GM, this is your Daily Bolt briefing
CoW Swap has long been a staple for DeFi power users on Ethereum. Many drew comparisons between UniswapX’s design and CoW Swap, notably in the way both systems mitigate gas fees and MEV by matching buy and sell order requests.
But CoW Swap has some developments in the works themselves, which we detail below.
We’ve also included notes breaking down the potential implications of both Bitcoin and Ethereum ETFs. With a gloomy market outlook amidst hawkish FED comments, an ETF could be more impactful than ever.
Stay alert, stay informed ⬇
1/ 0xResearch - Introduction to CoW Swap
Preview: Dan and Sam are joined by Felix to discuss CoW Swap, and the features of the protocol. Click here to listen to the full episode (84 mins).
Read our Note (10 mins) and save 74 mins.
Felix says that "Coincidence of Wants" is an economic phenomenon where two parties want to trade assets that the other party is interested in. For example, Party A wants to sell an asset that Party B wants to buy, and vice versa.
Felix points out that this allows for peer-to-peer trading without the need for a medium of exchange like money or liquidity providers.
Felix states that CoW Swap primarily focuses on Maximal Extractable Value (MEV) protection but also gains efficiency through the concept of "Coincidence of Wants."
Felix says that CoW Swap takes a holistic approach to aggregate fragmented liquidity in the crypto market, especially on Ethereum where there's a proliferation of tokens.
Felix notes that the crypto space has many different tokens, leading to fragmented markets. Unlike traditional stock markets where everything is denominated in USD, crypto markets have various base currencies like ETH, USDC, and USDT.
Felix adds that market makers or Automated Market Makers (AMMs) usually step in to provide liquidity between different token pairs.
Felix says that by using CoW Swap, users can re-aggregate this fragmented liquidity and find "Coincidences of Wants."
Felix says that CoW Hooks was launched without a clear vision for the user-facing product. The feature allows users to express more complex intents like "do x, then swap, then do y," enabling pre- and post-interactions around a swap.
Felix adds that the potential use cases for Cow Hooks are gasless approvals for permittable tokens, unstaking a token, swapping it, and then restaking it in a single transaction, bridging to another chain after a swap.
Felix highlights that with Cow Hooks, users only pay gas once the trade goes through. This eliminates the need to manage failed transactions or pay in $ETH, making it easier for users with new or old addresses to claim, approve, swap, and bridge tokens in one action.
Felix says that the Cow Swap UI will soon offer the option to gaslessly approve tokens and is also experimenting with bridging solutions. He also says that they have a grants program to sponsor teams, individuals, or projects that want to build on top of Cow Swap.
2/ The Delphi Podcast - Are Bitcoin and Ethereum ETFs Inevitable?
Preview: Tommy hosts James Seyffart, Scott Johnson, and Hal Press to discuss SEC vs crypto ETFs and more! Click here to listen to the full episode (82 mins).
Read our Note (12 mins) and save 72 mins.
James Seyffart is an ETF analyst with Bloomberg Intelligence.
Scott Johnsson is a Finance Lawyer and Trader.
Hal Press is the Founder of North Rock Digital.
James has been covering crypto since 2017 and says the SEC's stance on denying crypto ETFs is becoming increasingly nonsensical. He mentions that Ethereum futures ETFs are likely to launch soon.
James elaborates on the history of crypto ETF filings, mentioning that the Winklevoss twins were among the first to file back in 2013. He criticizes the SEC's inconsistent stance, especially since they've approved Bitcoin futures ETFs.
Scott says that the market has matured enough for the SEC to logically approve Spot ETFs. He mentions that BlackRock's surveillance sharing agreement with Coinbase could be a game-changer.
Tommy asks about Grayscale's business model and its ongoing legal battle with the SEC.
Scott explains that federal agencies derive their authority from specific statutes. He discusses how the SEC's inconsistent reasoning between approving futures ETFs and denying Grayscale's application could be problematic.
Tommy asks why Teucrium’s ETFs were approved while Grayscale's was not. He mentions that both had agreements with exchanges to detect fraud and manipulation.
James explains that Teucrium’s ETF was approved because they have a surveillance-sharing agreement with the CME, a federally regulated market. He says that the SEC's reasoning doesn't make sense, as spot and futures markets are intertwined. He criticizes the SEC's logic regarding market size.
Hal Press says that the SEC tries to distinguish between fraud intended to manipulate futures prices and fraud intended to manipulate spot prices. He finds this argument illogical and mentions that the SEC has approved spot ETFs in other commodities markets.
If you read these 2 Notes on Revelo Intel you would have saved: 1 hour and 24 mins!