explained.png

small_mev-stop-the-bots-traders-explained.png

thumbnail_mev-stop-the-bots-traders-explained.png

mev-stop-the-bots-traders-explained.png

The nasty culprits of MEV lurk in every corner… Find out how to stop them and keep yourself safe.

Stop the MEV bots: a guide for crypto traders


In DeFi, it's no longer enough to trade within one chain. The real action is happening across them.

Cross-chain swaps make that possible. They combine bridging and swapping into a single, streamlined move. No more hopping between protocols, juggling wallets, or sweating gas fees across two networks. Just one intent, one transaction, one unified outcome.

But here's the tradeoff: with greater reach comes greater risk. More complexity. More room for slippage, spoofing, and serious loss.

This guide breaks down how cross-chain swaps actually work, why they've become the go-to for serious traders, and what dangers hide beneath the surface. We'll cover the different models, unpack what's secure (and what isn't), and show you how to move smart - not just fast - when swapping across chains.

## What is a Cross-Chain Swap?

At its simplest: you're swapping tokens between two completely different blockchains. But under the hood, it's a power move that stitches together two complex operations - bridging assets and swapping them - into one clean transaction.

Think of it like teleporting your ETH from Ethereum mainnet to Arbitrum and flipping it for USDC on arrival - all in one go. No manual bridge. No double fees. No hopping between tabs wondering if your funds will show up.

Cross-chain swaps let you either move the same asset between chains (ETH on Ethereum → ETH on Arbitrum), or swap different assets across chains (ETH on one chain → USDC on another). This flexibility is what makes them so potent - giving traders access to price differences, liquidity, and opportunities wherever they pop up in the multi-chain jungle.

Of course, with that power comes complexity. And as always in DeFi, complexity is where risk likes to hide. Let’s take a look at an example.

## Example: Cross-Chain Swap from USDT to ETH

Picture this: you're watching the markets and notice a token tanking on Base - prime time to buy. But your assets? Stuck on Arbitrum. You could bridge, swap, approve, and pray it all goes through without burning gas. Or... you could do it in one clean move. That's the power of a cross-chain swap.

It's a single transaction that hops your assets and changes your token - no pit stops, no spreadsheets, no twelve-tab nightmares. Behind the scenes, it combines two big DeFi moves:  
- Bridging (moving assets across chains)  
- Swapping (trading one token for another)

Let's walk it through.

You're holding USDT on Arbitrum. You want ETH on Base.  
Here's how it goes:  
- Connect your wallet  
- Choose input: USDT (Arbitrum)  
- Choose output: ETH (Base)  
- Confirm the amount  
- Done

From there, the protocol takes over. It locks your USDT on Arbitrum, handles the bridge, finds the best rate via a DEX, and delivers ETH straight to your wallet on Base. No guesswork. No babysitting the trade.

And you? You didn't need to touch a bridge, approve a swap, or think twice about slippage or timing. The protocol bundles the whole operation into a single, atomic sequence that only executes if everything checks out.

The result?  More agility. Less friction. And a lot more upside when every second counts. Cross-chain swaps aren't just convenient - they're how serious traders move fast without getting wrecked.

## The Appeal of a Cross-Chain Swap

Cross-chain swaps aren't just a convenience feature - they unlock real tactical advantages for anyone managing assets across the DeFi multiverse. Here's why:

-   **1. Better Liquidity, Everywhere**  
    When your tokens can move freely across chains, liquidity stops being a local problem. Cross-chain swaps let users tap into liquidity pools on any supported network, stitching together fragmented DEX ecosystems into a more powerful, flexible whole. That doesn't just mean easier access to tokens - it means more efficient trades, tighter spreads, and new doors opening for arbitrage between chains.
    
-   **2. Real Autonomy, No Chain Jail**  
    Tired of being stuck on one chain because your token of choice lives somewhere else? Cross-chain swaps fix that. They give traders the freedom to deploy assets wherever they're needed - without wrapping, bridging manually, or rebalancing entire wallets. Whether you're chasing yield, rebalancing a position, or trying out a new protocol, your tokens can follow your strategy - not the other way around.
    
-   **3. Smarter Risk Management**  
    In a market that moves fast and breaks often, diversification isn't optional - it's survival. Cross-chain swaps give you the tools to hedge risk across protocols, exchanges, and networks. If one ecosystem falters, your entire portfolio isn't trapped in the wreckage. That kind of flexibility turns the sprawl of DeFi into a strategic advantage - not a liability.
    

## Two Types of Cross-Chain Swaps

There are two main ways cross-chain swaps happen - one centralised, one decentralised. Each has its own perks, pitfalls, and implications for how much control you actually have over your assets.

### 1. The Centralised Shortcut: Custodial CEX Swaps

Some cross-chain swaps are routed through centralised exchanges (CEXs) - the Binance, Coinbase, or Kraken types. Here's how it works:  
  

You deposit tokens into the exchange's wallet, tell them what you want on the other end, and they handle the internal mechanics to make it happen. Think of it as a high-speed asset ferry between chains - but someone else is steering the boat.

**Pros:**

-   Super convenient if you're already on their platform
    
-   UI tends to be polished, onboarding is smooth
    
-   Generally fast and relatively predictable
    

**Cons:**

-   You're giving up custody of your assets
    
-   You're exposed to counterparty risk: exchange hacks, regulatory freezes, or just plain mismanagement
    
-   Fees can spike without warning, and transparency is minimal
    

Bottom line: It's quick and easy, but you're putting trust (and your tokens) in someone else's hands.

### 2. The Onchain Way: Smart Contract Swaps  
  

This is the decentralized approach - often referred to as atomic swaps. Instead of sending assets to a middleman, you interact with smart contracts that handle the exchange logic directly on-chain.

**How it works:**  
These swaps are powered by Hash Time Lock Contracts (HTLCs) - clever bits of code that ensure a swap only happens if both sides complete. If one side fails? The whole thing reverts. No partial losses, no funny business.

**Pros:**

-   Fully non-custodial - you stay in control
    
-   Trustless by design: no third party, just code
    
-   Ideal for power users or protocols looking to build on decentralised rails
    

**Cons:**

-   You're at the mercy of smart contract security - bugs or exploits can be costly
    
-   Not all chains are compatible or equally mature
    
-   UX can be clunky compared to CEX flows
    

Bottom line: More secure in principle, more complex in practice. But for many DeFi-native users, the benefits of autonomy and trustlessness outweigh the extra steps.

## The Liabilities of Cross-Chain Swaps

For all their power and potential, cross-chain swaps aren't magic. They're a high-wire act performed across multiple networks - and each extra step introduces a point of failure. The more moving parts, the more ways things can go sideways. Let's break down the real risks:

**1. Bridge Security: The Big, Juicy Target**  
Bridges are the beating heart of cross-chain swaps - and they've become bullseyes for hackers. Why? Because they often store massive reserves of locked assets and rely on complex validation systems. Even battle-tested, audited bridges have been exploited. When they fall, they fall hard. And if your funds are mid-bridge when that happens? They're likely gone.

**2. Slippage & Failures: When the Math Doesn't Math**  
Every cross-chain swap involves several coordinated actions - lock, bridge, swap, settle. That means more time and more surface area for things to go wrong.

-   You could end up with an unwanted token stuck on a random chain.
    
-   You might hit unexpected slippage as market prices shift mid-transaction.
    
-   Or worse - the whole thing could fail halfway, leaving you in asset limbo.
    

**3. Fragmented Liquidity: Not All Pools Are Deep**  
Yes, cross-chain swaps aim to unlock liquidity. But in practice? Liquidity is often scattered, shallow, or non-existent - especially for lesser-known tokens. If you're swapping anything outside the top 20, good luck getting a fair price. Execution can suffer, and large trades can drag the whole pool with them.

**4. Gas Fees: Surprise! You're Paying Twice**  
Cross-chain means multi-chain, and that means gas on both ends.

-   If you don't have the right gas tokens on both chains, your transaction might stall.
    
-   If fees spike mid-swap due to network congestion, your costs (and stress) go up.
    
-   Worst case? You run out of gas and the whole thing reverts - or worse, you get stuck in a partial state.
    

**5. Price Volatility: Time is Risk**  
Cross-chain swaps aren't instant. They can take minutes - sometimes longer - especially under load. And in crypto, minutes are an eternity. If markets move while your assets are in flight, you might land at a dramatically different price point than expected. That "great trade" can turn sour fast.

Cross-chain swaps open up powerful new frontiers - but they don't come for free. Understanding the risks is key to navigating them well. And if you're not using tools designed to reduce that risk (like MEV protection, surplus capture, or intelligent order routing), you're playing the game with one hoof tied behind your back.

## MEV is a Concern with Cross-Chain Swaps

[Maximal Extractable Value (MEV)](https://cow.fi/learn/what-is-mev?ref=learn_search) is one of the most insidious threats in DeFi. It's not a bug - it's a design loophole. And cross-chain swaps, with their multi-step choreography, are prime hunting grounds for MEV predators.

Every step in a cross-chain swap is a new opportunity for someone to frontrun, reorder, or siphon value from your transaction. Here's how that plays out:

1. **Sandwich Attacks: The Classic Squeeze**  
Cross-chain swaps take time - and time gives bots space to strike. If your transaction is spotted in the mempool, an MEV bot can jump ahead, buy the asset you're swapping into, let your trade push up the price, then sell immediately after. They pocket the profit. You eat the slippage.

2. **Bridge MEV: Where Relayers Pick Your Pockets**  
Cross-chain bridges often rely on validators or relayers - and they're not always neutral. Some can reorder transactions, delay them, or exploit price differences between chains to extract value. If they're the ones moving your funds across, they can take a cut without you ever knowing it.

3. **Timing Arbitrage: Your Lag is Their Alpha**  
Cross-chain swaps don't settle instantly - and that lag is alpha to [MEV bots](https://cow.fi/learn/how-to-avoid-mev-bots?ref=learn_search). Say the price of a token changes mid-transaction. Bots watching the chain can jump in, arbitrage the price difference, and leave you with worse execution than expected. It's like placing a trade with a 5-minute delay... in a market that moves in seconds.

4. **Intent-Based [MEV](https://cow.fi/learn/mev-attacks-explained?ref=learn_search): Smarter Systems, Smarter Extraction**  
Intent-based protocols let users say what they want, not how to get it. Solvers then compete to fulfill that intent. On paper, this reduces MEV by routing through the most efficient path. But in reality, it concentrates MEV potential in the hands of the most sophisticated solvers - the ones who can game the system just enough to profit from it.

## How CoW Protocol Helps you Stay Safe

Recognizing the complexities and risks associated with cross-chain swaps, particularly the pervasive threat of MEV, [CoW Swap](https://swap.cow.fi/#/1/swap/WETH/0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) can help keep you protected. While cross-chain swaps aren’t available (yet), CoW Protocol is built to protect traders of all levels. Here’s how it helps:

-   **[MEV Blocker](https://cow.fi/mev-blocker): Defense at the Wallet Level**  
    CoW Protocol offers an RPC endpoint that plugs directly into your wallet - shielding every transaction from [MEV attacks](https://cow.fi/learn/mev-attacks-explained?ref=learn_search) like front-running and sandwiching. Instead of sending your trade into public mempools (aka shark-infested waters), it's routed through protected infrastructure designed to minimise extraction and maximise fairness.  
    Bonus: if your transaction creates a profitable backrun opportunity, you get the rebate - not the bot. That's protection and payback. [See for yourself.](https://cow.fi/mev-blocker)
    
-   **CoW Swap: Aggregated Liquidity. MEV-Hardened Execution.**  
    At the protocol level, CoW Swap runs on [CoW Protocol](https://cow.fi/cow-protocol) - a DEX aggregator protocol that sources the best price across the market and wraps it in MEV protection. Here's how it works: Every trade you submit triggers a solver auction, where specialist solvers compete off-chain to find the best route and price for your swap. The solver offering the most value wins - meaning you get optimal execution, without alpha leakage or exposure to malicious reordering. It's a smarter, safer way to trade - where you are in control, not the exploiters.
    

### Next Steps

We’re busy working on our own bridge and swap feature, and it’s coming soon. But for now, keeping yourself safe is the most important thing. Get started on [CoW Swap](https://swap.cow.fi) today:

large_X-chain swaps.png

medium_X-chain swaps.png

small_X-chain swaps.png

thumbnail_X-chain swaps.png

X-chain swaps.png

Learn how to use cross-chain swaps with to securely enhance your portfolio’s liquidity and find new trading opportunities.



Understanding Cross-Chain Swaps

![RPC-endpoints.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/RPC_endpoints_759a74f0fc.png)

Every move you make on a decentralized exchange: from scoping out token prices to sealing the deal on a trade relies on one critical piece of infrastructure: RPC endpoints. These endpoints are the unsung heroes that connect DEXs to the blockchain, translating your intent into on-chain action. When RPC performance falters, so does the entire trading experience. For traders, this can mean missed opportunities, failed transactions, and unnecessary friction. For seamless, reliable, and MEV-resistant trading, high-quality RPC endpoints aren't just helpful, they're essential.

  

In this post we’ll be exploring how RPC endpoints impact DEX trading, the benefits of endpoints, and how you can use them to enhance security.

## The basics: Remote Procedure Protocol endpoints

In simple terms, a [Remote Procedure Call (RPC)](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao) is the bridge between your wallet and the blockchain. It's a communication protocol that lets one program (like your wallet interface) request data or actions from another program (like a blockchain node) - even if it's sitting on a completely different machine.

  

When you interact with a DEX, send a trade, or check your wallet balance, it's not magic - it's your wallet using an RPC endpoint to talk to the network. Think of the RPC as the translator and dispatcher. It routes your requests - whether it's querying token balances, fetching gas prices, or submitting a transaction - straight to the blockchain and back again, ideally in milliseconds.

  

For traders, this infrastructure matters more than you think. A reliable RPC endpoint means faster confirmations, accurate balance checks, and lower chances of failed transactions. A slow or overloaded RPC? That can mean missed opportunities, stale data, or frustrating reverts.

  

Most wallets and dApps connect to public RPCs by default - which are often crowded. But using custom or private RPCs (like [MEV Blocker](https://cow.fi/mev-blocker)) can improve your trading experience by reducing latency, increasing throughput, and ensuring you're always working with up-to-date on-chain information.

  

Bottom line: if you're serious about trading on-chain, you should know how your wallet connects to the blockchain - and why the RPC behind it might be the quiet MVP of your whole setup.

### RPC endpoints streamline and secure crypto transactions

  

At its core, an RPC endpoint is what ensures your wallet can communicate with the blockchain. But beyond that, it plays a direct role in how fast, reliable, and cost-effective your transactions are.

  

Let's break it down:

  

Reliability: In high-traffic situations - like NFT mints, token launches, or market surges - public RPCs can become congested. This increases the risk of failed or delayed transactions. A robust RPC endpoint keeps your transactions moving, making sure they reach the mempool and are broadcast to the network without unnecessary friction.

  

Speed: Execution speed can directly impact trading outcomes. Whether you're arbitraging, swapping, or cancelling an order, every second counts. A fast RPC connection minimizes latency and ensures that your orders are submitted and confirmed quickly - helping you secure better pricing and reduce slippage in volatile markets.

  

Lower Gas Fees: Accurate gas estimation is key to efficient trading. Good RPC endpoints provide up-to-date block data and fee suggestions, helping you avoid overpaying - or worse, underpaying and having a transaction fail. By optimizing how transactions are priced and prioritized, they help you minimize costs without compromising execution.

  

In short: the right RPC endpoint doesn't just connect you to the chain - it actively improves your ability to trade smarter, faster, and cheaper..

## Public vs. private RPC endpoints

Not all RPC endpoints are created equal - especially when it comes to visibility. And in crypto, visibility = vulnerability.

  

When you send a transaction through a public RPC endpoint (like Infura, Alchemy, or QuickNode), your transaction enters the public mempool. That's essentially a waiting room where anyone - including [MEV bots](https://cow.fi/learn/what-are-mev-bots-and-how-do-they-make-money?ref=learn_search) - can see your order before it's confirmed. This exposure opens the door to MEV attacks: [frontrunning](https://cow.fi/learn/what-is-frontrunning?ref=learn_search), [sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself?ref=learn_search), and [backruns](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained?ref=learn_search) that can extract value from your trades without your consent.

  

In contrast, private RPC endpoints are designed to shield your transactions from public view. Tools like [MEV Blocker](https://cow.fi/mev-blocker) route your transaction through private relays - keeping it out of the public mempool and out of reach of predatory bots. This significantly reduces the chance of being targeted by MEV strategies that eat into your profits.

  

The difference comes down to who sees your transaction before it hits the chain. With private endpoints, visibility is limited to trusted relays. With public endpoints, it's a free-for-all.

  

There's another layer worth noting: tracking. Some public RPC providers have been known to log transaction metadata, wallet behavior, and trading patterns. While it may not be malicious, it's another form of exposure that privacy-conscious traders should care about.

  

So the choice is strategic. Public RPCs offer accessibility. Private RPCs offer protection. If you're actively trading, experimenting with new protocols, or just want to avoid unnecessary MEV slippage, switching to a private endpoint might be one of the lowest-lift, highest-impact moves you can make.

  

The below chart helps explain the differences between public and private RPC endpoints more clearly.
![White Yellow and Pink Minimalist Brand Comparison Chart.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/White_Yellow_and_Pink_Minimalist_Brand_Comparison_Chart_0592ba1c35.png)


## How private RPC endpoints protect against MEV

Privacy is the foundation of MEV protection - but it's not the whole picture. Once your transaction is hidden from the public mempool, what happens next depends on how that private system is designed. The best RPC endpoints don't stop at concealment. They actively optimize for fair execution, value sharing, and transaction reliability.

  

Let's break it down:

  

**Trusted Validators**

In a private RPC environment, your transaction doesn't just need privacy - it needs a trustworthy path to the chain. That's where curated validator sets come in. These are validators that commit to ethical execution - no frontrunning, no sandwiching, no games. It ensures that even after your transaction is out of public view, it's not being manipulated by bad actors at the validator level.

  

**Rebates via Backrunning**

Here's where privacy meets strategy. Some RPC endpoints - like [MEV Blocker](https://cow.fi/mev-blocker) and advanced bundlers - selectively allow backrunning (executing a transaction immediately after yours) in controlled environments. We call them rebates. When value is extracted, a portion of that MEV is given back to you. That turns what was once a loss into a financial incentive, helping offset gas fees or increase net gains.

  

**Preventing Reverts**

Failed transactions waste gas and erode trust. Smart RPC endpoints validate transactions before inclusion, or cancel the broadcast altogether if the transaction becomes invalid (due to price changes, slippage, etc.). The result? Fewer reverts, fewer surprises, and more confidence at the point of click.

  

Together, these tactics turn a private RPC from a black box into a value-aligned pipeline - one that protects, rewards, and optimizes every transaction you send.

### Protective endpoints in MEV Blocker

  

[MEV Blocker](https://cow.fi/mev-blocker) is more than just a private RPC - it's a purpose-built shield against the most common and costly MEV (Maximal Extractable Value) attacks, like frontrunning and sandwiching. By routing transactions away from the public mempool and through a private network of trusted searchers, or solvers as we call them, it helps ensure your trades land where they should - not as profit opportunities for bots.

  

But not all trades are the same. That's why MEV Blocker offers multiple RPC configurations, giving users the flexibility to choose what they care about most: speed, privacy, reliability, or rewards.

  

Here's how each endpoint works:

  

-   Fast Endpoint: Best for speed and simplicity. This endpoint offers basic MEV protection and potential rebates, routing your transaction through trusted searchers. It's built for fast inclusion but doesn't guard against transaction reverts.
    

  

-   Full Privacy Endpoint: Designed for maximum confidentiality. Your transaction is sent directly to builders, skipping searchers entirely. This offers the strongest privacy and MEV protection, and crucially, prevents reverts. The tradeoff? No rebate opportunities.
    

  

-   No-Revert Endpoint: Optimized for reliability. This option blocks invalid transactions from being broadcast at all, eliminating reverts and wasted gas. It includes both MEV protection and rebate potential, striking a strong balance between safety and efficiency.
    

  

-   Max Backruns Endpoint: Ideal for value maximizers. This endpoint widely shares your transaction with trusted searchers to enable maximum rebate opportunities. It protects against harmful MEV but doesn't prevent reverts, so timing matters.
    

  

With MEV Blocker, users can match their transaction goals to a routing strategy - and finally take control of how their orders are handled on-chain.
![Endpoints_protection-67030b0090420baaac8caa8a6c45a3ec.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/Endpoints_protection_67030b0090420baaac8caa8a6c45a3ec_51346ea583.png)


## How CoW integrates RPC endpoints with a meta-DEX

  

At [CoW Swap](https://cow.fi/cow-swap), protecting users from MEV isn't an afterthought - it's built into the infrastructure. By integrating MEV Blocker's RPC endpoints directly into its trading flow, CoW Swap ensures that [every user transaction benefits from privacy, security, and optimized execution.](https://cow.fi/learn/what-are-cows-on-cow-swap)

  

Here's how it works under the hood:

  

When a user initiates a trade on CoW Swap, the transaction is routed through a private RPC endpoint. This prevents it from entering the public mempool - where it could be exposed to frontrunning or sandwich attacks - and instead channels it through MEV Blocker's protected environment.

  

But the benefits go beyond shielding. CoW Swap uses its RPC layer to power batch auctions, where multiple orders are settled together in tightly timed blocks. This approach enables:

  

-   Improved price discovery
    
-   Reduced slippage
    
-   Efficient gas usage
    

  

Instead of competing with bots, your order joins a group - [and solvers (specialized agents) compete to fill those orders at the best possible rate.](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)

  

Traders can also submit ["intent to trade" messages](https://cow.fi/learn/what-are-cows-on-cow-swap) - statements of what they want to swap, under what conditions. These intents are transmitted via the RPC layer to the CoW Protocol, where solvers then route liquidity from the most efficient source - whether that's a matching user order or a DEX like Uniswap, Balancer, Curve or even private liquidity pools most users wouldn’t be able to access.

  

The result? Users trade on their terms, with better protection, better pricing, and zero need to micromanage execution risk.

  

This isn't just a DEX. It's a meta-DEX - one that uses smart routing and a privacy-first RPC network to reshape how trades are made in DeFi.

## Endpoint architecture: full, light, and archive nodes

Behind every RPC endpoint is a network of Ethereum nodes - each serving a different purpose depending on how much data they store and how fast they can serve it. For traders, understanding this architecture helps clarify why certain endpoints feel faster, offer more context, or provide deeper visibility into past activity.

  

Here's the breakdown:

### Full Nodes

  

These are the workhorses of the RPC world. Full nodes maintain all current blockchain data: recent transactions, token balances, smart contract states, and real-time event logs. They don't store the full history of Ethereum, but they have everything you need to trade, manage positions, and interact with live protocols.

  

CoW Swap's MEV Blocker operates on full nodes - ensuring up-to-date data and fast response times without compromising on MEV protection.

  

Best for: Active trading, portfolio tracking, and real-time DEX interactions.

### Light Nodes

Light nodes play a crucial role in blockchain ecosystems by offering a leaner, more resource-efficient alternative to full or archive nodes. Instead of storing the entire blockchain, light nodes retain only the most essential data, such as block headers. This allows them to verify the validity of transactions without needing the full transaction history or state data.

  

They're key for:

 - **Resource-Constrained Environments:** Ideal for mobile wallets, browser extensions, or lightweight applications where full node storage isn’t feasible.
 - **Quick Access to Basic Blockchain Data**: Useful for fast tasks like checking balances, verifying transaction inclusion, or syncing recent blocks without downloading the full chain.
 - **Interfacing with Full Nodes**: Serve as efficient front-ends that delegate heavy computation and validation to trusted full nodes, enabling low-bandwidth blockchain access.
    
Best for: Traders looking for quick, esay access to simple onchain data. .

### Archive Nodes

  Archive nodes store compressed blockchain data and rely on full nodes to fetch deeper details. But where they shine is in access to historical trading data - past balances, old transactions, and smart contract logs.

They're key for:

 - **Historical market analysis**
 - **Advanced trading strategies**
 - **Deep audit trails and analytics**

**Best for:** Traders doing historical performance reviews, tax reports, or backtesting.

  

Different nodes serve different needs - and the right RPC setup will prioritize node types based on the use case: speed, history, privacy, or resilience.

## Setting up RPC endpoints with MEV Blocker

Getting started with MEV Blocker is a low-friction, high-impact upgrade for any trader or dApp builder looking to protect users from MEV exploitation. Whether you're an active DeFi user or a developer building for others, the setup process is straightforward - and worth doing right.

#### 1. Select the Right Endpoint for Your Needs

Start by identifying what matters most in your trading or application flow:

  

-   Speed? Use the Fast endpoint.
    
-   Privacy and revert protection? Go with Full Privacy.
    
-   Reliability? Choose No-Revert.
    
-   Rebates and value sharing? Try Max Backruns.
    

  

Each endpoint is tuned for a specific tradeoff between protection, performance, and incentives. Choosing the right one ensures you're aligning the tech with your strategy - whether that's sniping a price, safeguarding a large order, or routing user transactions at scale.

#### 2. Integrate the MEV Blocker Endpoint

Once you've chosen your endpoint, integration is as simple as replacing the default RPC URL in your wallet, script, or frontend with the [MEV Blocker URL](https://cow.fi/mev-blocker).

  

Most wallets (e.g., MetaMask, Rabby) allow easy RPC switching. For developers, simply update your Web3 provider or backend config. This swap immediately routes your transactions away from the public mempool and through a privacy-preserving pipeline.

#### 3. Test for Connectivity and Stability

Run a few test transactions or simulated calls through the new endpoint. Confirm that:

-   Transactions are sent and confirmed successfully.
    
-   Gas estimates and responses are accurate.
    
-   No unexpected errors surface in your stack.
    
-   This ensures confidence before putting real capital at risk.
    

#### 4. Monitor Performance and Stay Updated

Set up basic monitoring: track transaction success rates, watch for latency issues, and check logs for abnormalities. CoW.fi may update endpoint availability or add new features - staying informed keeps your connection secure and high-performing.

  

With the right endpoint, a few config changes, and some initial testing, MEV protection becomes not just possible - but effortless and native to your workflow.

## Tips for developers: implementing RPC endpoints

For developers building dApps, trading tools, or wallet integrations, switching to a private RPC endpoint is one of the simplest ways to protect users from MEV and improve transaction reliability. Here's how to implement it with minimal friction - and maximum impact.

#### 1. Evaluate Your RPC Provider Carefully

Not all RPCs are created equal. Choose providers with:

-   High uptime and low latency
    
-   Proven MEV protection features
    
-   Transparent policies around data use
    
-   A solid reputation in the Ethereum dev community
    

  

[MEV Blocker](https://cow.fi/mev-blocker), built by CoW Protocol, is a strong choice - designed to align execution with user interests, not extract value from them.

#### 2. Replace Public RPCs with Private Endpoints

Wherever your app defines its Ethereum provider, swap in a private RPC URL. This can be done in:

  

-   MetaMask settings
    
-   Custom wallet configs
    
-   Backend infrastructure (e.g., INFURA_URL → MEV_BLOCKER_URL)
    

Use endpoint URLs that match your app's priorities: speed, privacy, no-reverts, or rebate-maximization.

#### 3. Integrate with Popular Frameworks Easily

Whether you're using React, Node.js, Web3.js, or Ethers.js, integration is straightforward. For example:

import { ethers } from 'ethers';

const provider = new ethers.JsonRpcProvider('https://rpc.mevblocker.org');

Use vetted documentation and keep implementation lightweight.

#### 4. Follow Transaction Privacy Best Practices

  

Below are the three key areas to think about thinking about preserving privacy.

  

-   Consider transaction batching to reduce exposure.
    
-   Use encrypted connections (https://, not http://).
    
-   Route through private mempools to avoid public broadcast.
    

#### 5. Monitor and Log Endpoint Access

  

Set up logs to track:

-   RPC call volume
    
-   Error rates
    
-   Latency spikes
    
-   Unexpected request patterns
    

  

This helps detect outages, catch anomalies, and ensure users are always protected.

### Next steps

Interested in learning more about [MEV Blocker](https://cow.fi/mev-blocker)? [Try this guide.](https://cow.fi/learn/what-does-an-mev-blocker-do)

  

Want to learn more about how meta-DEXs like CoW can integrate private endpoints? Try these related resources:

-   [A guide to MEV on Ethereum - CoW DAO](https://cow.fi/learn/a-guide-to-mev-on-ethereum-explained-cow-dao)
    
-   [What is a Meta DEX - and why should you use it for your trades? - CoW DAO](https://cow.fi/learn/what-is-a-meta-dex-and-why-should-you-use-it-for-your-trades)
    
-   [How to choose a DEX aggregator - CoW DAO](https://cow.fi/learn/dex-aggregator-how-to-choose)

large_RPC-endpoints.png

medium_RPC-endpoints.png

small_RPC-endpoints.png

thumbnail_RPC-endpoints.png

RPC-endpoints.png

Learn how Ethereum RPC endpoints impact DEX trading, the benefits of private endpoints like MEV Blocker, and strategies to securely enhance transaction success.

Understanding RPC endpoints for Ethereum

As decentralized finance (DeFi) continues to evolve, a new breed of algorithmic traders has emerged: MEV bots. MEV, or Miner Extractable Value (now more broadly referred to as Maximal Extractable Value), has become a critical concept in understanding the economics of blockchain networks, particularly Ethereum. These bots exploit the mechanics of block production to extract profits, often in ways invisible to the average DeFi user.

This article explores what MEV bots are, how they operate, the strategies they use to earn profits, and the risks they pose to the DeFi ecosystem.

### What Is MEV?

MEV refers to the value that can be extracted from a blockchain transaction beyond standard fees. This extraction is done by reordering, inserting, or censoring transactions before they are confirmed on-chain.

MEV is a hidden tax on all types of Ethereum transactions. That means any time you want to transact in DeFi: from buying or selling an NFT, lending tokens to a liquidity pool, or swapping one token for another, a group of opportunistic users known as "searchers" have the opportunity to see your trade, and manipulate the criteria surrounding your trade to ensure they make profit, at your expense.

There are lots of different ways MEV can take place on Ethereum, which we'll explore further down in the article. But for now, it's important to understand the mechanics of MEV, and their presence on many chains like Ethereum.

### What Are MEV Bots?

MEV bots are automated programs - or "searchers" - designed to scan the mempool for profitable opportunities and execute transactions that maximize extractable value. These bots typically run with low latency, operating within milliseconds to front-run, back-run, or sandwich user transactions.

They are often connected directly to validators or use private relay networks like Flashbots to gain preferential access to blockspace and avoid detection or retaliation.

### How MEV Bots Operate

MEV bots scan the mempool for patterns that can be exploited. Once a profitable transaction is identified, the bot crafts a bundle of transactions that captures the value and submits it for inclusion in the next block.

Bots are designed with specialized algorithms capable of:

-   Monitoring decentralized exchanges (DEXs) for price discrepancies.
    
-   Simulating transaction outcomes using blockchain state.
    
-   Submitting arbitrage, liquidation, or manipulation transactions with precision timing.
    

Many MEV bots use private relays like Flashbots, which provide a way to send transaction bundles directly to validators without exposing them to the public mempool.

## MEV Bot Strategies

#### 1. Arbitrage

MEV arbitrage bots identify and exploit price differences for the same asset across different decentralized exchanges or DEXes. This is also known as loss versus rebalancing. These bots look for a token price to be higher or lower on different exchanges, and then exploit the price difference between the two. Many liquidity providers haven't even heard of LVR, but it costs them 5-7% of their liquidity, resulting in hundreds of millions lost each year. In fact, when accounting for LVR, many of the largest liquidity pools are not profitable for LPs at all.  [Learn more about LVR.](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr)

#### 2. Sandwich Attacks

Sandwich attacks occur when a user's transaction gets trapped, or "sandwiched," between two hostile transactions - one before and one after. As a result, the original transaction executes at a much higher price than necessary, leading to an inflated price for the original trader and a profit for the malicious trader placing the two extra trades (known as a "searcher").  [Learn more about sandwich attacks.](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself)

#### 3. Liquidation Hunting

Liquidation bots specialise in monitoring lending platforms looking for undercollateralized loans. If a borrower's collateral falls below a required threshold, these bots execute liquidation transactions to claim rewards.

#### 4. Backrunning

Backrunning is a specific type of MEV (Maximal Extractable Value) which causes some traders to miss out on potential profit opportunities from their trades. In practice, backrunning involves strategically executing a transaction immediately after another, high-value transaction. By doing this, the backrunning transaction capitalizes on the arbitrage opportunity left over from the  [price impact](https://cow.fi/learn/cow-protocol-glossary#:~:text=Price%20impact)  of the initial transaction.  [Learn more about backrunning.](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained)

## Key Characteristics of MEV Bots

#### 1. Gas Fee Optimization

A fundamental challenge for MEV bots is managing gas fees. To successfully position a profitable transaction, a bot must bid just enough gas to be included quickly, but not so much that it eats into its margins. If it underbids, the opportunity may be lost to a faster competitor. The constant push-pull between speed and efficiency is critical in highly competitive mempool environments.

#### 2. Smart Contract Intelligence

Modern MEV bots aren't just reactive, they're analytical. Using complex algorithms, these bots dive deep into smart contracts, evaluating liquidity pools, token behaviors, and execution logic. They can assess the feasibility and profitability of complex trades across multiple contracts, even in split-second windows.

#### 3. Autonomous Execution

Speed is everything in MEV. These bots are designed to operate independently, constantly monitoring conditions, identifying patterns, and executing trades without human intervention. This autonomy enables them to react instantly when profit windows appear, making decisions at a speed no manual trader could match.

#### 4. Mempool Surveillance

MEV bots are essentially mempool watchers. They observe unconfirmed transactions, analyze them for profitable setups, and react accordingly. Depending on the strategy, a bot may look for large trades it can sandwich, vulnerable loans it can liquidate, or price discrepancies it can exploit through arbitrage. Their ability to see - and act on - these pending transactions is what makes them so effective.

## Real-World Examples of MEV in Action

One of the most well-known MEV incidents involved a bot that  [earned more than $1 million in ETH from](https://cryptorank.io/news/feed/7035e-ethereum-mev-bots-profitable-days)  reproducing and front-running an incoming hack in the Curve stablepools. This event showcased not only the profitability of MEV but also its potential to destabilize markets when unchecked.

Since 2020, crypto users have lost  [more than $1.8 billion](https://www.esma.europa.eu/sites/default/files/2025-01/ESMA75-453128700-1391_Joint_Report_on_recent_developments_in_crypto-assets__Art_142_MiCA_.pdf?utm_)  to malicious  [Maximal Extractable Value](https://www.ccn.com/education/crypto/mev-maximal-extractable-value-in-crypto-explainer/)  (MEV) extraction - not through dramatic hacks or bold heists, but through systematic exploitation happening in plain sight.

Flashbots, a research and development organization, has brought some transparency to MEV practices by facilitating ethical MEV extraction through private relays and promoting open dialogue.

## Risks and Criticism of MEV Bots

While MEV bots create efficiencies for some market participants, they also introduce significant risks:

-   Front-running and unfair advantage: MEV bots can effectively "steal" value from unsuspecting users by exploiting transaction ordering.
    
-   Network congestion: Intense MEV competition can drive up gas prices and clog the network.
    
-   Centralization risks: Reliance on private relays and preferential validator access may contradict the decentralized ethos of blockchain.
    
-   Volatility and slippage: Sandwich attacks distort prices and increase slippage for users.
    

## Mitigating MEV Risks

Beating MEV bots on your own can be tricky, but there are many avenues you can use to protect yourself from MEV Bots.

### Reduce Slippage on Ethereum

The most basic defense against MEV is setting a low slippage tolerance. Slippage tolerance is essentially how much variation in the final price you receive you are willing to accept.

Transactions with a lower slippage tolerance give MEV bots less room to exploit trades. For users who aren't utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it's by no means a complete solution.

Setting the slippage tolerance too low often results in failed transactions. Even with optimal slippage, MEV bots may still be able to extract value from your trades.

So sometimes we need to do more than adjust our slippage.

### Use a Custom RPC Endpoint on Ethereum

A better protection method is to install an MEV protection RPC endpoint. A Remote Procedure Call (RPC) endpoint is an intermediate layer that routes transactions from a user's wallet to the blockchain itself.

One of the most popular specialized RPC endpoints is  [MEV Blocker](https://cow.fi/mev-blocker).

As the name suggests, MEV Blocker provides protection against MEV across all of Ethereum. The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool.

These searchers cannot frontrun or sandwich user transactions.

Instead, they capture value through backrunning. Anytime a searcher backruns a user's transaction, the searcher keeps up to 10% of the value and sends the other 90% back to the user as a rebate.

[Install MEV Blocker.](https://cow.fi/mev-blocker)

### The best solution? Use an MEV-Protected DEX

[CoW Swap](https://swap.cow.fi/#/)  is a meta DEX aggregator that finds the best prices for trades and provides comprehensive MEV protection. The protocol uses a unique trading mechanism that relies on batch auctions and intents to achieve the best outcomes for users.

Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Swap users benefit from thorough MEV protection on all trades.

[Try CoW Swap.](https://swap.cow.fi/#/)

### Conclusion: The Dual Nature of MEV Bots

MEV bots occupy a fascinating and controversial space within DeFi. They represent the cutting edge of blockchain innovation, showcasing what's possible when technical sophistication meets economic incentive. But their existence also raises ethical and structural questions about fairness, transparency, and the future of decentralized markets.

As DeFi matures, understanding MEV - and the bots that exploit it - is crucial for anyone building or trading on open financial protocols. Whether seen as opportunistic predators or necessary arbitrageurs, MEV bots are here to stay. The real question is how we, as a community, design systems that encourage ethical behavior while preserving the integrity of decentralized finance.

Interested in learning about MEV and what measures you can deploy to help keep yourself protected? Check out the below.

-   [Understanding MEV Protection](http://cow.fi/learn/understanding-mev-protection)
    
-   [How to avoid MEV bots](http://cow.fi/learn/how-to-avoid-mev-bots)
    
-   [MEV Bots: switch from searcher to solver](http://cow.fi/learn/mev-bots-switch-from-searcher-to-solver)

large_MEV-bots-how-do-they-make-money?.png

medium_MEV-bots-how-do-they-make-money?.png

small_MEV-bots-how-do-they-make-money?.png

thumbnail_MEV-bots-how-do-they-make-money?.png

MEV-bots-how-do-they-make-money?.png

MEV bots are algorithmic traders in DeFi that exploit blockchain mechanics to extract profit during block production. This article explains how they work, their profit strategies, and the risks they pose to Ethereum and the broader DeFi ecosystem.

What are MEV bots, and how do they make money?

![MEV attacks.png](https://celebrated-gift-f83e5c9419.media.strapiapp.com/MEV_attacks_25da5820e4.png)
Maximal Extractable Value (MEV) attacks have become a significant concern for crypto traders. Whether you’re a beginner or an experienced trader, understanding MEV attacks is essential to protecting your transactions and ensuring fair trading practices.

In this article, we explain what MEV attacks are, how they work, and the best strategies for safeguarding yourself against them.

## MEV Attacks Go Beyond Standard Transaction Fees

Crypto traders are familiar with structural fees, such as:

-   Exchange fees – Charges applied by centralized or decentralized exchanges.
    
-   Execution fees – Costs associated with executing trades.
    
-   Gas fees – Payments made to blockchain miners or validators for processing transactions.
    

However, MEV attacks differ from these standard fees. Rather than being inherent costs of using the blockchain, MEV attacks exploit vulnerabilities in the transaction processing model to extract additional value at the expense of traders.

## “Inevitable” MEV vs MEV Attacks

### What is MEV?

MEV refers to the value that can be extracted from a blockchain transaction beyond standard fees. This extraction is done by reordering, inserting, or censoring transactions before they are confirmed on-chain.

MEV is a hidden tax on all types of Ethereum transactions. That means any time you want to transact in DeFi: from buying or selling an NFT, lending tokens to a liquidity pool, or swapping one token for another, a group of opportunistic users known as “searchers” have the opportunity to see your trade, and manipulate the criteria surrounding your trade to ensure they make profit, at your expense.

  

There are lots of different ways MEV can take place on Ethereum, which we’ll explore further down in the article. But for now, it’s important to understand the mechanics of MEV, and their presence on many chains like Ethereum.

### The MEV Debate: Good or Bad?

Some argue that MEV is a natural incentive mechanism compensating searchers and validators for optimizing transaction sequencing. Others see it as an unfair exploitation that degrades user experience and creates hidden costs.

Want to read more about this debate? [We have an article that explores the pros and cons in more detail.](https://cow.fi/learn/is-mev-good-or-bad)

MEV makes money for searchers, block builders, and Ethereum validators at the expense of regular users, especially beginners who don’t know how to protect themselves. As of the time of writing, sandwich attacks on AMMs and aggregators alike generate [almost $1 million in profit for searchers each week](https://eigenphi.io/mev/ethereum/sandwich).

  

Over time, persistent MEV erodes market confidence as traders realize they are at a constant disadvantage to more sophisticated actors. Ultimately, MEV may pose an existential threat to blockchain ecosystems like Ethereum, so it’s imperative for solutions to emerge that protect everyday traders from price exploitation.

  

The reality is, there is little appetite to change the design of chains like Ethereum, meaning MEV is here to stay. While it does help prices remain consistent across different liquidity pools, it creates a hierarchy between sophisticated actors looking for arbitrage and regular users unaware that their transactions could be exploited.

## What is an MEV Attack?

An MEV attack is a deliberate manipulation of transaction ordering in a way that unfairly profits a searcher at the expense of traders. MEV attacks actively exploit transaction sequencing vulnerabilities.

## Overview: How Searchers Implement an MEV Attack

MEV attacks exploit the mempool, a public waiting area where transactions reside before being confirmed. Here’s how searchers implement an MEV attack:

1.  Transactions enter the mempool before being included in a block.
    
2.  MEV searchers monitor the mempool for profitable opportunities.
    
3.  Searchers select, reorder, or delay transactions to maximize their gains.
    
4.  They execute transactions that benefit from market movement, often at the expense of regular traders.
    

### Example of an MEV Attack

Imagine a trader places a large buy order for a token. A searcher detects this order in the mempool and inserts their own buy order first. Once the trader’s transaction pushes the price up, the searcher sells the token at a higher price—pocketing the profit at the trader’s expense.

## Common Types of MEV Attacks

### Frontrunning Attacks

  

[Frontrunning](https://cow.fi/learn/what-is-frontrunning) is when a bot sees a profitable transaction in a public mempool, duplicates it, and places their own order in front of the victim transaction, extracting its value for themselves.

  

If you’re interested in understanding frontrunning more fully, check out our [frontrunning blog post](https://cow.fi/learn/what-is-frontrunning).

### Backrunning Attacks

  

These attacks are similar to frontrunning but in reverse. In [backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained), the attacker places a transaction after the victim transaction to capitalize on any arbitrage left by the victim’s order. Frontrunning and backrunning transactions are not very common by themselves, but a combination of the two, known as a “sandwich attack,” accounts for most MEV.

  

If you’re interested in understanding backrunning more fully, check out our [backrunning blog post.](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained?ref=learn_search)

### Sandwich Attacks

  

[Sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself) combine frontrunning and backrunning, placing a buy order before the victim transaction and a sell order directly after. This creates a “sandwich” of the victim transaction.

  

If you’re interested in understanding sandwich attacks more fully, check out our [sandwich attacks blog post.](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself?ref=learn_search)

### Loss-Versus-Rebalancing (LVR)

LVR is a sophisticated strategy where MEV searchers exploit the difference between a DEX’s price and an external market price.

Targeting liquidity providers, LVR is a form of MEV responsible for more price exploitation than all other forms of MEV combined. Many liquidity providers haven’t even heard of LVR, but it costs them 5–7% of their liquidity, resulting in hundreds of millions lost each year. In fact, when accounting for LVR, many of the largest liquidity pools are not profitable for LPs at all.

If you’re interested in understanding LVR more fully, [check out our LVR blog post.](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr?ref=learn_search)

## How MEV Attacks Hurt Crypto Traders

Maximal Extractable Value (MEV) attacks pose serious risks to both individual traders and the broader decentralized finance (DeFi) ecosystem. These attacks allow validators, miners, or other privileged actors to manipulate transactions for their own gain, leading to inefficiencies, increased costs, and a loss of trust in DeFi markets.

The negative impacts of MEV can be categorized into four major areas: unexpected losses and slippage, compromised trade execution, distorted market conditions, and a general erosion of confidence in decentralized trading platforms.

We explore each of these in turn below.

### Unexpected Losses and Slippage

One of the most immediate consequences of MEV attacks is that traders often experience worse-than-expected execution prices. This occurs due to front-running and sandwich attacks, two common forms of MEV exploitation.

-   **Front-running:** A validator or miner sees a pending trade and inserts their own transaction ahead of it, profiting from price changes before the original trade is executed. This forces the original trader to buy at a higher price or sell at a lower price than anticipated.
    
-   **Sandwich attacks:** This occurs when an attacker places one trade before and another trade after a target transaction. By manipulating prices through these additional transactions, the attacker forces the victim to complete their trade at a disadvantageous rate, profiting from the resulting price changes.
    

Both types of attacks create additional transaction costs, leading to unnecessary losses for unsuspecting traders. Even small-scale traders who frequently engage in swaps and liquidity provision can suffer from repeated losses over time, making DeFi trading less attractive.

### Compromised Trade Execution and Price Distortion

MEV attacks undermine the integrity of decentralized markets by interfering with the natural process of price discovery. Price discovery refers to the process by which market prices are determined based on supply and demand dynamics. However, when MEV bots and validators manipulate transactions, the resulting prices are no longer purely organic.

For example, large MEV attacks can lead to artificial price swings that do not reflect actual market sentiment. Traders making decisions based on manipulated prices may enter trades under false assumptions, increasing their risk of losses. Additionally, compromised trade execution makes it harder for traders to place orders with confidence, as they cannot be certain their transactions will be processed fairly.

### Skewed Markets and Artificial Inefficiencies

MEV-driven market manipulation can introduce significant inefficiencies that distort normal trading activity. Instead of functioning as a free and competitive environment, DeFi markets become skewed in favor of those who have privileged access to transaction data.

As a result, the markets may experience:

-   Reduced liquidity, as traders hesitate to provide liquidity, knowing they may be exploited.
    
-   Increased volatility, due to sudden and unpredictable price swings caused by MEV bots.
    
-   Barriers to entry for new traders who cannot compete with sophisticated MEV strategies.
    

These inefficiencies hinder DeFi’s ability to serve as a viable alternative to traditional finance.

### Erosion of Trust in DeFi

Finally, MEV attacks contribute to growing distrust in decentralized finance. When traders repeatedly experience unexplained losses, poor execution, and unfair market conditions, they begin to question whether DeFi is truly decentralized and transparent.

If MEV exploitation continues unchecked, DeFi platforms risk losing users, stalling adoption, and facing increased regulatory scrutiny. Therefore, addressing MEV challenges is crucial to ensuring a fair and sustainable DeFi ecosystem.

## Protect Yourself Against MEV Attacks

### MEV Blockers

MEV blockers reduce vulnerability to attacks by protecting transactions from manipulation. They work by preventing transactions from being publicly visible in the mempool, making it harder for searchers to exploit them. Read more about MEV blockers here.

### How CoW Swap Mitigates MEV Attacks

CoW Swap gives traders the tools they need to protect themselves from MEV, so when you’re trading through [https://swap.cow.fi/](https://swap.cow.fi/) you’re protected from the majority of opportunistic searchers, regardless of the size or type of trade.

  

CoW Swap relies on 3 main features to keep you safe from MEV:

1.  Delegated Trade Execution
    
2.  Coincidence of Wants
    
3.  Uniform Clearing Prices
    

  

Let’s dive in!

### Delegated Trade Execution

  

On CoW Swap, all transactions are routed through a decentralized network of “solvers” — independent algorithms that are responsible for finding the best execution price for your trades.

  

When you submit a trade on CoW Swap, rather than initiating a blockchain transaction like you would on a platform like Uniswap, you instead submit a signed “intent to trade” message. This means that CoW Swap can perform optimizations on your trade that would not be possible if you submitted the transaction directly to the blockchain.

  

These optimizations include finding Coincidences of Wants, adjusting the slippage tolerance dynamically, and completing your trade at an optimal price during the time of execution.

  

Since it is the solvers who execute your trade on your behalf, you are never directly exposed to the public mempool, meaning that you are protected from MEV at all times.

  

Whatever price solvers quote you at the time you place your order is actually the worst price that your order will be executed at (it may complete at a better price if solvers find a better execution path). All risk of MEV is taken on by the solver itself.

### Coincidence of Wants

  

CoW Swap’s delegated trade execution mechanism has another major advantage — it can match your orders off-chain.

  

Any time you submit a trade on CoW Swap, solvers start looking for the best way to execute it. Before checking on-chain liquidity, solvers check other incoming orders on CoW Swap’s current batch auction to see if your trades can be matched peer-to-peer.

  

Here’s how it works:

  

Let’s say you’re looking to trade ETH for USDC. You submit your order and solvers see that someone else in that batch is actually looking to trade USDC for ETH — the opposite of your trade — at the same time. These two trades will be matched with each other in a “Coincidence of Wants” (CoW) which allows traders to swap their assets with each other directly (one to one or many to many), thereby saving on gas fees, liquidity provider fees, price impact, and also bypassing MEV risks.

  

CoW Swap’s founders were inspired by the potential for Coincidence of Wants to provide lower prices for everyday Ethereum users (it’s in the name!). This mechanism is one of the cheapest and most secure ways to make a DeFi trade, and since you’re not using on-chain liquidity pools, your Coincidence of Wants trade cannot be subject to MEV attacks.

### Uniform Clearing Prices

As a third line of defense against MEV, CoW Swap ensures all orders complete under a “Uniform Clearing Price” (UCP).

  

Upon submitting your trade, your order gets included in a batch auction alongside other pending orders in the queue. All of the orders within a batch trade for the same price on the blockchain, a phenomenon referred to as “Uniform Clearing Price” (UCP).

  

To understand how UCP works on CoW Swap, we first have to consider how DeFi trading works on traditional DEXs. On a normal decentralized exchange, if 8 people want to trade ETH for USDC, each of their trades clears at a slightly different price since DEXs process trades in a sequential manner even though they might be happening concurrently (within the same Ethereum block).

  

This leaves room for MEV because the order in which transactions are processed heavily impacts the prices that users get. Searchers are constantly monitoring DEX trades, looking for opportunities like these where they can reorder transactions to their advantage.

  

On CoW Swap, if the same 8 people are making that trade, as long as they are in the same batch auction, each order will be settled for the same clearing price when it goes on-chain. This leaves no room for MEV attacks since all prices are the same, meaning that transaction ordering becomes irrelevant.

[Learn how CoW Swap solves the MEV problem.](https://cow.fi/learn/dex-aggregator-how-to-choose)

## Final Thoughts

MEV attacks exploit transaction sequencing for profit, often at the expense of everyday traders. While some MEV activities may be considered an unavoidable part of DeFi, MEV attacks actively harm market fairness.

Understanding these attacks and using tools like MEV blockers and fair trading platforms can help protect your transactions and ensure a more equitable DeFi ecosystem.

Interested in learning about MEV and what measures you can deploy to help keep yourself protected? Check out the below.

-   [Understanding MEV Protection](http://cow.fi/learn/understanding-mev-protection)
    
-   [How to avoid MEV bots](http://cow.fi/learn/how-to-avoid-mev-bots)
    
-   [MEV Bots: switch from searcher to solver](http://cow.fi/learn/mev-bots-switch-from-searcher-to-solver)

large_MEV attacks.png

medium_MEV attacks.png

small_MEV attacks.png

thumbnail_MEV attacks.png

MEV attacks.png

An introduction to MEV attacks, including specific strategies: frontrunning, backrunning, loss-versus-rebalancing, and sandwich attacks. 

Understanding MEV attacks

George Hristov


MEV or “maximal extractable value” is a hidden tax on all types of Ethereum transactions. Any time you make a DeFi trade, buy or sell an NFT, or lend tokens to a liquidity pool, opportunistic users known as “searchers” may manipulate your trades, resulting in unfavorable prices, failed transactions, and missed opportunities. But not everyone agrees that MEV is bad.

  

In this article we’ll be exploring the pros and cons of MEV and most importantly, how you can protect your transactions from MEV, if you decide it’s not for you.

## Is MEV inevitable?

  

On Proof-of-Stake blockchains such as Ethereum, validators - contributors who validate transactions to help keep the network secure - are free to select which transactions they process first. This is different from markets you would find in TradFi, where the order of transactions are strictly enforced by regulators.

  

Because of this unique feature, users can offer incentives to process their transactions faster than they might process others. This incentive typically comes in the form of a payment, or gas fee on Ethereum. This unique feature on Ethereum and other, similar chains allows MEV to take place.

  

While there are many types of MEV, the most common is frontrunning. Sophisticated traders and bots scan the mem pool, a digital holding area where all transactions wait to be processed. When it identifies a transaction it believes it can make money out of, it places a transaction for the same asset, and pays extra to have it processed before the transaction it wants to front run.

  

By the time the target transaction has been completed, the frontrunner has made a profit. But not everyone believes this is a bad thing. Let’s explore the pros in the next section.

## The good

  

The presence of MEV can lead to improvements in how markets are run. At a high level, the presence of MEV bots can help them run more smoothly by eliminating efficiencies in how markets are run.

  

Arbitrage and liquidations are common trades that flow through MEV infrastructure. Arbitrage is a useful activity that keeps prices aligned between, say, a DEX’s AMM price and the price of the broader market.

### Improved economic inefficiencies

  

Liquidations, meanwhile, are important for the smooth operation of over-collateralized lending platforms like Maker DAO, for instance.

  

MEV activity is necessary to do things like maintain stablecoin pegs and rebalancing liquidity across different pools. MEV bots compete to buy assets at a low price from one source and sell it to another as quickly as possible.

  

The profit taken from the price difference ensures AMM liquidity pools remain balanced. There are also other less obvious yet potentially beneficial effects of MEV. One of which is the incentive for validators to remain engaged in the maintenance of networks when prices are low.

  

By having a larger pool of validators, who can remain engaged during market downturns - thanks to the additional incentives earned through MEV - can help keep a network decentralized.

### Fast price corrections across decentralized exchanges

  

MEV can also bring benefit to blockchains because it incentivizes price normalization and ensures events like liquidations are efficiently executed. Because there is inherent value to capture, MEV bots can exchange assets across pools to maintain the ecosystem without liquidity providers’ or lenders’ involvement. This phenomenon also appears in other DeFi mechanisms where some form of asset rebalancing takes place.

## The bad

  

While MEV can have its benefits, it also has a number of drawbacks: namely that it creates unfairness. Sophisticated actors familiar with the mechanics of blockchains like Ethereum have developed numerous ways to exploit users with less knowledge.

  

MEV makes money for searchers, block builders, and Ethereum validators at the expense of regular users, especially beginners who don’t know how to protect themselves. As of the time of writing, sandwich attacks on AMMs and aggregators alike generate [almost $1 million in profit for searchers each week](https://eigenphi.io/mev/ethereum/sandwich).

  

Over time, persistent MEV erodes market confidence as traders realize they are at a constant disadvantage to more sophisticated actors. Ultimately, MEV may pose an existential threat to blockchain ecosystems like Ethereum so it’s imperative for solutions to emerge that protect everyday traders from price exploitation.

## The compromise

  

The reality is, there is little appetite to change the design of chains like Ethereum, meaning MEV is here to stay. While it does help prices remain consistent across different liquidity pools, it creates a hierarchy between sophisticated actors looking for arbitrage and regular users unaware that their transactions could be exploited.

  

But there are ways to guard against MEV. In the below sections we’ll be exploring each one, and also solutions that do the hard work for you.

### Methods of defense

  

There are a wide range of methods you could use to help mitigate against the effect of MEV. The good news is there are many projects - including [CoW DAO](https://cow.fi) - that are already aware of this problem, and have built a number of solutions to ensure your trades and transactions are MEV free.

  

But as you will see, while there are many different ways you can protect yourself, there are few that combine all these defenses into a single solution that’s easy to use. Like [CoW Swap](https://cow.fi/cow-swap), or [MEV Blocker](https://cow.fi/mev-blocker).

#### Off-chain single batch settlement

  

Off-chain single batch settlement is an idea that’s designed to keep prying eyes from seeing what transactions you are submitting before they are put into a block to be verified.

  

Off-chain settlements are, like they sound, transactions that take place away from the main blockchain. One such technique for using off-chain settlement is to use a layer 2, a second blockchain built on top of the main blockchain.

  

By settling off-chain, the order of those transactions, the primary attack vector for MEV bots, is irrelevant. That’s because by the time the transactions are added to the mem-pool, they have already been completed, meaning arbitrage can’t take place because the prices of the transactions have already been fixed.

#### Fair Sequencing Services (FSS)

  

Fair Sequencing Services (FSS) is a decentralized framework that helps ensure that transactions are ordered fairly and impartially, and that smart contracts process transactions in a fair manner. FSS is designed to help DeFi developers create more equitable systems for users.

  

FSS combats MEV by using an oracle network to order transactions sent to a contract. An oracle is a data source used to verify whether data is accurate. In the case of FSS, it ensure transactions are in an order that makes exploitation more difficult.

#### Explicit specification of maximum slippage

  

Slippage is the difference between the expected price of a trade and the price at which it is executed. It can occur at any time, but is more likely to happen during periods of high volatility or when orders exceed the available liquidity.

  

When it comes to transacting on a blockchain, users are able to adjust the level of slippage, which is commonly expressed as a percentage of the total value. For example, if you set slippage at 5%, this creates an acceptable range whereby the price can move before it is finalised.

  

When trading in DeFi, it’s important to set as low a number as possible to ensure you’re not being exploited by MEV bots. The lower the number, the less price variation. But there are limits. If there’s limited liquidity for the coin you’re trading, the transaction might fail if the slippage range is too small.

#### Using RPC endpoints for MEV protection

  

RPC endpoints or Remote Procedure Calls, are an intermediate layer that routes transactions from a user’s wallet to the blockchain itself. Transactions pass through RPC endpoints before getting to the mem pool, so RPCs can provide additional functionality across any blockchain application or protocol. Think of RPCs as a middle-man which can be used to improve security.

  

[CoW DAO](https://cow.fi) uses this unique feature of public blockchains to create a safety layer that helps protect transactions from MEV bots.

  

[MEV Blocker](https://cow.fi/mev-blocker) provides access to a permissionless network of searchers while hiding transactions from the public mem pool. These searchers cannot frontrun or sandwich user transactions. Instead, they capture value through backrunning. Anytime a searcher backruns a user’s transaction, the searcher keeps up to 10% of the value and sends the other 90% back to the user as a rebate.

  

Want to try MEV Blocker for yourself? [Start here.](https://cow.fi/mev-blocker)

  

CoW Swap's Uniform Clearing Prices

  

Another unique feature of CoW Swap is its uniform clearing price.

  

CoW Protocol collects and aggregates [intents](https://docs.cow.fi/cow-protocol/concepts/introduction/intents) off-chain and settles them together in groups, known as batches. These batches are then "auctioned off" through a competition to the [solver](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers) offering the most surplus for the orders in the batch.

  

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.

#### CoW Swap's Coincidence of Wants

  

A unique feature of CoW Swap is its use of what’s called a Coincidence of Wants - which also happens to be the meaning of CoW in CoW DAO!.

  

A coincidence of wants is an economic phenomenon where two parties swap assets with one another peer-to-peer. Typically users would have to use an exchange such as Uniswap to complete this trade, but on CoW Swap, you can do it off chain.

  

CoW Swap orders start out as signed “intent to trade” messages that get batched together before getting sent to on-chain liquidity sources like Uniswap. As a result, CoW Swap can match orders peer-to-peer when the opportunity arises.

  

This has two benefits: gas fees are lower, and second, it avoids transactions going through the public mem pool, adding an extra layer of security.

#### CoW Swap's Delegated Trade Execution

  

CoW Swap’s unique “solver” feature protects users from MEV by completing transactions on their behalf. Solvers are dedicated third parties whose role it is to search for the best price for trades submitted by users.

  

A group of solvers compete against each to find the best price for trades. They do this by searching across multiple DEX’s looking for the best prices - hence why CoW Swap is referred to as a meta DEX - because it searches all the other DEXes to find you th ebest price.

  

The most competitive solver is then awarded the trade, and any savings they generate for the user, they pass on to the user.

## The CoW approach to MEV protection

  

CoW DAO’s [MEV Blocker](https://cow.fi/mev-blocker) and [CoW Swap](https://cow.fi/cow-swap) have safety baked in. They are designed specifically to protect you from MEV attacks.

  

In the case of MEV Blocker - this is a stand alone product that you can add to your wallet to enjoy the full benefits of MEV protection. This works by using what is called an RPC or a Remote Procedure Call. This is an intermediate layer that routes transactions from a user’s wallet to the blockchain itself. Transactions pass through RPC endpoints before getting to the mempool, so RPCs can provide additional functionality across any blockchain application or protocol.

  

With CoW Swap meanwhile, it provides MEV protection whenever you trade on the DEX. CoW Swap is a meta DEX aggregator that finds the best prices for trades and provides comprehensive MEV protection.

  

The protocol uses a unique trading mechanism that relies on batch auctions and intents to achieve the best outcomes for users. Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Swap users benefit from thorough MEV protection on all trades.

### Interested to learn more?

  

If you want to dive deeper into MEV Protection and how CoW DAO does it, [head this way.](https://cow.fi/learn/articles/what-is-mev)

large_Is MEV good or bad.png

medium_Is MEV good or bad.png

small_Is MEV good or bad.png

thumbnail_Is MEV good or bad.png

Is MEV good or bad.png

MEV or “maximal extractable value” is a hidden tax on all types of Ethereum transactions. But some argue it can be useful. We weigh up the pros and cons. 

Is MEV good or bad?

large_what-is-mev-cover-photo.png

medium_what-is-mev-cover-photo.png

small_what-is-mev-cover-photo.png

thumbnail_what-is-mev-cover-photo.png

what-is-mev-cover-photo.png

MEV, or maximal extractable value, is a $1.3 billion hidden tax on Ethereum transactions. Learn how MEV works and how to protect yourself from MEV attacks.

What is MEV? — Maximal Extractable Value Explained

# MEV Bots: how to protect yourself

[Maximal extractable value, or MEV](https://cow.fi/learn/what-is-mev), is a pernicious form of price exploitation responsible for over $1.3 billion in losses for everyday traders. Most MEV occurs on the Ethereum ecosystem and adversely affects transactions across decentralized exchanges, liquidity pools, NFT marketplaces, and more.

MEV bots capture MEV by seeking out and exploiting price differences. Since blockchain markets are built to be always-on, there are always arbitrage opportunities on networks like Ethereum. MEV bots exploit beginners and seasoned traders alike, so it’s important to understand how they work and how to avoid them.

## What is MEV?

Before diving into the specifics of how to avoid MEV bots, let’s first make sure we understand MEV conceptually.

  
[Maximal Extractable Value](https://cow.fi/learn/what-is-mev) is, as the name suggests, a measure of the maximum amount of value that can be extracted from the contents of a given Ethereum block. Ethereum transactions are not all equally valuable, and validators (the parties responsible for creating the blocks) can pick and choose how to order transactions in blocks to maximize their profits. This means that transactions are not necessarily executed in the order they are received; instead, validators arrange them in a way that maximizes their compensation.
![1-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_how_to_avoid_mev_bots_ffb5692931.webp)


## How MEV occurs in an Ethereum block

  

Upon order submission, Ethereum transactions get sent to a “mempool” where they wait to be added to a block. In this mempool, MEV bots (also known as “searchers”) can view pending transactions and bribe validators to reorder them, exploiting the little guy and profiting in the process.

## What is an MEV Bot?

An MEV bot is a program designed to monitor decentralized exchanges, NFT marketplaces, lending platforms, and other on-chain venues to spot profit opportunities. There are several distinct types of MEV bots, each targeting different kinds of transactions.

  

### Trading MEV bots

The most common type of MEV bots exploit decentralized exchanges that users rely on to swap cryptocurrencies. They specifically take advantage of the mechanisms used by [automated market makers (AMMs)](https://cow.fi/learn/cow-protocol-glossary#:~:text=amm).

  
When users trade on decentralized exchanges, they set a [slippage](https://cow.fi/learn/what-is-slippage-in-crypto) tolerance to manage the price difference between the time an order is submitted and when it actually executes. Normally, slippage tolerances range from around 0.1% for stable assets like stablecoins, to 1–2% for blue-chip cryptos like Ethereum, and sometimes upwards of 10% for highly volatile cryptocurrencies like memecoins.

![1-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_how_to_avoid_mev_bots_ffb5692931.webp)

_How MEV occurs in an Ethereum block_

Upon order submission, Ethereum transactions get sent to a “mempool” where they wait to be added to a block. In this mempool, MEV bots (also known as “searchers”) can view pending transactions and bribe validators to reorder them, exploiting the little guy and profiting in the process.

## What is an MEV Bot?

An MEV bot is a program designed to monitor decentralized exchanges, NFT marketplaces, lending platforms, and other on-chain venues to spot profit opportunities. 

## Different bots target different MEV transactions

There are several distinct types of MEV bots, each targeting different kinds of transactions.

##Trading MEV bots 
The most common type of MEV bots exploit decentralized exchanges that users rely on to swap cryptocurrencies. They specifically take advantage of the mechanisms used by  [automated market makers (AMMs)](/learn/cow-protocol-glossary#:~:text=amm).

When users trade on decentralized exchanges, they set a slippage tolerance to manage the price difference between the time an order is submitted and when it actually executes. Normally, slippage tolerances range from around 0.1% for stable assets like stablecoins, to 1–2% for blue-chip cryptos like Ethereum, and sometimes upwards of 10% for highly volatile cryptocurrencies like memecoins.

![2-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_how_to_avoid_mev_bots_311ef2c62c.webp)


### How a [sandwich attack](https://docs.cow.fi/mevblocker/concepts/mev-concepts/sandwich-attacks) occurs

  

One of many techniques that DEX MEV bots use to exploit the slippage tolerance set by users to manipulate trades through is a “[sandwich attack](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself).” In a sandwich attack, MEV bots identify a target trade and execute a frontrunning trade just before it, driving up the asset’s price to the slippage tolerance limit. Once the victim’s transaction goes through and raises the price further, the bots dump the token, keeping the profits for themselves. MEV bots also use techniques like [frontrunning](https://cow.fi/learn/what-is-frontrunning) and [backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained) to exploit decentralized exchanges.

  

### LP MEV bots

Liquidity providers (LPs) on decentralized exchanges can also fall prey to MEV bots. MEV for LPs is known as “[loss versus rebalancing” or LVR](https://cow.fi/learn/what-is-loss-versus-rebalancing-lvr). This value extraction arises from the arbitrage between a given LP pool and a reference rebalancing pool that has more up-to-date pricing.

LVR is a problem on decentralized exchanges because price discovery for assets typically occurs off-chain. Centralized exchanges like Binance generally have more liquidity for tokens so they serve as the most accurate source of truth for up-to-the-minute prices.

MEV bots exploit this arbitrage opportunity by continuously trading against DEX pools, capturing upside for themselves at the expense of the LPs.

### NFT MEV bots

MEV bots can also hijack NFT mints through a process called “frontrunning.” If an MEV bot detects a transaction in the mempool from a user attempting to purchase a valuable NFT, it can submit an order to buy the NFT for itself that executes before the user’s transaction. This is similar to frontrunning swaps on DEXs but applied to NFT mints instead.

![what-is-frontrunning-cover-photo.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/what_is_frontrunning_cover_photo_11a9eec4fe.webp)

## How to Avoid MEV Bots

While MEV is a pervasive problem across all of Ethereum, there are multiple ways to keep yourself safe.

### Use tight slippage when trading

The simplest way to defend against MEV is by setting a low slippage tolerance.

Since MEV exploits slippage for price manipulation, transactions with a lower slippage tolerance provide searchers with less opportunity to exploit trades.

  

For users not using any other MEV protection tools, setting a lower slippage tolerance can serve as an initial line of defense. However, it’s not a complete solution. Setting the slippage tolerance too low can often result in failed transactions. Even with optimal slippage, MEV bots may still manage to extract value from your trades.

### Trade on pools with large liquidity

Fundamentally, MEV relies on arbitrage opportunities. One way to reduce exposure to such arbitrage is to restrict your trading only to pools with large liquidity. On these pools, individual trades won’t have much [price impact](https://cow.fi/learn/cow-protocol-glossary#:~:text=Price%20impact), so it will be more difficult for MEV bots to extract value.

This strategy limits much of DeFi, of course, as there are constantly new coins launched, and even popular coins may suffer from low liquidity on certain exchanges or during certain times.

### Install an MEV protection RPC

An increasingly popular type of MEV protection that provides a comprehensive solution to the problem is the use of an MEV blocking RPC like [MEV Blocker](https://mevblocker.io/).

  

An RPC (Remote procedure call) is a piece of software that sits between a user wallet and the blockchain, transmitting transactions. Normally, RPCs are a boring piece of blockchain infrastructure.

  

Recently, however, specialized RPCs have begun incorporating extra security guarantees for transactions before they reach the blockchain.

  

#### MEV Blocker

The most popular specialized RPC endpoint is [MEV Blocker](https://mevblocker.io/). As its name suggests, MEV Blocker protects against MEV across the entire Ethereum network.

  

This RPC manages a permissionless network of searchers and conceals transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions; instead, they capture value through [backrunning](https://cow.fi/learn/what-is-mev). Whenever a searcher backruns a user’s transaction, they keep up to 10% of the value and return the remaining 90% to the user as a rebate. This means that even when a transaction leaves money on the table, MEV Blocker ensures users get most of that value back.

  

MEV Blocker protects all types of Ethereum transactions, not just swaps, and is compatible with all Ethereum wallets. You can install the MEV Blocker RPC endpoint by following the instructions [here](https://mevblocker.io/).

### Use intent-based trading solutions

While RPC endpoints protect against MEV across many different types of trades, the most comprehensive solutions take place at the application level.

  

In recent years, there has been a surge in the popularity of intent-based trading solutions like CoW Swap, with leading exchanges like 1inch and Uniswap launching their own intent-based solutions in 1inch Fusion and Uniswap X. Unlike traditional decentralized exchanges, intent-based trading solutions rely on professional execution parties known as “solvers’’ to execute trades on behalf of users.

  

Delegating execution to professional third parties helps users get the best prices for their trades, as solvers can determine the optimal liquidity sources to tap into. It also means that solver themselves take the risk of MEV, and users are protected from direct price exploitation.

![3-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_how_to_avoid_mev_bots_523b1b6663.webp)

_The flow of a transaction on CoW Swap_

### (For LPs) Use an MEV-capturing AMM

Until recently, there wasn’t a great solution to MEV in the form of loss-versus-rebalancing (LVR). LPs basically had to accept that providing liquidity for tokens comes with a tax paid to the MEV bots that constantly rebalance the pools (at the expense of the liquidity providers themselves).

  

This all changed, however, with the launch of [CoW AMM](https://cow.fi/cow-amm) — a first-of-its-kind MEV-capturing AMM that redirects profits from pool rebalancing to liquidity providers. CoW AMM works sort of like MEV Blocker in that it makes the MEV bots work FOR users rather than against them. To trade against the liquidity in CoW AMM pools, solvers must bid to provide the most surplus to the pool, thereby giving the majority of LVR profits to the LPs.

## Why MEV bots are bad for Ethereum

As a permissionless, public platform, Ethereum serves as a battleground of opinions on whether [MEV is good, bad, or should even be allowed in the first place](https://cow.fi/learn/is-mev-good-or-bad).

  

Those sympathetic to the practice argue that MEV is a natural market mechanism that enhances market efficiency and encourages price discovery. While litigating the specifics of the issue is beyond the scope of this article, there are important arguments to be made for why MEV bots are harmful to individual users.
![4-how-to-avoid-mev-bots.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_how_to_avoid_mev_bots_c7aafd4451.webp)

_A snapshot of total MEV value extraction_

### Reduce fairness

At its core, value extraction prioritizes sophisticated traders with the means and know-how to exploit transactions and profit off minute arbitrage opportunities.

  

Users who may simply be making trades on exchanges or minting NFTs have no way to compete with these value extractors unless theycan write better bots to protect their transactions.

### Disproportionately target beginners

Those new to DeFi are particularly vulnerable to being exploited. The world of decentralized trading is complex for beginners, who may not even understand settings like slippage tolerance, making them easy prey for bots waiting to take advantage of inexperienced traders.

  

This creates a negative equilibrium for decentralized trading that may drive newcomers away, hurting the ecosystem as a whole.

### Engage in market manipulation

While there are arguments to be made for MEV encouraging market efficiency and price discovery, this is not the case with every type of MEV.

  

For example, trading MEV bots rely on exploiting slippage tolerances by raising prices up to a threshold and then selling immediately after in a sandwich attack. In this scenario, the AMM does not benefit from price discovery, but instead experiences an artificial pump-and-dump at the expense of a single trader. In traditional markets, such a move could be considered market manipulation as it adds nothing to the market and is designed solely to profit off a market participant.

## CoW DAO: Protecting Ethereum Users from Negative Outcomes

Ultimately, the goal of Ethereum is to serve as a public platform that enables innovation. MEV as a problem emerges from a largely unrestricted marketplace. This benefits innovation by encouraging novel market mechanisms, but it also poses risks to uninformed traders.

  

For this reason, it’s important for users to be aware of the solutions available for protecting themselves. Regardless of what side of the MEV debate you stand on, most of us agree that we don’t want our trades exploited. To this end, [CoW DAO](https://cow.fi) has your back with products that protect you from Ethereum’s dangers and work to ensure positive outcomes.

  

Install MEV Blocker here: [www.mevblocker.io](http://www.mevblocker.io/)

LP on CoW AMM: [https://cow.fi/cow-amm](https://cow.fi/cow-amm)

Swap on CoW Swap: [www.swap.cow.fi](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=protect-from-mev-bots-article)

large_MEV bots.png

medium_MEV bots.png

small_MEV bots.png

thumbnail_MEV bots.png

MEV bots.png

The nasty culprits of MEV lurk in every corner of Ethereum… Find out how to keep yourself safe.

MEV Bots: how to protect yourself

Maximal extractable value (MEV) has become a controversial topic in the DeFi community over the last few years as the practice has gained wider adoption. Some blockchain projects take steps to protect their users from suffering MEV, but there are also advocates of the practice who argue that it contributes to market efficiency and validator compensation.

[CoW DAO](https://cow.fi/)  creates products that protect Ethereum users from negative outcomes, so it’s clear that participants in the DAO are no fans of MEV. The technical innovations that MEV searchers have pioneered in the pursuit of maximizing profits, however, are indeed impressive.

Thankfully, this tech can be put to good use in a way that benefits users and still makes money: Rather than being MEV searchers, these users should consider becoming CoW Protocol solvers.

## What is a Searcher?

Searchers are DeFi market participants, most often bots, that monitor pending Ethereum transactions for arbitrage opportunities.

Captured arbitrage is known as  [maximal extractable value (MEV)](/learn/understanding-mev-protection), and it’s a pernicious form of price exploitation that occurs across all types of transactions. To date, MEV has cost traders over $1.5 billion in losses. Most of these losses have been facilitated by searchers who pocket a large portion of the arbitrage for themselves.

## What is a Solver?

![1-switch-from-searcher-to-solver.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_switch_from_searcher_to_solver_7763c26103.webp)

CoW Protocol is a meta DEX aggregator that relies on bonded third parties known as “[solvers](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers)” to execute user trades. The protocol uses an  [intents-based trading system](https://docs.cow.fi/cow-protocol/concepts/introduction/intents)  where user intents get grouped into  [batches](https://docs.cow.fi/cow-protocol/concepts/introduction/batch-auctions). The solver that can execute the orders at the best price wins the right to settle the batch (find out more about how CoW Protocol works  [here](https://docs.cow.fi/category/concepts).)

Solvers are compensated in COW tokens for settling batches, incentivizing them to compete to find better prices and win the right to execute user intents. In return for this compensation, solvers provide users with a number of benefits including:

-   Finding optimal prices for the trades in a batch
-   Protecting users from MEV by executing transactions on their behalf
-   Providing abstraction that allows for benefits like gasless trades, transaction bundles, directly tapping into LPs, and more

## Searchers vs. Solvers

Fundamentally, searchers and solvers optimize for the same thing: maximizing profits. However, they serve different purposes, so their incentives diverge.

Searchers make money by performing MEV attacks on vulnerable transactions — giving users worse prices and keeping the difference for themselves. Searchers are incentivized to maximize their profits while ensuring that they are bidding enough for their transactions to be included in the next block.

In Ethereum, searchers work to out-bid each other to have their transactions included and make money. This is similar to what solvers do on CoW Protocol. The difference, of course, is that  **searchers benefit validators while solvers benefit users.**

## Why Become a Solver?

The fundamental difference between searchers and solvers is that searchers extract value from user transactions while solvers add value to them.

MEV may be a profitable enterprise in the short-term, but it hurts users and makes for a more toxic ecosystem. This turns potential new entrants away, feeding a vicious cycle — after all if there are no users left, who will searchers make money off of?

Solvers are the opposite: they take the same tech but they leverage it for the benefit of users. This cycle is virtuous, rather than toxic. Users achieve better prices, so they’re incentivized to use the product more, which means more order flow and better compensation for solvers.

From a technical standpoint, the methods searchers use to find arbitrage opportunities can be used to instead find solutions to batches. Searchers can leverage their existing nodes, algorithms, servers, AMM-indexed liquidity, simulation services, and more to become a good solver. This means that the lift to turn a searcher into a solver is relatively minor, while the upside is significant.

## Who can be a Solver?

CoW Protocol was the first DEX to implement intent-based trading, a model that the entire DeFi industry is now moving towards. This means that  [opportunities for solvers](https://dune.com/cowprotocol/solver-info)  will only grow in the coming years.

Thanks to a permissionless structure, anyone can become a solver. The main requirement is to put up a bond which serves as a guarantee that the solver will follow the  [rules](https://docs.cow.fi/cow-protocol/reference/core/auctions/competition-rules)  or risk getting slashed.

Solvers that do well find good solutions to the  [batch auction problem](https://docs.cow.fi/cow-protocol/reference/core/auctions/the-problem). They also generally:

-   Develop an efficient optimization algorithm
-   Identify and solve special problem instances that are easy to solve
-   Consider diverse liquidity sources
-   Integrate external market makers

## How to Become a Solver

Transforming a searcher setup into a solver setup or writing a new solver takes some technical expertise. We won’t go into it in this article, but you can find the requirements and specifications for becoming a solver in the  [CoW Protocol solver documentation](https://docs.cow.fi/cow-protocol/tutorials/solvers).

We also answer questions and provide technical support through the CoW Protocol  [Discord](https://discord.gg/cowprotocol).

Happy solving!

large_switch-from-searcher-to-solver-cover-photo.webp

medium_switch-from-searcher-to-solver-cover-photo.webp

small_switch-from-searcher-to-solver-cover-photo.webp

thumbnail_switch-from-searcher-to-solver-cover-photo.webp

switch-from-searcher-to-solver-cover-photo.webp

Searchers make Ethereum worse for everyone, but with just a few tweaks they could contribute to the ecosystem instead


MEV Bots: Switch From Searcher to Solver

An MEV blocker is a piece of blockchain infrastructure that protects orders from price exploitation resulting from MEV (Maximal extractable value).

Under the hood, it’s  [RPC endpoints](https://www.quicknode.com/docs/ethereum)  that function as MEV Blockers by routing transactions through specialized mempools which protect them from MEV and even send rebates back to traders when their trades leave money on the table.

There’s a lot of moving parts when it comes to MEV blockers, so let’s break the topic down one step at a time.

## What is MEV?

An MEV blocker is a piece of software that protects user transactions from suffering MEV exploitation… but what is MEV?

MEV (Maximal extractable value) is a hidden tax on all types of Ethereum transactions. Any time you make a large trade, mint a valuable NFT, or even provide liquidity to a liquidity pool, you are at risk of experiencing price exploitation through MEV. To date, MEV has caused over $1 billion in trading losses and continues to increase by the millions each day.

![1-what-does-an-mev-blocker-do.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_what_does_an_mev_blocker_do_80b9b36ca6.webp)

MEV is carried out by traders known as “searchers” who monitor pending Ethereum transactions and  bribe block builders  to order the transactions in a specific order, extracting profit in the process.

Find out more about the specifics of how MEV attacks work in our  [“Understanding MEV” series](/learn/understanding-mev-protection).

## How do MEV Blockers Work?

Since MEV relies on  [reordering transactions](/learn/understanding-mev-protection)  from the order in which they were submitted to a new, more profitable order, it’s possible to cut the process short by sending transactions to a specialized network of searchers bound by unique rules that ensure favorable execution for users.

These searchers cannot frontrun or sandwich transactions. Rather, they capture value by  [backrunning](/learn/what-is-backrunning-mev-attacks-explained)  large orders and sending a large portion of the backrunning profits back to the users as a rebate. So, as a user, you’re not only protecting yourself from harmful price exploitation in the form of frontrunning and sandwich attacks, you also have someone looking out for you any time you leave money on the table.

## What is an RPC endpoint?

We mentioned earlier that under the hood, MEV blockers run through RPC endpoints. An RPC endpoint is a communication layer between the blockchain and a user’s wallet. RPC endpoints relay messages from the wallet that  [RPC nodes](https://www.alchemy.com/overviews/rpc-node)  use to add orders to the blockchain.

RPC endpoints are the perfect place for MEV protection because they are an intermediary layer between the wallet and the blockchain, safely re-routing transactions towards the specialized network of searchers we mentioned earlier, rather than letting them end up in the public  [mempool](https://www.blocknative.com/blog/mempool-intro)  where malicious searchers lie in wait.

## Order Flow Auctions for MEV Blockers

![2-what-does-an-mev-blocker-do.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_what_does_an_mev_blocker_do_7de134111f.webp)

MEV Blocker RPCs rely on an emerging blockchain mechanism known as  [order flow auctions](/learn/understanding-order-flow-auctions). Order flow auctions are bidding mechanisms used at various levels of the Ethereum stack which pit multiple execution parties against each other to find the one that can provide users with the best value for their transaction.

Currently, block building incentivizes MEV extraction by awarding the privileges of creating the next block to the builder who can extract the most value from the trades. Order flow auctions invert this dynamic — incentivizing auction participants (in the case of MEV blockers, this is the specialized network of searchers) to instead find as large of a rebate as possible for the user submitting the transaction. The searcher who bids the most to backrun a trade wins the auction, capturing some small value of the proceeds for themselves and sending the rest back to the user as a rebate.

## Should you use an MEV Blocker?

While many people have yet to learn about MEV blockers, they’re quickly being adopted by some of the most savvy traders to protect their trades, NFT swaps, LP positions, and more. MEV is an increasingly significant problem for traders of all sizes and MEV blockers are designed to outsmart the searchers with the latest innovations in market mechanics.

You may have heard that MEV is only a problem for large trades, but as searchers get more and more sophisticated, this is becoming less true. Searchers can also extract value from small trades, especially in volatile markets, and beginner traders are especially susceptible to price exploitation as they may not yet know how to protect themselves.

MEV blockers provide robust protection without many downsides. As a user, you install the MEV blocker through your wallet and forget about it, meanwhile it’s quietly protecting you from price exploitation and even forwarding rebates from any money your trades leave on the table.

## MEVBlocker.io — CoW DAO’s Approach to MEV Blocking

![3-what-does-an-mev-blocker-do.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_what_does_an_mev_blocker_do_cc9833e466.webp)

[CoW DAO](https://cow.fi/)  became a first mover in the MEV blocker space when it introduced  [MEV Blocker](https://mevblocker.io/)  (yes, we coined the term) in April of 2023.

MEV Blocker (capital “B”) is an RPC endpoint developed by CoW DAO in collaboration with  [Beaver Build](https://beaverbuild.org/)  and  [Agnostic Relay](https://agnostic-relay.net/)  that’s built to protect Ethereum transactions from frontrunning and sandwich attacks. MEV Blocker sends transactions to a mempool of searchers who bid for the opportunity to backrun the trades, sharing any profits 90/10 with users (90% to users, 10% to searchers.)

To join  [over 600,000 Ethereum users receiving more than 1,000 ETH](https://dune.com/cowprotocol/mev-blocker)  in rebates, add MEV Blocker to your wallet by following the instructions  [here](https://mevblocker.io/).

large_What does a MEV Blocker do.png

medium_What does a MEV Blocker do.png

small_What does a MEV Blocker do.png

thumbnail_What does a MEV Blocker do.png

What does a MEV Blocker do.png

MEV blockers have made headlines in the blockchain space, but what are they and how do they work?


What does an MEV Blocker do?

MEV, or maximal extractable value, is a form of price exploitation that acts as a “hidden tax” on Ethereum transactions.

To date, MEV has caused over a billion dollars in losses for everyday traders, especially beginners who often don’t know how to protect themselves.

![1-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_understanding_mev_protection_5c36d92e50.webp)

In this article we’ll take a look at what MEV is and explore some of the popular protection solutions.

## What is MEV protection?

MEV protection refers to a broad set of strategies that keep users safe from price manipulation when trading, providing liquidity, minting NFTs, and more.

### What exactly are you protecting against?

To understand MEV, we must first understand how Ethereum transactions are processed.

![2-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_understanding_mev_protection_9bb7157306.webp)

When a user places an order, it initially gets submitted to a holding area for pending Ethereum transactions known as the “mempool.” Transactions in the mempool are public, meaning that [MEV bots (known as “searchers”) can monitor them for exploitation opportunities.](https://cow.fi/learn/mev-bots-switch-from-searcher-to-solver). MEV relies on reordering transactions from the order in which they were submitted to a new, more profitable order.

**Example: sandwich attacks**

To better understand this process, let’s trace the flow of a sandwich attack — the worst type of MEV.

![3-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_understanding_mev_protection_b1a61b2259.webp)

Essentially, traders place orders on  [AMMs](/learn/cow-protocol-glossary#:~:text=AMM)  by designating a  [slippage tolerance](/learn/cow-protocol-glossary#:~:text=Slippage%20Tolerance). Searchers can exploit these orders by placing similar trades before and after the user trade, manipulating the price of the assets on the AMM and forcing the victim trade to execute at a higher price.

Searchers pocket this difference in price for themselves. Their only cost is the amount of money they spend bribing the Ethereum block builders to order the transactions in a specific way.

To learn more about the different types of MEV, check out our articles on  [sandwich attacks](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself),  [frontrunning](/learn/what-is-frontrunning), and  [backrunning](/learn/what-is-backrunning-mev-attacks-explained).

**How to protect yourself from MEV**

Now let’s take a look at methods and tools you can implement to guard against MEV exploitation.

## Slippage tolerance and MEV protection

The most basic defense against MEV is setting a low slippage tolerance.

Since [MEV relies on slippage for price manipulation](https://cow.fi/learn/what-is-slippage-in-crypto), transactions with a lower slippage tolerance give searchers less room to exploit trades.

For users who aren’t utilizing any other MEV protection tools, setting a lower slippage tolerance can be a good first line of defense, however it’s by no means a complete solution. Setting the slippage tolerance too low often results in failed transactions. Even with optimal slippage, MEV bots may still be able to extract value from your trades.

## RPC endpoint tools for MEV protection

A better protection method is to install an MEV protection RPC endpoint.

A Remote Procedure Call (RPC) endpoint is an intermediate layer that routes transactions from a user’s wallet to the blockchain itself. Transactions pass through RPC endpoints before getting to the mempool, so RPCs can provide additional functionality across any blockchain application or protocol.

Normally, RPCs are a boring piece of blockchain infrastructure. Recently, however, specialized RPCs have begun incorporating extra security guarantees for transactions before they reach the blockchain.

### MEV Blocker

One of the most popular specialized RPC endpoints is  [MEV Blocker](https://mevblocker.io/).

As the name suggests, [MEV Blocker provides protection against MEV across all of Ethereum](https://cow.fi/learn/mev-blockers-explained-how-they-protect-users). The RPC works by managing a permissionless network of searchers and hiding transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions. Instead, they capture value through  [backrunning](/learn/what-is-backrunning-mev-attacks-explained).

Anytime a searcher backruns a user’s transaction, the searcher keeps up to 10% of the value and sends the other 90% back to the user as a rebate. So even when a transaction leaves money on the table, MEV Blocker puts it back into the pockets of users.

MEV Blocker provides protection for any type of Ethereum transaction (not just swaps), and it works with all Ethereum wallets. Install the MEV Blocker RPC endpoint by following the instructions  [here](https://mevblocker.io/).

## Decentralized applications and MEV protection

While RPC endpoints provide significant MEV protection, the most complete protection comes at the application layer.

As MEV has become more prevalent, decentralized applications (especially [decentralized exchanges — DEX’s](https://cow.fi/learn/how-cow-swap-solves-the-mev-problem)) have begun offering creative protection solutions to users. For example, many DEXs offer an “auto-slippage” feature which determines the optimal slippage for user trades, reducing the chances of price exploitation.

### Native MEV protection on CoW Protocol

CoW Protocol is a meta [DEX aggregator](https://cow.fi/learn/what-is-a-dex-aggregator) that finds the best prices for trades and provides comprehensive MEV protection. The protocol uses [a unique trading mechanism that relies on batch auctions](https://cow.fi/learn/understanding-batch-auctions) and [intents](https://cow.fi/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade) to achieve the best outcomes for users.

![4-understanding-mev-protection.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_understanding_mev_protection_cf34f8959e.webp)

Starting at the application level, CoW Protocol provides end-to-end MEV protection through its unique protocol design:

**Delegated Trade Execution:** On CoW Protocol, [bonded third parties known as “solvers” execute transactions on behalf of users.](https://docs.cow.fi/cow-protocol/concepts/introduction/solvers) Solvers source liquidity across multiple DEX’s and even offchain liquidity sources to find the best prices for any given trade. Solvers also execute transactions on behalf of users, meaning they are never exposed to the blockchain directly.

**Coincidences of Wants**  **(CoWs)**: Thanks to CoW Protocol’s batching mechanism, trades may be matched using peer-to-peer liquidity in a  [Coincidence of Wants (CoW)](/learn/what-are-cows-on-cow-swap). This method of trading bypasses AMMs, reducing fees and preventing MEV.

**Uniform Clearing Prices:** Another benefit of batching is that [duplicate trade pairs within a given batch clear for the same price](https://cow.fi/learn/what-is-price-improvement-and-why-is-it-unique-to-cow-swap). For example, if multiple users are trading ETH and USDC in the same batch, the assets will execute for the same price across the various trades. This makes transaction reordering useless, removing the opportunity for price exploitation.

Thanks to a powerful combination of delegated trade execution, batch auctions, and protected transaction flow through MEV Blocker, CoW Protocol users benefit from thorough MEV protection on all trades.

## CoW DAO protects you from MEV

MEV is a billion dollar problem for the Ethereum ecosystem. CoW DAO builds products to protect users from negative outcomes for transactions of all types and sizes.

DeFi traders can rely on  [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=understanding-mev-article)  as the most trusted decentralized exchange when it comes to MEV protection. For all other use-cases, including liquidity providing, NFT trading, and more,  [MEV Blocker](https://mevblocker.io/)  provides extensive MEV protection anywhere on Ethereum.

If you want to learn more about MEV, check out “[MEV Transparency: Ensuring Fairness In DeFi Markets](/learn/mev-transparency-ensuring-fairness-in-defi-markets)” and “[How CoW Swap solves the MEV problem](/learn/how-cow-swap-solves-the-mev-problem).”

Safe trading!

## **FAQs**




## What is MEV and why is it harmful?

MEV (maximal extractable value) is a form of price exploitation that acts as a "hidden tax" on Ethereum transactions. It has caused over a billion dollars in losses for everyday traders, especially beginners who don't know how to protect themselves. MEV relies on reordering transactions from their original submission order to a more profitable arrangement, allowing exploiters to extract value from unsuspecting users.

## How do sandwich attacks work?

Sandwich attacks occur when MEV bots (searchers) monitor pending transactions in the mempool and exploit a trader's slippage tolerance. The searchers place similar trades before and after the user's trade, manipulating the asset price on the AMM and forcing the victim's trade to execute at a higher price. The searchers pocket the price difference, with their only cost being the bribes paid to Ethereum block builders to order transactions in their preferred way.

## What are some basic methods to protect against MEV?

Setting a low slippage tolerance is the most basic defense against MEV since it gives searchers less room to exploit trades. Users can also install specialized MEV protection RPC endpoints like MEV Blocker, which hides transactions from the public mempool and works with a permissionless network of searchers who cannot frontrun or sandwich user transactions. For comprehensive protection, using decentralized applications that offer native MEV protection features like auto-slippage is recommended.

## How does MEV Blocker protect users?

MEV Blocker is a specialized RPC endpoint that provides protection against MEV across Ethereum by managing a network of searchers and hiding transactions from the public mempool. These searchers cannot frontrun or sandwich user transactions but can capture value through backrunning, with 90% of the value returned to users as rebates. MEV Blocker works with all Ethereum wallets, protects any type of Ethereum transaction (not just swaps), and can be installed by following instructions on their website.

## How does CoW Protocol provide MEV protection?

CoW Protocol is a meta DEX aggregator that provides comprehensive MEV protection through its unique design. It offers delegated trade execution where bonded third parties called "solvers" execute transactions on behalf of users, finding the best prices across multiple DEXs. The protocol facilitates peer-to-peer liquidity matching through Coincidences of Wants (CoWs), bypassing AMMs and preventing MEV. Additionally, it implements uniform clearing prices within batches, making transaction reordering useless and eliminating price exploitation opportunities.

Line chart: from October 2020 to January 2023, MEV cumulative gross profit has risen to $1.3 billion. Within the first quarter alone, MEV profits went from zero to more than $0.5 billion."

large_understanding-mev-protection-cover-photo.webp

medium_understanding-mev-protection-cover-photo.webp

small_understanding-mev-protection-cover-photo.webp

thumbnail_understanding-mev-protection-cover-photo.webp

understanding-mev-protection.webp

Ethereum users still don’t know how to protect themselves against MEV. Here are tools, methods, and apps to defend your trades from exploitation.


Understanding MEV Protection

_Blockchains enable reliable, trustless transactions on a large scale, however the automated nature of the technology leaves room for price manipulation by bots and malicious actors. In this talk, Olga Fetisova of CoW Protocol takes a look at Maximal Extractable Value (MEV) and its impact on the Ethereum ecosystem._

_The first part of the talk focuses on defining MEV and considering metrics, while the second part covers transparency initiatives, challenges, and solutions._

<iframe width="560" height="315" src="https://www.youtube.com/embed/hbgJYZlSU1k?si=IXHbjvmu9cdhWKC4" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

_What follows is a transcript of Olga’s talk:_

## What is MEV?

![1-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_mev_transparency_a_dappcon_talk_f6131f7a7a.webp)

Blockchain technology is great at ensuring the validity of all transactions and creating new blocks with no downtime, however not all transactions are ordered in the same manner that they are submitted.

While block producers have full autonomy over selecting which transactions to include in each block, they usually opt to maximize profits by ordering transactions based on the highest gas price. This means that validators may censor or re-order transactions before creating the block. Re-ordering transactions with a profit motive is known as “maximal extractable value” (MEV).

In other words, MEV is the profit extracted by miners or other actors in the blockchain network who insert, remove, and re-order transactions.

According to  [Flashbots](https://www.flashbots.net/), a research and development organization focusing on MEV, over $500 million in MEV has been extracted just since The Merge. This value is only the recorded amount paid out to Ethereum validators; the attackers themselves have earned much more.

As we can see, MEV creates a set of skewed incentives. On certain days, Ethereum validators earn more ETH from extracting MEV than from network fees themselves.

Some MEV activities are indeed legitimate, as the practice makes sure that transactions are ordered in an optimal way. Overall, however, the practice creates unfair advantages for a small minority.

Today we will talk about the most common types of MEV.

**Frontrunning attacks**

Frontrunning is when a bot sees a profitable transaction in a public mempool, duplicates it, and places their own order in front of the victim transaction, extracting its value for themselves.

**Backrunning attacks**

Very similar to frontrunning, but in reverse. In backrunning, the attacker places a transaction after the victim transaction to capitalize on any arbitrage left by the victim’s order.

Frontrunning and backrunning transactions are not very common by themselves, but a combination of the two, known as a “sandwich attack,” accounts for most MEV.

**Sandwich attacks**

Sandwich attacks combine frontrunning and backrunning, placing a buy order before the victim transaction and a sell order directly after. This creates a “sandwich” of the victim transaction.

Let’s take a deeper look into sandwich attacks.

## Sandwich attacks on the blockchain

![2-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_mev_transparency_a_dappcon_talk_8e1295469d.webp)

A sandwich attack begins after a user places a transaction in the mempool.

During order placement, the user indicates a slippage tolerance. Slippage is the necessary deviation in price that a trader is willing to accept for their transaction. Since the user indicates that they are willing to accept a particular sub-optimal price, MEV bots take this opportunity to exploit the price of the asset and capture the value for themselves.

The bot frontruns the user by placing a transaction directly in front of the victim’s trade. This strategically raises the price of the token by the exact amount necessary to make the victim transaction clear at its maximum slippage tolerance.

After the user’s transaction goes through (at the max slippage), it pushes the price of the asset up even further. The bot places a sell transaction (backrunning) directly after, benefiting from this artificial price arbitrage.

In essence, the bot places a transaction at a low price, rides the user’s slippage and price impact up, and sells at a higher price.

The user loses out, as they have to pay more than they would have otherwise and they receive fewer tokens for their trade. This is not fair.

## MEV Attacks in Practice

We can look at the chain to examine sandwich attacks directly. If we see the same token trading multiple times in one block, this may be an indicator that MEV attacks are occurring.

![3-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_mev_transparency_a_dappcon_talk_0bf4aae45b.webp)

In a block analyzed by the research organization  [ZeroMEV](https://zeromev.org/block?num=15956603), we can see that the DAI token was traded multiple times, suggesting actions by MEV bots.

The ZeroMEV analysis indicates that this block contains nearly $40 of lost value. The last transaction in the block was a payment to the miner in the form of 0.41 ETH, meaning that the attacker themselves earned an even higher amount.

![4-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_mev_transparency_a_dappcon_talk_6d599f75e5.webp)

To put this into perspective, the average MEV payout per block is about $100. On certain days of volatile market activity, however, this value can be much higher.

![5-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/5_mev_transparency_a_dappcon_talk_f76cf0cd60.webp)

![6-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/6_mev_transparency_a_dappcon_talk_aa4faee6ce.webp)

Looking at  [a block from November 2022](https://zeromev.org/block?num=15957277)  around the time of the FTX crash, we can see a completely different set of numbers.

In just one block, a bot caused over $5,000 in user losses and the validator received a kickback of over 3.5 ETH, suggesting, once again, that the gains for the MEV bot were significantly higher.

One notorious MEV searcher is known as “jaredfromsubway.” In a report by  [The Block](https://www.theblock.co/post/230218/jaredfromsubway-mev-bot), this searcher earned $34 million through MEV extraction in just the span of 3 months.

Using  [on-chain data](https://transparency.flashbots.net/), we can break down MEV price exploits by DEX. In the below image, we can see that Uniswap V2 and V3 account for over 90% of all MEV attacks on Ethereum.

![7-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/7_mev_transparency_a_dappcon_talk_d48aacf263.webp)

This, of course, is primarily as a result of Uniswap capturing the majority of trading liquidity — the more trades, the more potential MEV.

Thankfully, it’s quite simple to check if you have been MEV attacked. One of the easiest methods is by entering your Ethereum address on  [ZeroMEV’s website](https://zeromev.org/). You can also use a transaction hash or a particular block number.

![8-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/8_mev_transparency_a_dappcon_talk_60f3ba93f7.webp)

## Transparency Initiatives

Several organizations specialize in tracking MEV. These include Flashbots, Eigenphi, and ZeroMEV, among others. There are, however, practical ways that you can protect yourself from MEV exploits.

One of the most effective methods involves using a specialized RPC (remote procedure call) endpoint. RPC endpoints send calls to the blockchain for data and stand as an intermediary between your wallet and the blockchain itself.

RPC endpoints can be swapped out by the user depending on their needs. Most wallet applications such as MetaMask make it relatively straightforward to add custom RPC endpoints. Some well-known examples of specialized RPC endpoints include  [MEV Blocker](https://mevblocker.io/),  [MEV-Share](https://docs.flashbots.net/flashbots-protect/mev-share), and  [BackRunMe](https://backrunme.com/).

## MEV Blocker

![9-mev-transparency-a-dappcon-talk.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/9_mev_transparency_a_dappcon_talk_08bc87a2fd.webp)

[MEV Blocker](https://mevblocker.io/)  was developed by CoW DAO and, as the name suggests, it provides MEV protection for users.

When a user submits a transaction using MEV Blocker, rather than sending it to the public Ethereum mempool, the RPC sends the transaction to a specialized private pool. This conceals the transaction from public exposure, protecting it from exploitation by MEV searchers.

As an extra layer of security, MEV Blocker generates fake transactions that prevent probabilistic exploitation by advanced searchers. In addition, MEV Blocker offers rebates on trades by capturing value from potential backrunning opportunities. If a user transaction creates a backrunning opportunity, MEV Blocker guarantees that at least 90% of the backrunning value will be forwarded back to the user in the form of a rebate.

While it’s relatively new, MEV Blocker has already enjoyed a meteoric rise. So far, the RPC endpoint accounts for $16 billion in protected volume and 370 ETH in user savings.

To add MEV Blocker to your wallet, check out the MEV Blocker website:  [https://mevblocker.io/](https://mevblocker.io/)

## Dedicated dApps

While RPC endpoints protect against price exploitation, the most extensive MEV protection comes at the application layer.

One dApp that provides comprehensive MEV protection is  [CoW Swap](https://swap.cow.fi/). CoW Swap is a meta-DEX aggregator that matches orders with the best liquidity available on-chain and protects trades from MEV exploitation.

CoW Swap actually sends all transactions through MEV Blocker by default, but the dApp also uses some extra techniques to combat MEV.

1.  **Delegated Trade Execution**: On CoW Swap, dedicated parties known as “[solvers](https://docs.cow.fi/solvers/solvers)” execute transactions on behalf of the users. This means that users are never directly exposed to the chain, as they only sign an “intent to trade” message which the solvers execute as a blockchain order.
2.  **Coincidence of Wants (CoW)**: CoW Swap enables users to trade off-chain with each other through a peer-to-peer trading mechanism. These trades don’t have to go through the public mempool, so they avoid the dangers lurking there.
3.  **Uniform Clearing Prices**: Transactions on CoW Swap get grouped together into “batches.” Each time a particular asset (such as WETH) trades in a batch, it trades for a constant price. This mechanism obviates the price advantages of reordering transactions, preventing MEV exploits.

These two categories of protection — RPC endpoints and dedicated dApps — are the current ways that we can protect ourselves from MEV attacks. It’s important to remember, however, that MEV is a broader problem that evolves quickly, with bots constantly finding new ways to attack us and steal our precious ETH.

## Conclusion

There are many challenges in combating MEV.

For one, there is a lack of data availability. Centralized exchanges, for example, don’t share their data so it’s difficult to understand the full scale of the MEV problem and come up with a complete solution.

While lots of organizations focus on combating MEV, the issue continues to pose a significant challenge. This also creates opportunities, however, for the community to come together, innovate, and ensure that Ethereum remains the gold standard in the blockchain world.


large_mev-transparency-a-dappcon-talk-cover-photo.png

medium_mev-transparency-a-dappcon-talk-cover-photo.png

small_mev-transparency-a-dappcon-talk-cover-photo.png

thumbnail_mev-transparency-a-dappcon-talk-cover-photo.png

mev-transparency-a-dappcon-talk-cover-photo.png

A DappCon Talk by Olga Fetisova of CoW DAO


MEV Transparency: Ensuring Fairness In DeFi Markets

![what-is-backrunning-mev-attacks-explained-cover-photo.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/what_is_backrunning_mev_attacks_explained_cover_photo_7573e1bea9.webp)
## Overview

-   Backrunning is one of [the three main types of MEV](https://cow.fi/learn/what-is-mev), but it’s the least harmful as it only involves capturing arbitrage left over after a large trade
    
-   When a trader places a large trade that artificially inflates the price of an asset on an AMM, [an MEV bot can backrun the trade](https://cow.fi/learn/how-to-avoid-mev-bots) and profit from the arbitrage
    

- CoW Swap eliminates backrunning opportunities through its delegated trading mechanism, while [MEV Blocker pays out rebates for any backrunning opportunities](https://cow.fi/learn/mev-blockers-explained-how-they-protect-users) user trades create when transacting anywhere on Ethereum.


## What is backrunning?

Backrunning is a specific type of MEV (Maximal Extractable Value) which causes some traders to miss out on potential profit opportunities from their trades.

In practice, backrunning involves strategically executing a transaction immediately after another, high-value transaction. By doing this, the backrunning transaction capitalizes on the arbitrage opportunity left over from the [price impact](https://cow.fi/learn/cow-protocol-glossary#:~:text=Price%20impact) of the initial transaction.

Backrunning involves the tactical use of the information contained within the Ethereum mempool — a holding area for all pending transactions — to place transactions immediately after high-value trades in order to profit.

  

### Backrunning is the least harmful MEV attack

Out of the three types of MEV ([frontrunning](https://cow.fi/learn/what-is-frontrunning), [sandwich attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself), and backrunning) backrunning is considered the least harmful. In fact, if performed by itself, this method simply captures the arbitrage opportunity left over by a large trade without affecting the initial trade itself. Backrunning is only harmful to the user when combined with a [frontrunning attack](https://cow.fi/learn/what-is-frontrunning), which results in the worst kind of MEV — [the sandwich attack](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself).

For advanced traders who are capable of capturing the leftover arbitrage from their trades, backrunning may be considered a missed opportunity since it’s technically money left on the table.

Thankfully, not everyone has to be an experienced trader to capture the backrunning profits from their trades. Retail traders can automatically benefit from backrunning opportunities through specialized RPC endpoints such as [MEV Blocker](https://mevblocker.io/).

## How backrunning works

[The most common perpetrators of backrunning are MEV bots](https://cow.fi/learn/how-to-avoid-mev-bots) programmed to monitor pending Ethereum transactions. These bots place strategic trades directly after existing trades in order to capture the arbitrage left over from their price impact.

The process takes advantage of the mechanisms of [automated market makers (AMMs)](https://cow.fi/learn/cow-protocol-glossary#:~:text=amm).

  

Whenever a large trade goes through, it imbalances the liquidity pools of the AMM, causing the price of the asset being sold to go down, and the price of the asset being bought to go up. This price imbalance leaves an arbitrage that MEV bots correct by placing a follow-up trade, earning a profit in the process.

## Backrunning example: trading Ethereum

To better understand the concept of backrunning, let’s consider an example scenario. In this example, a user named Alex initiates a substantial trade, selling $10,000 of ETH to buy COW on Uniswap.

  

Due to the nature of AMMs, this swap leads to a jump in the value of COW and a drop in the value of ETH on this particular exchange (Uniswap).

![what-is-backrunning-mev-attacks-explained-cover-photo.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/what_is_backrunning_mev_attacks_explained_cover_photo_7573e1bea9.webp)

At the same time, an MEV bot notices Alex’s large transaction and springs into action. And so the backrunning begins…


    
-   The MEV bot acquires Alex’s sell token (ETH) at this lower price.
    
-   The bot immediately turns around and sells that token for a higher price on a different exchange where this price arbitrage has not yet been reflected.
    
-   The bot profits from the price difference between the assets on these two exchanges.
    

  

From a technical perspective, Alex’s transaction doesn’t result in any realized loss for him, since he still got the price he was quoted for his trade. However, his trade created an arbitrage opportunity that he didn’t capture, leaving money on the table.

  

[The actions of the MEV bot have broader implications](https://cow.fi/learn/is-mev-good-or-bad) for the DeFi ecosystem. Bots monopolize arbitrage opportunities between exchanges and deny regular users the chance to benefit from the price impact their trades create.

## Related MEV attack tactics

[Frontrunning](https://cow.fi/learn/what-is-frontrunning): In a frontrunning attack, an MEV bot spots a profitable transaction, duplicates it, and offers a higher gas fee so that validators execute the duplicate transaction before the original one. In effect, the MEV bot hijacks the profits of the original transaction and keeps them for itself.

[Sandwich Attacks](https://cow.fi/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself): This tactic combines frontrunning and backrunning. An attacker first executes a frontrunning transaction before a valuable trade, pushing the price of the asset up to the slippage tolerance set by the victim trade. This increases the price of the purchased asset. The victim trade then goes through at this new higher price and its price impact raises the price of the asset even more. Finally, the attacker performs a backrunning attack which captures the newly-created arbitrage, generating a profit in the process.

## Who does backrunning harm the most?

Backrunning is not as harmful as the other types of MEV attacks since it doesn’t result in traders receiving a worse price for their trades. Rather, it simply means that traders leave money on the table by not capturing the arbitrage opportunities from their large trades.

This opportunity cost primarily affects advanced traders who would otherwise be able to capture this arbitrage for themselves. Everyday traders are usually not sophisticated enough to backrun their own trades, so backrunning does not really result in measurably worse outcomes for them.

However, [MEV Blocker](https://mevblocker.io/) can help anyone trading on Ethereum automatically capture any backrunning opportunities that their trades create.

## How CoW Swap protects against backrunning

CoW Swap has developed an innovative set of mechanisms for mitigating harm from all types of MEV, including backrunning. The system relies on [Order Flow Auctions](https://cow.fi/learn/understanding-order-flow-auctions) that gather and consolidate user orders into a batch before execution. Specialized parties known as “[solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers)’’ compete to find the most optimal execution path and provide the best settlement solution.

The design of CoW Swap helps protect against MEV attacks in several ways:

1.  Delegated trade execution: When users submit orders on CoW Swap, they are not directly initiating a blockchain transaction, like they would on Uniswap for example. Instead, users submit orders as signed “[intent to trade](https://cow.fi/learn/cow-protocol-glossary#:~:text=Intent%20to%20Trade)” messages which include the details of the intended trade, but don’t actually get submitted to the blockchain. The solvers then find the best execution path for the specified trade and execute the trade on-chain on behalf of the user.
    
2.  Uniform clearing prices: The batch auction system ensures that each asset in the batch only executes for a single price, even if there are multiple trades using that asset. This negates the price variations inherent to AMMs that result in different prices for trades within the same block due to sequential transaction processing. Uniform clearing prices nullify the strategy of transaction re-ordering, thereby mitigating the impact of MEV.
    
3.  Liquidity: CoW Swap’s unique solver design executes trades optimally without leaving room for arbitrage opportunities. Thanks to Uniform Clearing Prices, all token pairs traded in the same batch will clear at the same price, leaving liquidity pools balanced with no opportunity for arbitrage.
    

In addition, CoW Swap leverages off-chain interactions known as “[Coincidences of Wants](https://cow.fi/learn/what-are-cows-on-cow-swap)” (CoWs) to swap user assets peer-to-peer, leaving zero room for MEV. Furthermore, the protocol’s Order Flow Auction mechanism ensures that user trades are maximally protected from all types of MEV.

Backrunning is prevalent in the DeFi space, leaving everyday traders with suboptimal outcomes at the expense of searchers & MEV bots. However, innovative solutions like CoW Swap are combating the issue of backrunning and MEV as a whole through innovative Order Flow Auction design.

## MEV Blocker — Profit from backrunning

On [CoW Swap](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=backrunning-article), your orders are protected from all types of MEV, including backrunning, sandwich attacks, and frontrunning.

CoW DAO has taken MEV protection a step further, however, with [MEV Blocker](https://mevblocker.io/). MEV Blocker is a custom RPC endpoint that you add to your crypto wallet which routes all of your transactions through a trusted network of searchers that scan for backrunning opportunities, but cannot frontrun or sandwich your trades. The best part? The RPC passes the profits from backrunning opportunities back to you in the form of rebates. This means you can make money from any backrunning opportunity you create just by routing your transactions through MEV Blocker.

MEV Blocker works on all types of transactions across all of DeFi. Just [add the RPC endpoint to your wallet](https://mevblocker.io/#rpc) and start trading.

While MEV Blocker should be part of every Ethereum user’s arsenal, it’s still optimal to use CoW Swap when doing swaps. CoW Swap is specifically engineered to give traders the best prices and protect against all types of MEV without leaving backrunning opportunities.

Remember: if you’re swapping, use CoW Swap. For everything else, rely on MEV Blocker.

large_what-is-backrunning-mev-attacks-explained-cover-photo.webp

medium_what-is-backrunning-mev-attacks-explained-cover-photo.webp

small_what-is-backrunning-mev-attacks-explained-cover-photo.webp

thumbnail_what-is-backrunning-mev-attacks-explained-cover-photo.webp

what-is-backrunning-mev-attacks-explained-cover-photo.webp

What is Backrunning? — MEV Attacks Explained


[MEV bots](https://www.blocknative.com/blog/mev-and-creating-a-basic-arbitrage-bot-on-ethereum-mainnet)  monitor pending transactions in the mempool and place their transaction ahead of others, capitalizing on the order of transactions within a block. This approach allows them to gain a significant edge, profiting from traders placing transactions. Frontrunning occurs when an MEV bot monitors the mempool for a trader’s pending transaction. Spotting a potential trade, the bot quickly duplicates the users transaction so that they can be the one to get the tokens or the opportunity that the user detected.

This issue permeates various blockchain ecosystems — from decentralized exchanges to non-fungible token (NFT) marketplaces.

According to recent  [data](https://dune.com/jhackworth/mevmevmev), over 2.7 million MEV transactions have been processed on Uniswap alone. This alarming statistic underscores the widespread and high-stakes nature of MEV exploitation.

## How frontrunning works

Frontrunning takes advantage of the open nature of the blockchain mempool, as anyone can view transactions. MEV Bots exploit this transparency to hijack trades. Here’s a basic rundown of the process:

1.  **Monitoring Pending Transactions:**  The first step involves monitoring the blockchain network’s mempool, a holding area for pending transactions. Here, frontrunners, who are often sophisticated bots, scan the mempool to identify transactions that can carry significant value that they want to snatch away or that could influence the price of a particular asset
2.  **Selecting Profitable Transactions:**  The frontrunner will analyze the potential market impact once such a transaction is identified. For instance, if a large buy order for a specific token is detected, the frontrunner knows that this transaction could increase the asset’s price once processed
3.  **Placing a New Transaction:** The frontrunner will initiate their buy order for the same asset, intending to get their transaction processed before the initially detected transaction. They typically give the validators a higher “tip” to execute their transaction first in the block in comparison to the target transaction

### Frontrunning examples

A notable example of DeFi frontrunning involves the notorious MEV bot named “[jaredfromsubway.eth](https://www.theblock.co/post/230218/jaredfromsubway-mev-bot).” In one case, a user,  [0x3a7822](https://zeromev.org/block?num=17508508), intended to trade 2 ETH for another token, $BOB. This trade was noticed by the bot jaredfromsubway.eth, which continuously monitors the mempool for transactions it could take advantage of.

Once the transaction entered the mempool, Jaredfromsubway.eth quickly executed its own transaction to buy $BOB with ETH, strategically placing it as the first in the block, and knowing that he would get the assets at a discount as the transactions behind will pamp the pricer. MEV allows validators to prioritize transactions that are of the most value to them. Consequently, the bot’s transaction, being the first one in the block, was confirmed ahead of the user’s transaction.

![1-frontrunning.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_frontrunning_6077287d3c.webp)

The frontrunning attack triggered an increase in the price of $BOB tokens due to the additional demand created before the user’s transaction was processed. When the user’s original order of 145M $BOB was executed, it was conducted at this now-inflated price, leading to user 0x3a7822 receiving way fewer $BOB tokens, hence losing out on the value they could have otherwise captured.

Jaredfromsubway.eth completed its MEV attack by  [selling](https://etherscan.io/tx/0xff31ba1a8a61933e0093bc4afba95018929e9e1599fec204a3f503c6b7851cb1)  its $BOB tokens at an increased price, resulting in a profit, a second move that made this MEV attack a  [sandwich attack](/learn/what-is-a-sandwich-attack-and-how-can-you-protect-yourself). In this scenario, the price slippage triggered by the frontrunning bot meant that user 0x3a7822 encountered a worse trade-off, ultimately making a loss while the MEV bot profited — an estimated gain of 0.1 ETH.

Another form of frontrunning would have been for example, if user, 0x3a7822 identified an liquidation opportunity faster than anyone else and sent its transaction to the mempool to get the discounted assets from the liquidation in the first place, then Jaredfromsubway.eth would have seen this and would have replaced the users transactions with the transaction of its own, but with a higher gas fee, and thus more likelyhood to get processed faster, and effectively stealing the opportunity of capturing value away from the user.

### How Harmful is Frontrunning?

While frontrunning may seem harmless or even clever to some, it can adversely affect individual traders and compromise the overall integrity of the Ethereum network. Here’s how:

1.  **Impact on Traders**: Frontrunning disrupts the fair operation of financial markets. By exploiting pending transactions, frontrunners manipulate market conditions to their benefit. This can lead to distorted prices, impacting regular traders who abide by market rules. What’s more, these traders miss out on the value they would have otherwise derived from their trades. But most importantly, frontrunning attacks prevent users from receiving the value of the trading opportunity they identified
2.  **Long-term Market Consequences**: Over time, persistent frontrunning can erode market confidence. As traders realize they are consistently at a disadvantage due to frontrunning, they may lose faith in the integrity of the market and choose to leave. This could result in diminished market participation and liquidity, both of which are critical for overall market health and efficiency
3.  **Network Effects**: Frontrunning can also have wider implications for the underlying network. It can cause network congestion, since unnecessary transactions in a block slow down transaction processing times

CoW Swap takes a firm stance against all forms of Maximal Extractable Value (MEV), including frontrunning, as they are detrimental to traders and the wider Ethereum ecosystem. CoW Swap was built to cultivate a fair and transparent trading environment that best serves the interests of all market participants.

### How to protect against frontrunning?

Mitigating frontrunning and other forms of MEV can pose a challenge, given the transparent and permissionless nature of the Ethereum blockchain. However, CoW Swap gives traders the necessary tools to outsmart the MEV bots:

1.  **Batch Auctions**: Instead of executing orders immediately, CoW Swap orders are gathered and grouped into collections known as “batches.”  [Solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers), or the algorithms that provide an order settlement solution for a batch, compete to deliver optimized solutions. This batch auction method ensures all trades within a batch share the same uniform clearing price, preventing MEV Bots from reordering trades. Through batch auctions, CoW Swap affords traders the opportunity to pool liquidity among their orders, enabling users to trade directly with each other or access specialized markets to complete transactions that would otherwise be impossible to do in a peer-to-peer manner — this is known as  [Coincidence of Wants](/learn/what-are-cows-on-cow-swap)  (CoW)
2.  **MEV Blocker**:  [MEV Blocker](https://mevblocker.io/)  is a straightforward solution to the MEV problem. It is an RPC endpoint that protects all types of transactions from MEV. MEV Blocker organizes an auction among searchers, who are given the chance to backrun your transactions and forward up to 90% of the backrun value to the user. In exchange, they protect you from both frontrunning and sandwich attacks
3.  [**Use CoW Swap**](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=frontrunning-article)**:** CoW Swap is a meta DEX aggregator that uses batch auctions and facilitates an efficient trading process, preventing all forms of MEV, including frontrunning

### The CoW approach to frontrunning

CoW Swap distinguishes itself in the trading ecosystem with its innovative and comprehensive approach to combating frontrunning and other MEV tactics, thereby creating a safer trading environment for users. The platform has meticulously crafted multiple layers of protection, each targeting a distinct aspect of the MEV issue.

The initial line of defense is  **Delegated Trade Execution**. In conventional DeFi platforms, every transaction a user initiates is instantaneously visible in the public mempool, providing an opportunity for searchers to exploit it. As opposed to other exchanges, on CoW Swap, users sign an “intent to trade” which protects them from directly interacting with the mempool. CoW Swap directs all intents through a network of decentralized ‘[solvers](https://docs.cow.fi/cow-protocol/tutorials/solvers).’ These solvers are responsible for securing the best execution price for your trades, while also shielding you from direct exposure to the public mempool, effectively making you undetectable to MEV bots. Moreover, CoW Swap harnesses the power of  [‘Coincidence of Wants](/learn/what-are-cows-on-cow-swap)’ (CoW). This allows the platform to match orders off-chain, fostering peer-to-peer trades that not only save on gas and liquidity provider fees but also substantially reduce the risk of MEV attacks by circumventing public liquidity pools. CoWs that don’t rely on on-chain liquidity pools eliminate a key opportunity for MEV exploits.

The platform also introduces a  **Uniform Clearing Price**  for all orders in a batch. In a typical decentralized exchange, simultaneous trades clear at marginally different prices in the same block due to sequential transaction processing. This provides an opening for MEV attacks. CoW Swap counters this by ensuring all orders within the same batch auction are settled at the same clearing price within a block. As a result, the order of transactions within a batch becomes irrelevant, effectively preventing MEV attacks and giving users in the batch a fair price.

CoW Swap’s strategy to tackle frontrunning hinges on eliminating opportunities for searchers to exploit trades. This helps maintain the integrity of user transactions and safeguards user value. By leveraging its unique batching technology, CoW Swap remains resilient against frontrunning and other MEV attacks.

### Trade safe from MEV on CoW Swap

Given the severity and frequency of MEV attacks, protecting your trades from MEV should be a top priority. CoW Swap offers unparalleled protection with its pioneering anti-MEV features, making it an invaluable tool for every trader.

Get started with CoW Swap by  [placing your first trade](https://swap.cow.fi/#/swap?utm_source=medium&utm_campaign=frontrunning-article)  and enjoy the freedom and peace of mind of the best prices and the best MEV protection!

## **FAQs**

## What is frontrunning in blockchain?

Frontrunning occurs when MEV bots monitor pending transactions in the blockchain mempool and place their own transactions ahead of others. The bots duplicate users' transactions with higher gas fees, effectively stealing trading opportunities and profits from regular traders. For example, if a user tries to buy a token, a frontrunning bot might execute the same trade first, causing the price to increase before the user's transaction is processed.

## How does frontrunning work?

Frontrunning exploits the transparent nature of blockchain mempools where pending transactions are visible to everyone. The process involves three main steps: monitoring the mempool for valuable pending transactions, analyzing which ones could be profitable to hijack, and placing a new transaction with higher fees to get processed first. For instance, if a bot detects a large buy order for a specific token, it will quickly place its own buy order with higher priority, knowing this will increase the price for the original user.

## What is a real example of frontrunning?

A notable example involves a MEV bot named "jaredfromsubway.eth" that frontran a user's transaction to trade 2 ETH for $BOB tokens. When the user's transaction entered the mempool, the bot quickly executed its own transaction to buy the same tokens first, causing the price to increase. The user ended up receiving fewer $BOB tokens than expected while the bot profited an estimated 0.1 ETH by selling the tokens at the inflated price.

## How harmful is frontrunning to the ecosystem?

Frontrunning negatively impacts both individual traders and the entire blockchain ecosystem in several ways. It prevents users from receiving the full value of trading opportunities they identified, distorts market prices, and can erode overall market confidence as traders realize they're at a disadvantage. Over time, persistent frontrunning can lead to diminished market participation and liquidity, while also causing network congestion through unnecessary transactions.

## How does CoW Swap protect users from frontrunning?

CoW Swap employs multiple protection layers against frontrunning, including batch auctions that group orders together with a uniform clearing price. Users sign an "intent to trade" rather than directly interacting with the mempool, and transactions are directed through decentralized "solvers" that shield users from MEV bots. Additionally, CoW Swap utilizes "Coincidence of Wants" to match orders off-chain when possible, enabling peer-to-peer trades that bypass public liquidity pools where MEV attacks often occur.

large_what-is-frontrunning-cover-photo.webp

medium_what-is-frontrunning-cover-photo.webp

small_what-is-frontrunning-cover-photo.webp

thumbnail_what-is-frontrunning-cover-photo.webp

what-is-frontrunning-cover-photo.webp

Frontrunning is a crypto strategy exploiting blockchain’s transparency to extract value from a transaction.


What is Frontrunning

[Maximal Extractable Value (MEV)](https://cow.fi/learn/what-is-mev) is a serious problem in the Ethereum ecosystem that accounts for more than $1.3 billion in lost value for traders just over the last few years. While there are different types of MEV, most extracted value comes from the dreaded sandwich attack.

![1-mev-cumulative.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_mev_cumulative_5be731696a.webp)

[_MEV Cumulative Gross Profit_](https://dune.com/queries/2259793/3703605)

Sandwich attacks occur when a user’s transaction gets trapped, or “sandwiched,” between two hostile transactions — one before and one after. As a result, the original transaction executes at a much higher price than necessary, leading to an inflated price for the original trader and a profit for the malicious trader placing the two extra trades (known as a “searcher”).

### What's the difference between a sandwich attack and other forms of MEV?

Sandwich attacks specifically target trades by manipulating prices before and after a transaction. Unlike arbitrage MEV which exploits price differences across platforms, sandwich attacks directly harm individual users. Sandwich attacks are particularly damaging because they directly steal value from regular traders by impacting the price before the trade executes.

## Overview: How a sandwich attack works

When a searcher spots an opportunity to sandwich a transaction, they place a trade before (known as “[frontrunning](https://cow.fi/learn/what-is-frontrunning)”) and a trade after (known as “[backrunning](https://cow.fi/learn/what-is-backrunning-mev-attacks-explained)”) the transaction in order to manipulate the price of the trade.

  
Due to the design of [Automated Market Makers (AMM)](https://cow.fi/learn/understanding-automated-market-makers-a-beginner-s-guide-to-de-fi-liquidity) such as Uniswap, these trades strategically manipulate the price of the assets, leaving room for profit. To really understand how sandwich attacks work, though, we first need to understand some core concepts.
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">If you don&#39;t know what <a href="https://twitter.com/hashtag/MEV?src=hash&amp;ref_src=twsrc%5Etfw">#MEV</a> (Miner/Maximal Extractable Value) is and how it can hurt your swaps, make sure to watch this video! 🐮<a href="https://twitter.com/hashtag/CoWGMI?src=hash&amp;ref_src=twsrc%5Etfw">#CoWGMI</a> 🐄 <a href="https://t.co/2g1cFLYvAL">https://t.co/2g1cFLYvAL</a></p>&mdash; CoW DAO | CoW Swap &amp; MEV Blocker (@CoWSwap) <a href="https://twitter.com/CoWSwap/status/1498678005777973249?ref_src=twsrc%5Etfw">March 1, 2022</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>


# What makes a sandwich attack possible?

Let’s look at sandwich attacks on a more granular level. The following concepts and\ tech make sandwich attacks possible.

### Transaction reordering

Your crypto trade doesn't always happen immediately. It waits in line with other trades.

But here's the problem: the order can be changed. Attackers can pay extra fees to cut in line. They can place their trades before and after yours.

  

This reordering is what makes sandwich attacks possible. Attackers use it to manipulate prices around your trade.

### Automated market makers (AMMs)

Think of AMMs as robot traders that never sleep. They let you buy and sell crypto instantly.

Traditional exchanges need another person to trade with you. You need a seller to buy from someone. AMMs work differently.

  

AMMs keep pools of two different cryptocurrencies. For example, ETH and another token called COW. The AMM automatically sets prices based on how much of each token is available.

When you buy COW, you're taking COW from the pool. You're also adding ETH to the pool. This changes the balance and moves the price.

  

If more people buy COW, its price goes up. If more people sell COW, its price goes down. The AMM adjusts prices automatically to keep things balanced.

### Slippage tolerance

Crypto prices change constantly. Your trade might execute at a different price than expected.

Slippage tolerance is your safety buffer. It's the maximum extra amount you're willing to pay.

  

Here's an example: ETH costs $2,000 right now. You want to buy some ETH. You set 5% slippage tolerance. This means you're okay paying up to $2,100 for ETH. If the price goes higher than $2,100, your trade fails.

  

You need some slippage tolerance because prices move fast. But setting it too high creates problems. It gives attackers room to manipulate your trade.

### Price impact

Every trade moves the market price slightly. This movement is called price impact.

Small trades barely affect prices. A $100 trade won't change ETH's price noticeably.

  

Big trades move prices more. A $1 million trade will definitely change the price. This happens because large trades use up more of the available tokens.

  

Think of it like a small pond. Dropping a pebble creates tiny ripples. Dropping a boulder creates big waves.


## The sandwich attack: Step by step

Let’s examine a sandwich attack through a step-by-step example. In this example, we’re trading ETH and COW.

![2-the-sandwich-attack-step-by-step.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_the_sandwich_attack_step_by_step_3a443571e9.webp)

**Step 1**: Bessie wants to buy COW using her ETH. She goes to a decentralized exchange (DEX) like Uniswap, and places an order for 4,000 COW. This should cost her around 1 ETH, but due to significant market volatility, Bessie decides to set a 10% slippage tolerance. This means she’s willing to pay up to 1.1 ETH for 4,000 COW.

**Step 2**: Bessie’s trade enters the Ethereum mempool (the pending order queue), and a lurking searcher spots an opportunity. Springing into action, the searcher places a trade just before Bessie’s large enough to push the COW price up to her slippage tolerance. In this case, the searcher buys 4,000 COW for exactly 1 ETH. As a result of this first trade’s price impact, Bessie’s 4,000 COW purchase now costs 1.1 ETH — the maximum she’s willing to pay.

**Step 3**: Once the searcher’s transaction clears, Bessie’s transaction also goes through and she receives her 4,000 COW in exchange for 1.1 ETH. The searcher takes advantage of this price impact and sells his original COW at this new rate — 4,000 COW for 1.1 ETH.

In the end, the searcher buys 4,000 COW for 1 ETH and sells it for 1.1 ETH, earning a profit of 0.1 ETH (before gas and fees) for not much effort.

It’s easy to see how lucrative sandwich attacks are!

Bessie, on the other hand, ends up with a bad deal. She could have purchased 4,000 COW for just 1 ETH, but her slippage tolerance left room for a sandwich attack that forced her to pay an extra 10% for her trade.

## The consequences of sandwich attacks

Sandwich attacks siphon millions of dollars from everyday Ethereum traders. Every dollar captured by searchers is a dollar stolen from the pockets of traders.

![3-consequences-of-sandwich.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/3_consequences_of_sandwich_bda8ad0cdd.webp)

[_EigenPhi_](https://eigenphi.io/)_, a website tracking on-chain data, offers a dashboard displaying the latest sandwich attacks._

At the time of writing, sandwich attacks on AMMs and aggregators alike generate over $1 million in profit for searchers  **each week**.

## How can you protect against sandwich attacks?

There are several steps traders can take to protect themselves from sandwich attacks.


### Reduce Slippage

A simple way to reduce your exposure to sandwich attacks is to decrease your [slippage](https://cow.fi/learn/what-is-slippage-in-crypto) tolerance. Sandwich attacks rely on a high slippage tolerance that leaves arbitrage for searchers to exploit.

Lowering your slippage tolerance decreases the chance of falling victim to a sandwich attack, but, on the other hand, it means there’s a greater chance that your transaction will fail. Failed transactions can be frustrating and costly, since you still have to pay a gas fee even for failed transactions.

It can be difficult to know exactly what slippage to use. This is why using a trading mechanism solution that optimizes slippage tolerance on your behalf and doesn’t make you pay for failed transactions, such as CoW Protocol, can be useful.

### Use a DEX Aggregator

Decentralized exchange aggregators scan multiple on-chain liquidity sources to offer you better prices for your trades. Spreading out a single trade across multiple liquidity pools means a reduced [price impact](https://cow.fi/learn/cow-protocol-glossary), and thus less room for searchers to profit.

In addition, DEX aggregators often provide an “auto-slippage” option to algorithmically determine the appropriate slippage for your trade, reducing the chances of sandwich attacks.

### Use a Custom RPC Endpoint

For advanced MEV protection, consider using a [custom RPC (remote procedure call) endpoint](https://cow.fi/learn/mev-blockers-explained-how-they-protect-users) for your wallet.

RPC endpoints act as intermediaries between your wallet and on-chain transactions. Most RPC endpoints (such as the default ones on your wallet) simply do the technical work of routing your trades to the chain. Others, however, will also provide protection from MEV.

A notable RPC endpoint that provides MEV protection is  [MEV Blocker](https://mevblocker.io/). When using RPC’s like this, users are protected from MEV for a wide range of transactions including DeFi trading, NFT minting, liquidity providing, and more.

### Use CoW Swap

For the most comprehensive MEV protection, it’s a good idea to use dApps that are specifically optimized to protect you from MEV.

CoW Swap is a meta-DEX Aggregator that combines all of the benefits of price-optimized trading with the safety features of an MEV-resistant protocol. Cow Swap matches your order against the best prices for on-chain liquidity, and protects your trades from MEV.

For a comprehensive dive into how CoW Swap protects traders from MEV, check out “[_How CoW Swap solves the MEV problem_](/learn/how-cow-swap-solves-the-mev-problem).”

## CoW Swap’s approach to sandwich attacks

Trading on CoW Swap is similar to using a platform like 1inch or Uniswap. You simply navigate to the swap interface, select the tokens you want to trade, specify your trade amount, and click “Swap.”

![4-cow-swap-approach-to-sandwich-attacks.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/4_cow_swap_approach_to_sandwich_attacks_701174b9d6.webp)

Behind the scenes, however, CoW Swap is quite different.

First, your order submission is no order at all, it’s actually a signed “intent to trade” message. This message gets sent to a network of “solvers” who find the best route for your trade, optimizing price and slippage tolerance in the process.

This delegated trading model means that your transaction is protected from MEV. If there is a sandwich attack that takes place, it will be the solvers getting sandwiched, not you. And the CoW Swap solver are some of the toughest bulls in the pasture, so they’re not easy to sandwich!

But there’s more: CoW Swap also utilizes Uniform Clearing Prices (UCP) to protect you from MEV.

CoW Swap groups orders into batches and executes them all at the same clearing price per asset. This approach makes [transaction reordering](https://cow.fi/learn/cow-protocol-glossary) ineffective as an MEV strategy since all orders in a CoW Swap batch trade for the same price.

## Don’t end up lunch meat

Sandwich attacks pose a constant threat to Ethereum AMM (DEX) users who may fall victim to searchers looking to make a quick buck. Trades with high slippage tolerances are most susceptible to sandwich attacks and other types of MEV. The bigger the trade, and the bigger the slippage tolerance, the higher the chance that you’ll end up as lunch meat.

Thankfully, innovations such as DEX aggregators and custom RPC endpoints have made it much easier to protect yourself from all types of MEV.

For the most comprehensive MEV protection, however, whales, DAOs, and traders of all sizes turn to CoW Swap. Built from the ground up with MEV protection in mind, CoW Swap puts users first and protects every transaction from searchers… And  [we’ve got the data to back it up](https://drive.google.com/file/d/1zNGPeYx9sDVBiuSjCyYtkCjPt3VLZ6Vb/view?usp=sharing).

So try  [CoW Swap](https://swap.cow.fi/#/swap)  for yourself and leave MEV in the past.


# FAQs about sandwich attacks

### What's the difference between a sandwich attack and other forms of MEV?

Sandwich attacks specifically target trades by manipulating prices before and after a transaction. Unlike arbitrage MEV which exploits price differences across platforms, sandwich attacks directly harm individual users. Sandwich attacks are particularly damaging because they directly steal value from regular traders by impacting the price before the trade executes.

### Can sandwich attacks occur on all blockchains and DEXs?

Sandwich attacks can potentially occur on any blockchain with transparent mempools and AMM-based DEXs. Ethereum and EVM-compatible chains are particularly vulnerable due to their transaction visibility. Some newer blockchains implement mempool privacy features that reduce these risks significantly. Certain DEX designs like batch auctions or order book models are inherently more resistant to sandwich attacks.

### How much slippage tolerance is safe to use when trading?

The ideal slippage tolerance balances protection from sandwich attacks with transaction success. For small trades on liquid pairs, 0.5-1% slippage may be sufficient. Larger trades or trades on illiquid pairs might require 2-3% slippage to execute successfully. Consider using platforms that intelligently calculate optimal slippage settings based on trade size and current market conditions.

### How do custom RPC endpoints protect against sandwich attacks?

Custom RPC endpoints like MEV Blocker route transactions through protected channels rather than public mempools. They often use private transaction bundles submitted directly to validators, bypassing searcher visibility. Some RPCs employ sophisticated algorithms to detect and prevent harmful reordering of transactions. This protection extends beyond sandwich attacks to other MEV forms, safeguarding users across various DeFi activities.


large_mev-cumulative-gross-profit-cover-photo.webp

medium_mev-cumulative-gross-profit-cover-photo.webp

small_mev-cumulative-gross-profit-cover-photo.webp

thumbnail_mev-cumulative-gross-profit-cover-photo.webp

mev-cumulative-gross-profit-cover-photo.webp

An introduction to sandwich attacks and how they steal millions from crypto traders. Discover proven strategies to protect your DeFi trades from MEV exploitation.

DeFi sandwich attacks explained

MEV or “maximal extractable value” is a hidden tax on all types of Ethereum transactions. Any time you make a DeFi trade, buy or sell an NFT, or lend tokens to a liquidity pool, opportunistic users known as “searchers” may manipulate your trades, resulting in unfavorable prices, failed transactions, and missed opportunities.

To date, MEV has been responsible for more than $1.3 billion in lost value for Ethereum users.

![1-mev-cumulative-gross-profit.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/1_mev_cumulative_gross_profit_cdc8935d2a.webp)

[_MEV Cumulative Gross Profit_](https://dune.com/queries/2259793/3703605)

In this article, we will take a deep dive into the problem of MEV and explore some potential solutions, including those offered by CoW Swap.

## Understanding MEV

When it comes to DEX trading, there are three main types of MEV attacks that searchers use to take advantage of your trading orders:

-   **Frontrunning**: Searchers submit a transaction similar to yours and place it before you in the block. Their transaction then executes first and they get to keep your profits for themselves, while your transaction fails
-   **Backrunning**: Any time you make a large trade, it leaves behind a price impact. If your trade is large enough, this price impact may move the market enough to open an arbitrage opportunity. Searchers can “backrun” your trades by placing their own trades directly after yours and profiting from this leftover arbitrage. Backrunning is generally viewed as a less-harmful type of MEV since it doesn’t affect the main transaction, it simply captures leftover arbitrage
-   **Sandwich attacks**: Sandwich attacks combine both frontrunning and backrunning into the worst kind of MEV attack. In a sandwich attack, searchers first ratchet up the price for your trade up to your slippage tolerance by frontrunning your transaction. Once your transaction clears, searches make a second trade in the opposite direction that cleans up any profits from the price change your trade causes

MEV is possible because validators are free to order blockchain transactions as they see fit in order to maximize their profits. Proof-of-stake (PoS) blockchains such as Ethereum use parties known as “validators” in order to ensure that the consensus rules of the blockchain are followed by all participants. Validators get randomly selected to add the next block to the blockchain. In this process, they determine what transactions are included in the block, and in what order.

When you submit a transaction on Ethereum, it does not immediately get added to the next block. Instead, it first goes into the “mempool” which is the collection of all pending transactions. Validators then pull transactions from the mempool and add them to the next block when it’s time for it to be built.

Here is where the opportunity to extract value through MEV comes in.

Validators are not required to add transactions to the block in the same order that they were submitted by users, so searchers can pay validators a fee to order transactions in a specific way. For example, they can pay to have their transactions come first if they want to frontrun someone else, or they can pay to have their transactions come right after a specific transaction if they want to perform a backrun.

![2-flow-of-an-Ethereum-transaction.webp](https://celebrated-gift-f83e5c9419.media.strapiapp.com/2_flow_of_an_Ethereum_transaction_3ac014b14d.webp)

_The flow of an Ethereum transaction_

## Is MEV inevitable?

MEV is a complex and controversial topic in the Ethereum community.

Some say that MEV is a natural part of the Ethereum market mechanism and it helps to find the most efficient prices. Others believe that MEV can be harmful, but only if it’s concentrated in the hands of a few validators — therefore they work to “democratize” MEV and allow anyone to extract value from on-chain transactions.

At CoW Swap, we believe that all MEV is harmful to all traders, especially beginners who may not even be aware that they are getting shortchanged on their trades. This is why the protocol is designed to protect user trades from all types of MEV attacks.

## Strategies for Protecting Against MEV

CoW Swap gives traders the tools they need to protect themselves from MEV, so when you’re trading through  [https://swap.cow.fi/](https://swap.cow.fi/)  you’re protected from the majority of opportunistic searchers, regardless of the size or type of trade.

CoW Swap relies on 3 main features to keep you safe from MEV:

1.  Delegated Trade Execution
2.  Coincidence of Wants
3.  Uniform Clearing Prices

Let’s dive in!

### Delegated Trade Execution

On CoW Swap, all transactions are routed through a decentralized network of “solvers” — independent algorithms that are responsible for finding the best execution price for your trades.

When you submit a trade on CoW Swap, rather than initiating a blockchain transaction like you would on a platform like Uniswap, you instead submit a signed “intent to trade” message. This means that CoW Swap can perform optimizations on your trade that would not be possible if you submitted the transaction directly to the blockchain. These optimizations include finding Coincidences of Wants, adjusting the slippage tolerance dynamically, and completing your trade at an optimal price during the time of execution.

Since it is the solvers who execute your trade on your behalf, you are never directly exposed to the public mempool, meaning that you are protected from MEV at all times.

Whatever price solvers quote you at the time you place your order is actually the worst price that your order will be executed at (it may complete at a better price if solvers find a better execution path). All risk of MEV is taken on by the solver itself.

### Coincidence of Wants

CoW Swap’s delegated trade execution mechanism has another major advantage — it can match your orders off-chain.

Any time you submit a trade on CoW Swap, solvers start looking for the best way to execute it. Before checking on-chain liquidity, solvers check other incoming orders on CoW Swap’s current batch auction to see if your trades can be matched peer-to-peer.

Here’s how it works:

Let’s say you’re looking to trade ETH for USDC. You submit your order and solvers see that someone else in that batch is actually looking to trade USDC for ETH — the opposite of your trade — at the same time. These two trades will be matched with each other in a “Coincidence of Wants” (CoW) which allows traders to swap their assets with each other directly (one to one or many to many), thereby saving on gas fees, liquidity provider fees, price impact, and also bypassing MEV risks.

CoW Swap’s founders were inspired by the potential for Coincidence of Wants to provide lower prices for everyday Ethereum users (it’s in the name!). This mechanism is one of the cheapest and most secure ways to make a DeFi trade, and since you’re not using on-chain liquidity pools, your Coincidence of Wants trade cannot be subject to MEV attacks.

### Uniform Clearing Prices

As a third line of defense against MEV, CoW Swap ensures all orders complete under a “Uniform Clearing Price” (UCP).

Upon submitting your trade, your order gets included in a batch auction alongside other pending orders in the queue. All of the orders within a batch trade for the same price on the blockchain, a phenomenon referred to as “Uniform Clearing Price” (UCP).

To understand how UCP works on CoW Swap, we first have to consider how DeFi trading works on traditional DEXs. On a normal decentralized exchange, if 8 people want to trade ETH for USDC, each of their trades clears at a slightly different price since DEXs process trades in a sequential manner even though they might be happening concurrently (within the same Ethereum block). This leaves room for MEV because the order in which transactions are processed heavily impacts the prices that users get. Searchers are constantly monitoring DEX trades, looking for opportunities like these where they can reorder transactions to their advantage.

On CoW Swap, if the same 8 people are making that trade, as long as they are in the same batch auction, each order will be settled for the same clearing price when it goes on-chain. This leaves no room for MEV attacks since all prices are the same, meaning that transaction ordering becomes irrelevant.

## Getting Started with CoW Swap

CoW Swap was built from the ground up with MEV protection in mind.

Whether you’re a beginner or a seasoned trader, CoW Swap ensures a fair trading experience that protects you from price exploitation. Give it a shot for your next trade at  [https://swap.cow.fi/#/swap](https://swap.cow.fi/#/swap)


CoW Swap is a meta-DEX aggregator that provides users with the best trading prices out of all AMMs and DEX aggregators. An important part of guaranteeing these prices is CoW Swap’s MEV protection, which we explore in this article.
