CIP-58
title: < funding for development services - Service Agreement No 4>
author: <@Kowrigan>
status: Active
created: 2024-11-12
Simple Summary
This CoW Improvement Proposal (“CIP”) requests the DAO to approve the allocation of 5,100,000 USD from the treasury to Nomev Labs, Lda (the “Service Provider”) for the execution of the Services related but not limited to CoW Protocol, CoW Swap, CoW AMM, MEV Blocker (“CoW DAO Products”) under the terms of the Service Agreement hereunder (the “Agreement”). The compensation will cover the Service Provider’s labor and expenses related to this Agreement for the period from 1 January 2025 to 31 December 2025 (the “Term”).
Motivation
The Service Provider remains committed to fulfilling CoW DAO’s vision of a decentralised future where digital assets can be traded in a fair, efficient and reliable manner among people and communities around the world. Any trades, liquidity provision, and any blockchain transaction must be securely protected.
We consider this CIP critical to ensure ongoing development and refinement of the CoW Products and for keeping a competitive edge within the decentralised exchange ecosystem, including strategic pivots.
The Past Execution in a Nutshell
A significant amount of work has gone into the past year and the team is really proud to successfully close the Third Service Agreement:
First and foremost, servicing users with a total of 359 million USD surplus was created during this year.
The 11 months, in review, saw a big uptick in user engagement, builders and contributors to CoW Products. To name a few, the solvers grew to a number of 24, ensuring better prices for users and increasing the robustness and decentralisation of the protocol.
The CoW Protocol trading volume in the past year was 6.5bn USD worth in assets just in Mainnet (plus 50M USD and 113M USD worth in assets on Gnosis Chain and Arbitrum, respectively), assets that were protected from MEV. CoW Protocol’s market share kept stable as the second largest DEX aggregator in the past year, while approaching the market leader.
With a current team of 31 members, the team is focused heavily on the development of the CoW DAO Products, expanding the development activities to MEV Blocker. This was done while keeping an extended presence at many conferences and Hackathons, growing the CoWmunity.
In terms of advancements, 2024 saw the launch of:
- CoW AMM: protecting Liquidity Providers from Loss-Versus-Rebalancing (LVR);
- CoW Swap Widget: allowing partners to integrate CoW Swap interface to their own website;
- Expansion of the Protocol to Arbitrum and exploration/preparation for other L2s ;
- Support for CoW Hooks;
- Fee Experiment under CIP-34 and CIP-49;
- Rebranding of CoW DAO and its Products;
- Colocated Drivers with currently 8 solvers running their own drivers;
- The initiation of the governance delegation program under CIP-53.
Everything developed, decided and spent was and is done with CoW DAO’s and its users’ benefit in mind!
The Past Execution in a Nutshell - Financial
Looking at 1. March 2024 to 30 November2024 a total of 3.3M USD were spent on (values in thousands):
| Cost Centre | CIP Total | Actual (up to Nov.24) | Variance(CIP - Actual) | Variance % |
|---|---|---|---|---|
| Team compensation (aggregate) | 2,630,000 | 2,397,627 | 232,373 | 8.84% |
| Third party services | 230,000 | 186,278 | 43,722 | 19.01% |
| Events & Travel | 240,000 | 82,094 | 157,906 | 65.79% |
| Hosting | 240,000 | 276,090 | -36,090 | -15.04% |
| External tooling | 100,000 | 76,928 | 23,072 | 23.07% |
| Office | 60,000 | 42,285 | 17,715 | 29.52% |
| Tax Provision | 350,000 | 283,776 | 66,224 | 18.92% |
| Total | 3,850,000 | 3,345,078 | 504,922 | 13.11% |
With an estimate of remaining funds of 500k USD per 1. Dec 2024, we expect to fully utilise the funds allocated for the period (note that the Budget Section includes funds that were accrued and rolled forward from previous periods). The lower spend (compared to prior periods) mostly came from a reduction in outsourcing and events, as the team focused more on delivery of features and product development, over widespread marketing initiatives.
Scope of Services
Services
The Service Provider agrees to deliver comprehensive technical and non technical services to CoW DAO (the “Service”), including but not limited to:
- Code development and design based on Section on “Development Focus” below;
- Continuous improvement of the existing Products and user experience;
- Executing relevant user research and proposing development focus adjustments based on its findings;
- On behalf of CoW DAO, hosting relevant interfaces, upkeeping and housekeeping of forum.cow.fi;
- Assisting the CoWmunity in the promotion of the CoW Products, including at and for conferences and with promotional materials;
- Engaging in, and maintaining the activity of participating in the consensus of proof of stake blockchains such as but not limited to Gnosis Chain as part of the DAO’s treasury management
- Fostering collaborations and partnerships on behalf of CoW DAO;
- Any other assistance and advice that may be provided by the team’s expertise, e.g. computer engineering, design as well as relevant project management, accounting services, legal, compliance, and other relevant fields of expertise;
- Facilitating solver onboarding and solver management, vetting, and assisting with payouts on behalf of CoW DAO;
- Ad payments / Paid Media ;
- Ensuring system security, providing development operations and security personnel. Per need, driving bug bounties for CoW DAO’s settlement (incl. via Grants DAO);
- Engaging the CoWmunity in the decision making process using the regular governing mechanism (not limited to but including enhancing the delegate program and fostering governance participation engagement)
- Thoughts and proposals around governance and decentralisation
- Assistance in updating terms and conditions such as but not limited to the participation agreement and GrantsDAO related documents;
- Coordination around GrantsDAO processes
- Clearer transparency and accountability rules.
- Effective outsourcing to specialists and external parties;
- Explore the opportunity to set up a legal entity (such as a foundation or similar entity) to legally represent CoW DAO’s governance or parts thereof in a DAO-adjacent structure (to be proposed to CoW DAO in more developed state, for public discussion).
Other Services may be included in further CIPs for CoW DAO to decide upon separately (they can but must not lead to additional funding requests, dependent on scope, timing and efforts).
Main Development Focus
In the spirit of fostering a collaborative and inclusive environment, our main development focus follows the collective wisdom and insights of the CoWunity and our users.
This approach ensures that the development aligns with the needs and aspirations of CoW DAO, resulting in more impactful and user-centric products. However, it’s the responsibility of CoW DAO and its members to propose and decide the way forward - we want to comply with this ethos: it’s important to keep this focus flexible to adjust to community voices and successful proposals, changing competitive environments as well as improving and changing technological advancements.
We propose that the year 2025 be dedicated to the below items and features. This list is not exhaustive and may evolve based on the CoWMunity feedbacks, decision and change of priorities:
- Network expansion: deploying CoW Protocol to other Ethereum based networks
- CoW AMM: expanding on the functionality of CoW AMM
- MEV Blocker: Technical improvements to MEV Blocker, including roll-out on relevant L2s
- Continuous experimentation around fee models, according to suggestions of CIP-34 or the finalisation of a fee concept that has been successfully tested, including fee cuts for partners (to be put forward in a separate CIP for discussion and approval by CoW DAO directly).
- Continuous decentralisation of the CoW Products, including governance.
- Support of documentation, SDKs and external teams building on top of the Products (also via GrantsDAO)
- Development of a Smart Contract Version 2 for CoW Protocol enabling advanced functionalities such as NFT support; enforcement of post order interactions; etc.
- Support for additional smart orders (such as DCA, stop loss, etc)
- Support for a CoW Hook UI and SDK allowing for easy integration by partners
Compensation & Budget
Compensation
The Service Provider calculated a spend of 7,600,000 USD for the delivery of the Services, for the period of 1. January 2025 to 31. January 2025.
Estimates are based on projected labour, materials, and other direct/indirect costs to provide the Services as defined in the Budget section below.
The Budget section below shows the composition of the total of 7.6m USD for the entire year of 2025, of which 2.5m USD can be rolled forward and 5.1m USD requested under this CIP.
The budget agreed upon for delivery of the Services is effective for the current term of this Agreement. In the event of any substantial changes to the budget and/or Services requiring an increased allocation requires the Service Provider to submit CIP to CoW DAO to adjust the fee. The increased allocation shall be calculated on a monthly basis to account for actual costs incurred. Any such CIP is subject to the approval of CoW DAO’s Governance Mechanism as defined in CoW DAO’s Participation Agreement. In the event the Service Provider submits a fee adjustment proposal, it must provide a detailed account of costs incurred in the preceding months.
In the event the Service Provider releases or sells any accounting provisions (including but not limited to tax provisions), the resulting positive cash flow shall be reinvested solely into the Service Provider’s operations, in accordance with CoW DAO’s vision of a decentralised future and its mission to enhance the CoW Products.
Budget
From 1st of January 2025 - 31 Dec 2025, the USD budget estimate comprises the following significant positions. Given funds still available from prior executions, returns of investments of idle funds, not needed calculatory provisions, and minimisation of costs around third party services, infrastructure credits and delayed hiring, the Service Provider is in the favourable position to ask for a significantly lower amount than the budgeted development budget:
| Cost Centre | CIP Total |
|---|---|
| Team compensation | 5,398,000 |
| Third party services | 517,000 |
| Events & Travel | 366,000 |
| Hosting | 570,000 |
| External tooling | 144,000 |
| Office | 42,000 |
| Tax Provision | 563,000 |
| Total | 7,600,000 |
| Rolled-forward allocation | 2,400,000 |
| Funds requested in this CIP | 5,100,000 |
These categories are estimated to include the following positions:
- Team compensation - Includes total compensation of existing team members and planned hires for the service period.
- Third party services - Includes all outsourcing providers and financial intermediaries & banking fees as well as third party development providers.
- Events & Travel - Covers relevant presence in conferences, business development events as well as team meetings.
- Hosting - Covers mainly DevOps related expenditures (AWS and nodes). An increase from prior years is requested due to added network costs from launching in new networks.
- External tooling - Covers softwares and subscriptions.
- Office - Includes fees supported for temporary rental of spaces.
- Tax provision - lump sum provision of 10% for potential tax costs (unforeseen and relating to various tax categories)
- Accounting provisions (such as tax provisions) that are dissolved, arising in a positive cash-flow, will be reinvested in line with CoW DAO’s vision of a decentralised future and mission of enhancing CoW Products. Remaining funds from the execution of this CIP as well as other financial decisions in the upcoming year may prolong the estimated length of the Service Agreement.
The Team
The team that plans to execute this Service Agreement and the development of the CoW Products part of the Services, has been doing so for the past three years, and is dedicated to continue working towards making the protocol successful. We have carefully recruited and will continue to do so in the future. The leadership team is stable with Anna George on the product and Felix Leupold on the engineering side. The team consists of 31 full-time positions. The team’s expertise include roles such as engineers, cryptographer, mathematicians, user researcher as well as business development, operations and HR. Furthermore, we have built up a range of ecosystem, legal, and academic advisors who will help us achieve the success of the CoW DAO and its Products.
Execution: Proposed transaction/ Payment
Upon approval of this CIP, CoW DAO agrees to an upfront payment of the approved fee to the Service Provider.
Upon successful passing of this CIP, CoW DAO’s treasury team is mandated to transfer the payment of 5,100,000 USD (in any relevant stablecoin) to the Service Provider at eth:0x51678341B2a5c063ead2ecfcA91e05ba73B09CAE by 10.th of January 2025.
Terms and Conditions
Validity
This Agreement is subject to the approval of CoW DAO’s Governance Mechanism as defined in CoW DAO’s Participation Agreement. In the event CoW DAO does not approve this Agreement through its Governance Mechanism, this Agreement shall be null and void.
Service
The Service Provider agrees to deliver to CoW DAO the Service as defined above.
The Service Provider shall collaborate closely with CoW DAO to understand their wider objectives and tailor services to align with the CoW DAO’s vision and products.
CoW DAO will provide the necessary information and access required to facilitate these services effectively.
Activities and results will be shared through periodic updates, with comprehensive reviews typically conducted semi-annually. Specifically, a half-year update in Q3 2025 and a full-year update will be provided in Q1 2026.
Payment
Upon approval of this CIP, CoW DAO agrees to a prepayment in full of the approved compensation to the Service Provider.
Unless the Service Provider asks for further compensation due to miscalculation or misjudgement of Service scope, no detailed time report will be provided by the Service Provider to CoW DAO.
This prepayment constitutes the only compensation owed to the Service Provider for delivery of the Services over the engagement term, unless amended by a future DAO vote.
Upon approval of this CIP, the prepayment of funds to the Service Provider will be transferred from the DAO’s treasury via the established financial processes.
Term and Termination
This Agreement shall commence on the 1st January 2025 and shall remain in full force and effect until the 31st December 2025 (the “Term”).
Notwithstanding the foregoing, should funds remain available to continue the mandate provided by this Agreement, the Agreement may be extended for up to an additional six (6) months. The Service Provider shall notify CoW DAO at least thirty (30) days prior to the Term end regarding any proposed extension, including the estimated period for which the remaining funds will support its operation.
Early Termination
- The Service Provider may terminate this Agreement for convenience by providing three (3) months’ prior written notice in the form of a Forum post.
- CoW DAO may terminate this Agreement if the termination is approved through CoW DAO’s Governance Mechanism (as defined in CoW DAO’s Participation Agreement); however, any termination approved through this mechanism shall not take effect until the expiration of a three-month period following the successful vote.
- Either party may terminate this Agreement if any law, decree or regulation is enacted that directly prohibits or materially impairs the performance of the core services under this Agreement; provided that such termination shall not take effect until the day prior to the effective date of such law, decree or regulation.
Consequence of Early Termination
In the event of early termination:
- The Service Provider shall, within thirty (30) days of the termination date:
- Reimburse CoW DAO for any prepaid amounts, less: (i) fees for services already performed and (ii) reasonable and documented expenses directly related to the services and incurred prior to the termination date;
- Provide CoW DAO with detailed documentation supporting all deducted amounts.
- All reasonable expenses claimed must be supported by receipts or other appropriate documentation and be consistent with the budget outlined in this Agreement
Intellectual Property
All rights related to works, new products and processes, or correction or improvement of products or processes already existing in the CoW DAO’s portfolio in addition to works, inventions or creations, designs or models, trademarks, trade names, logos, software, databases, domain names or other materials and know-how (including trade secrets), whether registered or not, and regardless of their patentability, registrability or fixation, that the Service Provider, individually or jointly, has created or whose creation has provided during the execution of the Agreement to provide services that relate, directly or indirectly, to the business of the CoW DAO, (hereinafter, “Intellectual Property”), belong by origin and since their creation to CoW DAO in accordance with the CoW DAO’s Participation Agreement.
This effect occurs when the Intellectual Property is generated during the provision of Service by the Service Provider, regardless of whether or not the creation, or the cause of the creation, of the Intellectual Property is, wholly or partially, directly or through a third party.
CoW DAO hereby grants the Service Provider a non-exclusive and non-transferable right to use CoW DAO’s Intellectual Property for the purpose of this CIP (“License Purpose”). CoW DAO authorises the Service Provider to grant sublicenses for the sole purpose of executing this CIP consent. A prerequisite for this authorisation is that the sublicensee agrees to comply with all of the Service Provider’s obligations under this CIP.
The Service Provider is responsible for ensuring that CoW DAO’s products and Intellectual Property are marketed and presented accurately and in line with CoW DAO’s values to potential partners.
Miscellaneous (in no particular order)
Subcontracting. The Service Provider may subcontract any portion of the Services to be performed under this Agreement and remains responsible for the obligations under this Agreement.
Assignment. The Service Provider and CoW DAO may at any time assign, mortgage, charge, subcontract, delegate, declare a trust over or deal in any other manner with any or all of its rights and obligations under this Agreement.
Confidentiality. All information obtained privately (i.e. not via public discourse, such as blockchain transactions or on the CoW DAO Forum) shall remain the sole and exclusive property of the disclosing party (including CoW DAO and the Service Providers).
Definitions. Terms in this Agreement shall have the same meaning as in the CoW DAO Participation Agreement. In the event of any conflict or inconsistency between this Agreement and the terms of the CoW DAO Participation Agreement, this Agreement shall take priority as between them to the extent that is necessary to resolve the conflict or inconsistency.
Independence of the Parties. The Service Provider is an independent contractor and is not an employee, agent, partner, joint venture, legal representative, an affiliate, or a member of CoW DAO. Nothing in this Service Agreement is intended to, or shall, operate to create a partnership or joint venture of any kind between the service provider and CoW DAO, nor authorise either Party to act as agent for the other. Neither Party has the authority to act in the name or on behalf of, or otherwise bind, the other Party in any way.
Disclaimer. CoW DAO and the Service Provider expressly disclaims all representations, warranties, guarantees, conditions and undertakings, including warranties of merchantability and fitness for a particular purpose.
Limitation of liability. The Service Provider’s total aggregate liability for all and any claims arising under or in connection with this Agreement, regardless of form of action and whether in contract, tort, warranty, or other legal or equitable grounds (including in each case negligence), shall be limited to a maximum amount of USDC 50,000.00. the Service Provider shall not be liable for any actions taken by or on behalf of CoW DAO including Services and actions taken pursuant to this Agreement.
Force Majeure. If the provision of the Services are affected, hindered, prohibited or made impossible in whole or in part by a Force Majeure, this shall under no circumstances be deemed a breach of this Agreement.
Severance. If any provision of this Agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable.
Disputes. In the event of any dispute, claim, question, or disagreement, CoW DAO and the Service Provider shall use their best efforts to settle the disagreement. To this effect, they shall consult and negotiate with each other in good faith (using the CoW DAO forum forum.cow.fi or any other Interface) and, recognising their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties. Any such amicable decision to resolve a dispute shall go through the CoW DAO Governance Mechanism. If no agreement is found within thirty (30) days, the disagreement shall be referred to and finally resolved by arbitration by one arbitrator in London, United Kingdom, under the rules of the London Court of International Arbitration.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of England and Wales.