Why is CoW Swap the best choice for multisig wallets?

Large traders, which can often include DAOs and other types of organisations, typically require transactions to be signed by more than one wallet for security purposes. On many DEXes that can be a time-consuming experience. But not on CoW Swap!

In this article we explain why CoW Swap is the best choice for multisig wallets and explore some of the features that make it also great for regular users too.

What are multisig wallets?

A multisig wallet, also known as a multi-signature wallet or shared wallet, is a cryptocurrency wallet that requires multiple signatures to send a transaction.

These wallets are most useful when cryptocurrency or other digital assets are owned by multiple individuals or are held in custody by a company or a DAO.

Typically multisig wallets require more technical know-how to set up and use than a traditional crypto wallet, which only needs one signature. However, the added security benefits make the additional technical requirements a benefit rather than a drawback for those with more complex security needs.

Why would you use a multisig wallet?

There are many reasons why you would use a multi-sig wallet. The first and most obvious is there are more than one person required to sign a transaction.

If five users need to approve a transaction, it makes sense that five would need to sign it. Multisig wallets provide that flexibility. The second reason why you might use a multisig wallet is security. Many cryptocurrency wallets rely on a single public address and private key.

If each person uses their own software or hardware wallet to conduct a transaction, it requires five distinct transactions to enable the signing of the main key. This adds an extra layer of protection. In the example above, if we have five individuals, there will be five separate transactions required to enact the multisig wallet.

Why is CoW Swap the best solution for multi-sig wallets?

Multi-sig wallet users face a number of challenges when it comes to efficiently signing and transacting on chain. Multi-sig wallets are commonly found in DAOs and other organisations, who use multi-sig wallets to do large transactions for things like payroll and other expenses.

Many DAOs mint their own governance tokens and are responsible for allocating treasury funds. But when it’s time to make trades with these funds, DAOs and other multi-sig wallet users face unique challenges not encountered by other types of traders.

These issues stem from a variety of factors:

• Placing and executing trades takes time

• For DAO, trade details can be public, and announced well in advance

• Large trades create large price impact

• Large trades sizes call for large slippage tolerances

CoW Swap’s unique design addresses each of these concerns, making DAO trades easier, safer, and cheaper.

Below we explore how CoW Swap can alleviate these issues.

Using CoW Swap helps multi-sig wallets get the price they want

That’s because traders using CoW Swap get the price at the time of execution instead of at the time of submission. What does that mean?

Let’s say you have to gather the signatures of five different wallets to execute a trade. Meanwhile, prices are constantly moving. By the time you have gathered your signatures, the price might have changed significantly enough to either lead to a transaction failing, or it being exploited by MEV bots. Not on CoW Swap.

Because it uses a solver system, the price of the trade is only confirmed when the trade is completed, not when it is started. Because solvers are working on your behalf, the user experience means you’re less likely to experience a failed transaction because you’ve missed your price.

CoW Swap can help mitigate the impacts of large trades

DAO trades are usually large transactions that move the market, leading to worse prices for the DAO overall. On CoW Swap, price impact is mitigated through several factors:

• When CoW Swap finds a Coincidence of Wants opportunity, the order may be filled without accessing on-chain liquidity at all, and thus without creating a price impact

• For trades that are not fully filled by a CoW, CoW Swap makes use of multiple on-chain liquidity sources and quotes from market makers to spread out the price impact

• Special order types like partially fillable limit orders and TWAP orders spread trades out over time, further reducing price impact

The CoW Swap solvers automatically search for Coincidences of Wants and optimize the routing of each order to on-chain liquidity. All DAOs have to do is simply place their order. Special order types have to be selected in the CoW Swap UI, however, it just takes a few clicks to add them to a trade as well.

Gasless approvals make multi-sig wallets more efficient

Gasless approvals allow traders to swap over 150 tokens completely gaslessly through CoW Swap.

CoW Swap now allows users to sign a message (gas free!) that gives solvers permission to execute the approval transaction on their behalf. Solvers then bundle the approval transaction with the first swap, and users pay fees in the sell token.

The result? Users can now do an entire swap, even for a new token, without spending a gwei in ETH, or even holding any ETH in their wallet at all. That’s a smoooooother (and cheaper) user experience.

This brings a host of benefits to multisig wallets, including:

• Fully ETH-less swaps: New users and fresh wallets can complete swaps end-to-end without needing ETH — that’s especially nice for airdrop farmers and privacy seekers

• Faster trades: CoW Swap users don’t have to wait for an approval transaction to execute before the swap — traders can now swap right away, even with tokens they haven’t traded before

• Bundling efficiency: Approval transactions execute alongside orders, in the same block — shielded from fluctuating gas prices, for a more cost-efficient experience overall

• Enhanced security: Only an approved spender can execute transactions on behalf of a trader — users can trust that CoW Swap is as secure as ever

CoW Swap helps multi-sig wallets get the best prices

DAO and other multi-sig managers have a duty to their stakeholders to execute trades at the best possible prices. According to karpatkey, who works with ENS, Balancer, Gnosis, Lido and CoW treasuries, fulfilling this obligation is easy on CoW Swap because all trades, whether large or small, almost always receive better prices than they would through individual liquidity pools or DEX aggregators.

On CoW Swap, the solver that provides the most value to the user wins the right to settle the trade; this is in contrast to the default Ethereum model where the searcher that provides the most MEV profits to the validator decides how transactions should be ordered.

Milkman, CoW Swap’s secret UX sauce for multi-sig wallets

For traders looking to trade at some point in the future, on traditional DEXes that’s a challenge. That’s why CoW DAO built Milkman. Milkman is a specialized smart contract for advanced traders that lets them set their slippage tolerance for trades in the future.

Many smart contract wallet users, such as DAOs, frequently need to create these types of orders. Take the following examples:

• DAOs that need trades to execute after passing a governance process

• Groups that need hours to collect signatures to execute trades from a multisig wallet

• Applications that process automated swaps years in the future (e.g. for payroll or treasury management).

Milkman is a smart contract that solves all of this. Let’s take a look at an example.

Let’s say you want to sell 1000 ETH for USDC, but you want to do it far in the future. To protect yourself from volatile price movements, you can ask Milkman to create the order and specify a minimum amount you’re willing to accept for the trade. Milkman tracks prices using oracles.

When the time comes to execute your trade, CoW Protocol will receive it and solvers will compete to improve the price on top of that, as they always do.

It’s why DAOs like Aave and ENS, have already used Milkman to trade over $20M worth of tokens.

Beyond allowing these DAOs to count on reliable prices, Milkman lets them reduce their overall number of governance votes and gives them standard CoW Swap benefits like best price execution and best-in-class MEV protection — critical for large trades.

Programmatic Orders let’s multi-sig wallets set and forget

When trades are submitted directly to CoW Protocol, via CoW Swap, traders can take advantage of programmatic orders: or orders with certain conditions that have to be met before they are executed.

For example, if a trader wants to set and forget a trade like a stop loss or trailing stop, they can on CoW Swap. But there’s more.

Wallets of all sizes can automate recurring actions using programmatic orders. DAOs can automate payroll, diversify their treasuries, collect fees and more. Individuals, meanwhile, can automate portfolio rebalancing, yield farming, and hedge market positions.

Users can even bundle multiple actions together into one single order. For example, if a trader wanted to withdraw and swap a token for another in the future, it can do so using programmatic orders. No need to create multiple transactions, thanks to Hooks.

How does it work? They allow any user to to pair multiple steps together into a single transaction. Let’s say you want to unstake tokens to take advantage of a price movement, sell a token and swap it for another. With Hooks that can be created and executed in one single transaction. No more multiple transactions, no more multiple fees.

Find out more about how to use Hooks here.

In summary: Why CoW Swap is great for multi-sig wallets.

When making large transactions in crypto, there are a number of things users need to be aware of. Whether it’s slippage, what order type you’re looking to execute, MEV attacks, to the user experience of different platforms.

CoW Swap is designed to do the hard work for you. It combines class-leading protection from MEV attacks, alongside its unique solver system which helps find you the best prices, and also gives you the chance to earn a surplus from every trade.

No wonder GnosisDAO, ENS DAO, dxDao, Yearn Finance, Safe, Frax, Olympus DAO, Synthetix, Balancer, Aura, Gnosis Guild, Badger DAO, Aave, Tally DAO and Karpatkey all use CoW Swap to manage their multi-sig wallets.

Multi-sig wallet owners can count on CoW Swap to help them:

• Trade in a way that takes the press out of coordinating key holders.

• MEV-protected trades even when trade details are publicly announced.

• Provide the best prices through slippage-capturing trade execution.

• Allow special order types custom-tailored for DAOs

If you are a interested in learning more about how CoW Swap can optimize your trades, join our Discord and give us a shout, or leave a comment in our forum.