CIP-76: Continued funding for development services - Service Agreement No 5

[fairlight]

I don’t agree with framing core team voting here as a “conflict of interest”. A large part of the team are long-term COW holders themselves (many almost fully vested), so they’re not just voting to fund work, they’re also voting to dilute their own holdings along with everyone else.

You can just as easily say other holders are “conflicted” in the opposite direction: they benefit from saying no to any dilution, even if it starves execution.

Some people argue COW is undervalued. If that’s true, allocating more ownership to the people actually driving the value is exactly the kind of bet you want to make, not something you rule out by excluding them from governance. If we want extra signalling (e.g. “non-team vote” views), that’s a separate design question, but treating contributor votes as illegitimate is not a healthy model for DAO governance.

[sunce86]

so they’re not just voting to fund work, they’re also voting to dilute their own holdings along with everyone else

Respectfully, being a token holder does not automatically justify ignoring all other incentives one might have - that’s why disclosure is important.

In many DAOs (Uniswap, ENS, Optimism, Gnosis, etc.), this kind of situation is generally treated as a conflict-of-interest case — not because contributors shouldn’t vote, but because voting on funding your own employer is usually handled differently from other proposals.

A very similar thing happened recently with the KPK proposal on Gnosis DAO, where KPK employees voted on their own budget request and got a fair amount of community pushback for doing so. So this isn’t unusual — it’s a well-known conflict-of-interest pattern.

Similarly, GNOSIS LTD recently had a budget request and it’s employees abstained from voting publicly.

I’m not trying to delegitimize anyone’s vote. I’m mostly trying to understand whether COW DAO has, or wants to have, any guidelines for situations where a proposal allocates funds (both USD and COW) to the same team the voter works for. I think having these rules clearly defined would increase transparency overall and make the governance process stronger. If the answer is simply “we don’t have a policy yet,” that’s perfectly fine — I’m just trying to understand how we approach this going forward.

Again to emphasise, I initially voted FOR this proposal, but the way the voting unfolded gave me pause. If a proposal were to pass despite a clear majority of the broader community (excluding the team) being against it, that could make COW DAO governance look pretty bad. We need to improve on this side.

[fairlight]

KPK at Gnosis is not really comparable here. That case came with clear performance concerns and a very different context. Gnosis Ltd’s choice to abstain is also tied to their own structure and history so I don’t think it makes sense to import those patterns 1:1 as a norm for CoW.

To build on what I wrote above: my point was never that contributors have no conflict, but that it goes both ways. Core contributors who vote are long-term COW holders, so they’re funding work and diluting their own stack. They could have sold, they didn’t, and their COW is exposed to the same dilution and future success (or failure). To me that’s a signal of a team willing to back execution with its own holdings, with governance still providing guardrails.

By your own words you were initially comfortable with the proposal on substance and changed because of how the voting looked. So if there had been no major NO votes, your view would have remained FOR. To me that suggests late sentiment and optics ended up weighing more than the content of a proposal that had already been live and discussed on the forum for a month.

[sunce86]

Core contributors who vote are long-term COW holders, so they’re funding work and diluting their own stack. They could have sold, they didn’t, and their COW is exposed to the same dilution and future success (or failure). To me that’s a signal of a team willing to back execution with its own holdings, with governance still providing guardrails.

True. However, the same is true for other respected teams in the DAOs I mentioned, and even there, conflict-of-interest rules are applied for proposals that directly fund the team.

Let’s agree we disagree. My intention is simply to remind the COW community and the team of this pattern and its importance for maintaining governance credibility — it ultimately protects both the community and contributors in the long run, especially when looking beyond any single proposal (we all know this one will likely pass in some form).

[cp0x]

We all saw the negative results of this vote.

I would have liked to see more opinions, but only a few people expressed. This is important because the CoW team needs to make some changes to the proposals, and to help them with this, it’s worth writing to everyone who voted against them and asking why they did so.

For my part, I always speak openly and justify my decisions. I’ll say again that the following were unpleasant for me:

• the budget is structured in such a way that it’s difficult to compare the previous one with the new one. The team was accommodating here, but not everyone reads the forum, and such a comparison should be made right away in the final proposal.
• 100 million tokens is too much simply for employee retention. I believe such a budget should be accompanied by four-year plans – specific goals to be achieved, and the project’s strategic plans. Other options are also possible – for example, awarding tokens to the team from profits if they exceed the planned profit.

[karolak]

This is what I initially suggested: we have a lot of COW sitting idle, waiting on $0.90 sell orders. We could use those tokens to compensate the team and increase buybacks—say, by around 20% above what is used for rewards—while slowly replenishing reserves. It might turn out that this extra 20% is enough to cover most of the costs.

If the price rises, you can pause buybacks and sell some of the COW accumulated at these low levels. You should take advantage of the current low market price, maximize buybacks, and help push the price upward. Once the price is higher, you can always sell some of the COW acquired at the bottom.

This approach would also signal confidence in COW’s progress and strengthen faith in the project even further.

Instead, you unlocked 80M COW to be sold at >$0.59 while the price isn’t even close to that. Those 80M tokens are essentially sitting idle and doing nothing. Why release even more COW under these conditions? Use those which are currently unlocked and slowly replenish treasury with buybacks.

[karolak]

Reposting from discord degen channgel:

1. Tang-lin — 1:23 PM

   but if anything, i think this shows that the DAO is working properly, and altough we (investors) are sometimes a pain in the ass, i think can speak for everyone when i say we’re very happy with performance (maybe so much not price action haha), and would be happy to proportionally compensate the team if still delivers at this level or higher. What was lacking in the proposal imo its whats has already been commented; >clarity on us of funds >some min. KPIs that need to be met ( taking care of not creating mis-aligment as one time you mentioned that you were worried about team over-focusing on it) >and for me the most important factor, is to efficiently use resources; we have a 40M treasury, with 70M COW sitting idle (doing nothing), which is exactly what the team wants (100M minus dilution…), so why not using it? More is needed we can still use some liquidity to bring more COW, reduce the time-frame, etc.

2. just by removing the ‘‘suply increase’’ factor from the equation i think you’ll convert a lot of yes, add a bit more of context on use of funds and min. KPIs and imo its a no brainer that it will pass its a win-win with investors happy, team happy and it’d just require using tokens that currently are sitting idle

3. with more revenue coming in from buybacks those 70M will be replenished in the blink of an eye, and if thats not the case i’m pretty sure some whales/team members would be happy to hedge at higher prices while accomodating those strategic investors into the cow fam; mooo0000oooo

[annageorge]

Thank you to everyone who engaged with CIP-76, commented, and voted.

We want to start by clearly acknowledging the outcome and sentiment: in its current form, CIP-76 does NOT have a mandate from CoW DAO. The main point of opposition in our view is the 100M COW team incentive component, not the continued funding for development services under Service Agreement No. 5, which many commenters explicitly supported.

We are grateful that several delegates and community members recognised the importance of funding core development, operations, and growth, while still voicing strong concerns about the size, structure, and framing of the 100M COW request.

We take this seriously and we will adjust.

What we will do next

1. Decouple Service Agreement No. 5 from the 100M COW incentive

Given the feedback, we understand that:

• continued funding for development services is broadly supported, but

• the 100M COW top-up is not, especially in the way it was bundled into the same CIP.

To reflect that distinction we will bring back Service Agreement No. 5 as a standalone CIP, focused solely on the operational budget (dev & smart contracts, frontend, solver infra, audits, infra, BD, marketing, etc.), without any 100M COW allocation attached.

This should allow token holders and delegates to vote directly on the question: “Do we want to continue funding the core team and roadmap for the next period under Service Agreement No. 5?” without mixing it with long-term token allocation and dilution questions.

2. Rework the team incentive as an independent CIP

We also hear the message that the team incentive structure needs to be re-thought in size, pacing, transparency and alignment.

We will therefore:

• Draft a separate CIP specifically for the team incentive pool, independent of the service agreement.

• Base its design on the themes that came up in this discussion:

  • concerns about size vs circulating supply and dilution;

  • better transparency on unlocks and actual distributions;

  • appropriate guardrails and reporting, so token holders can see if the plan is being applied responsibly.

The idea is not to create a rigid “if X then Y tokens” formula at protocol level, but to:

• keep time-based vesting (for legal/HR reasons), and

• make that framework and its application visible to the DAO.

Any reworked team-incentive CIP will be submitted on its own merits, for the community to accept, reject or amend.

3. Invite concrete community input on the incentive design

For this new CIP to be credible, we would be grateful to get practical, actionable suggestions from delegates, long-term holders and ecosystem partners.

In particular, it would be helpful to hear views on:

• Which safeguards you consider essential:
  e.g. review checkpoints, reporting cadence, “slow-down” levers if dilution feels too fast.

• Examples from other DAOs whose contributor incentive models you think we should learn from (what worked, what didn’t).

We will share a new CIP-draft for the COW-token top up as a separate, new Forum post in the upcoming days. We will treat this thread, and any follow-up posts, as direct input into the next version of the plan.

—
Below this thread the team will post the cleaned version of the CIP regarding the service funding.

[Kowrigan]

CIP-DRAFT: Continued funding for development services - Service Agreement No 5. V2

Context

Following the community discussion and vote on CIP-76: Continued funding for development services – Service Agreement No. 5, we acknowledge that, in its bundled form, CIP-76 did not receive a mandate from CoW DAO. Feedback from delegates and token holders made it clear that the main point of contention was the 100M COW team incentive top-up, rather than the underlying need to continue funding development and operations. Several comments explicitly supported ongoing funding for core services while raising concerns about the size, structure, and framing of the token component.

In direct response to that feedback, we are now putting forward a decoupled CIP that focuses only on the continued funding under Service Agreement No. 5. This new proposal is strictly limited to the operational budget required to maintain and evolve CoW Protocol and its ecosystem over the next funding period. It does not include any COW-token incentive allocation or grant top-up, which will instead be addressed separately.

A future proposal concerning team incentives, long-term token alignment, will therefore come as an independent CIP, in its own discussion thread.

We also want to transparently acknowledge that, during the CIP-76 process, the budget table contained typos and inconsistencies caused by versioning issues between different drafts. For this new CIP, the budget has been fully cleaned up, reconciled, and cross-checked, so that each line item, category subtotal, and overall total are consistent and auditable.

The CIP below therefore focuses solely on: (i) describing the scope of work covered by Service Agreement No. 5, (ii) presenting the corrected budget and its allocation across workstreams, and (iii) explaining how reporting, accountability, and governance interfaces with CoW DAO will work over the funding period.

CIP-DRAFT: Continued funding for development services - Service Agreement No 5. V2

title: < Funding for Consolidated Services under the New Legal Structure for 2026 >

author: < @Kowrigan>

status: Draft

created: Redraft of CIP-DRAFT of 2025/10/28 on 2025/12/11

Simple Summary

• This proposal is filed by the Core Team (the “Service Provider”) and requests that CoW DAO earmark 12,600,000 USDC from the treasury for calendar year 2026 to fund its operations.
• Pursuant to CIP‑64, CoW Foundation will allocate the approved budget quarterly to each of the four Legal Entities: CoW Foundation, CoW Core Limited, CoW Hosting Limited, and CoW Business Limited; in line with their mandates.
• Each Legal Entity will then sub‑contract the Service Provider for its respective workstream and compensate the Service Provider monthly in arrears, for the scope of services described in this CIP.

Motivation

CoW DAO’s mission is to make digital‑asset trading provably fair, cost‑efficient and MEV‑resistant. Achieving that vision in 2026 hinges on pairing the DAO’s new legal structure with an uninterrupted stream of specialist execution capacity.

• Preserve product momentum & market reach. For several years the Service Provider has shipped major protocol upgrades, launched new products and features, and expanded to additional chains. Continued funding keeps this proven team focused on the roadmap and accelerates growth (new product research and innovation, L2 expansion, and strategic partnerships).
• Maintain a growing technological system: Given that CoW suite of products grew from 4 to more than 10 networks, with more than 10B traded on a monthly basis.
• Operationalise the legal framework. The requested budget is allocated by the Foundation to the four legal entities (including itself) according to their functional remits, thereby realising the structure’s operational efficiencies.
• Sustainable, transparent funding. Switching to monthly, invoicing (instead of large upfront transfers) smooths the Service Provider’s cash flow while giving the DAO and the Foundation twelve checkpoints per year to verify KPIs, pause or redirect spend, and earn yield on undisbursed treasury assets.

The Past Execution in a Nutshell (Background & Performance Context)

To provide context for this funding request, it is valuable to review the performance of the core contributing team that will be engaged by the Service Provider. The achievements of 2025 demonstrate a track record of effective execution and financial diligence:

• Market share increase with prudent financial performance encompassing profitability at a protocol level
• Migration to a Fair Combinatorial Batch Auction mechanism
• Strategic integration partnerships (Aave, LI.FI, OKX, etc.)
• Cross-chain swap feature
• Onboarding of solvers including those running their own drivers
• Setup of new legal structure (CIP-64)
• Deployment of 5 new networks

Financial: The budget allocated for 2025 activities was managed with diligence. A focus on high-impact initiatives and careful cost control ensured that all key objectives were met within the allocated financial scope.

Values in USD
Month	A) Budget at Treasury	B) Budget at Foundation	C = (A+B ) CoW DAO budget	Spent from CIP	Variance
Actual
01/01/2025	633,333.33		633,333.33	419,379.00	213,954.33
01/02/2025	633,333.33		633,333.33	406,356.90	226,976.43
01/03/2025	633,333.33		633,333.33	500,736.00	132,597.33
01/04/2025	633,333.33		633,333.33	495,061.00	138,272.33
01/05/2025		633,333.33	633,333.33	754,303.26	-120,969.93
01/06/2025		633,333.33	633,333.33	375,900.23	257,433.10
01/07/2025		633,333.33	633,333.33	434,115.20	199,218.13
01/08/2025		633,333.33	633,333.33	347,971.42	285,361.91
01/09/2025		633,333.33	633,333.33	734,435.35	-101,102.02
01/10/2025		633,333.33	633,333.33	591,376.55	41,956.78
Subtotal	2,533,333.33	2,533,333.33	5,066,666.67	3,733,823.01	1,332,843.66

This history of execution provides confidence in the team’s ability to effectively utilize the funds requested in this proposal for 2026.

For more context, please refer to the Core Team update (Jan to Aug 2025)- Update on CIP-58: Funding for development services - Service Agreement fulfilment.

Scope of Services & Entity Mandates

As established in CIP-64, the Foundation will coordinate the distribution of the services under this CIP across the four distinct legal entities adjacent to CoW DAO. This CIP mandates that each entity will subcontract the execution of the services within its mandate to the designated Service Provider.

Main Development Focus

While remaining flexible to adapt to community feedback, we propose that the year 2026 be dedicated to the below items. This list is not exhaustive and may evolve.

• Growing CoW Swap volume and market share through strategic, awareness-driving activities
• Supporting the integration of CoW Protocol into relevant B2B partners both within TradFi and DeFi
• Deploying CoW Protocol on relevant EVM chains
• Expanding CoW Protocol & CoW Swap beyond the EVM ecosystem
• Bringing CoW Protocol’s unique smart orders to EOA accounts
• Building a prototype of Cross Chain Solution, based on CoW’s intent, leveraging efficiency gains via CoW’s unique batch mechanism across chains
• Research and implementation of value distribution mechanism

The Team

The team that plans to execute this Service Agreement on behalf of the Legal Entities is the same core group that has been dedicated to the CoW DAO ecosystem for several years and is committed to its long-term success. The team consists of more than 40 full-time positions, with world-class expertise across engineering, cryptography, research, product management, design, business development, marketing, and operations. The team operates under the stable and continuous leadership of the Core Team and has a proven track record of delivering on ambitious roadmaps.

Compensation & Budget

The Service Provider has calculated a total spend of 12,600,000 USD for the delivery of all services for the term. The budget below breaks down this cost by expense category and the responsible legal entity.

Budget Breakdown by Entity

From 1st of January 2026 - 31st December 2026, the USD budget estimate is allocated as follows:

Team CIP	Request from Treasury	CoW Business	Foundation	CoW Hosting	CoW Core
Frontend	1,500,000			1,500,000
Backend & Smart Contracts	2,600,000				2,600,000
Solvers	1,500,000				1,500,000
DevOps & Infrastructure	1,700,000				1,700,000
Product management	700,000		700,000
Marketing & BD	3,000,000	3,000,000
Operations, Finance and Legal	1,600,000		1,600,000
	12,600,000	3,000,000	2,300,000	1,500,000	5,800,000

Note: This request excludes any budget for Foundation operations, which is regulated under CIP-64: Incorporation of a legal structure for CoW DAO.

Execution: Proposed Transaction & Payment Process

Upon successful passing of this CIP, CoW DAO’s treasury team is mandated to execute the following:

1. Initial Funding: The CoW Foundation treasury shall finance on a quarterly basis its main multisig, so that the officers can fund each entity multisig according to its individual treasury needs. The transfers should be made in a relevant stablecoin (e.g., USDC) by the 10th of the month post quarter end.
2. Monthly Payments: Each entity will then be responsible for disbursing its portion of the service fees to the Service Provider in twelve equal monthly installments, managed by the entities’ Director(s).

Terms and Conditions

Service

Pursuant to their foundational mandates established by CoW DAO in CIP-64, the Legal Entities agree to execute their respective services for the 2026 term by subcontracting all operational tasks defined herein to the Service Provider. The Service Provider shall collaborate closely with the Directors of the Legal Entities and the broader CoW DAO community to understand wider objectives and tailor services to align with CoW DAO’s vision and products. Activities and results will be shared through periodic updates, with comprehensive reviews typically conducted semi-annually. Specifically, a half-year update in Q3 2026 and a full-year update will be provided in Q1 2027.

Payment

Upon approval of this CIP, CoW DAO agrees to the allocation of the Requested Funds to Legal Entities.

CoW Foundation is hereby granted the authority to manage this total budget and allocate funds periodically to its own operational wallet and to the operational wallets of the other entities (CoW Core Ltd., CoW Hosting Ltd., and CoW Business Ltd.). This flexibility is granted to allow for dynamic adjustments based on evolving operational requirements throughout the Term.

This authority is subject to the following conditions:

1. Total disbursements across all entities shall not exceed the total budget approved in this CIP.
2. All fund allocations must be consistent with the established mandates of each entity as defined in the Service Allocation Matrix.
3. All inter-entity fund allocations must be transparently documented and presented to the community in the regular transparency reports.

The Legal Entities will use these allocated funds to pay the Service Provider monthly in arrear for services rendered under their respective sub-contracts resulting from this CIP.

Term and Termination

This Agreement shall commence on the 1st January 2026 and shall remain in full force and effect until the 31st December 2026 (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 Directors of the Legal Entities shall notify CoW DAO at least thirty (30) days prior to the Term end regarding any proposed extension.

Early Termination

The Service Provider may terminate its engagement with the Legal Entities for convenience by providing three (3) months’ prior written notice in the form of a Forum post.

CoW DAO may command the Legal Entities, individually or together, to terminate their engagement with the Service Provider 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 the Legal Entities or the Service Provider may terminate their engagement if any law, decree or regulation is enacted that directly prohibits or materially impairs the performance of the core services under this Agreement.

Consequence of Early Termination

Upon the effective date of termination:

1. Final Settlement with Service Provider: The Service Provider shall be entitled to payment for all services satisfactorily performed up to the effective termination date. The Legal Entities shall settle any final, pro-rata invoices for completed work. The Service Provider must reimburse the Legal Entities for any portion of a monthly payment that covers a period extending beyond the effective termination date.
2. Return of Funds to DAO Treasury: CoW Foundation and the Legal Entities are hereby mandated to return all unspent and uncommitted funds from the budget approved under this CIP to the CoW DAO treasury. This transfer shall be completed within thirty (30) days of the termination date, ensuring the remaining annual budget is secured under direct DAO governance pending further proposals.

Intellectual Property

All rights related to works, new products and processes, or any other creations resulting from the services provided under this Agreement (“Intellectual Property”), regardless of which entity contracted the specific work, belong by origin and since their creation to the CoW Foundation in accordance with its mandate under CIP-64 and the CoW DAO Participation Agreement. The CoW Foundation shall grant the necessary licenses to the other Legal Entities and the Service Provider to fulfill their operational duties.

Miscellaneous (in no particular order)

• Subcontracting.
  • The Legal Entities are hereby mandated by CoW DAO to subcontract the services outlined in this Agreement to the designated Service Provider. The Legal Entities remain responsible to CoW DAO for the fulfillment of this primary mandate.
  • The Service Provider may further subcontract all or portions of the services to specialist third parties as needed to fulfill its obligations. In doing so, the Service Provider remains fully liable and responsible to the Legal Entities for the performance, quality, and deliverables of any and all of its own subcontractors. The contractual relationship for any further subcontracted work exists solely between the Service Provider and the third-party specialist.
• Assignment. No party may assign its rights or obligations under this Agreement without the prior approval of CoW DAO via its Governance Mechanism.
• Confidentiality. All information obtained privately (i.e., not via public discourse) between CoW DAO, the Legal Entities, and the Service Provider shall remain the sole and exclusive property of the disclosing party. A receiving party including its subcontractor and agents must keep all information obtained privately confidential.
• 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, this Agreement shall take priority.
• Independence of the Parties. The Legal Entities are independent legal persons mandated by CoW DAO. The Service Provider is an independent contractor to each Legal Entity. Nothing in this Agreement is intended to create a partnership or joint venture between any of the parties.
• Disclaimer. All parties expressly disclaim 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 to each Legal Entity for all claims arising under this Agreement shall be limited to a maximum amount of USDC 50,000.00. The Directors and officers of the Legal Entities shall not be liable for any actions taken in good faith on behalf of CoW DAO pursuant to this Agreement.
• Force Majeure. If the provision of the Services are affected by a Force Majeure event, this shall not 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, the relevant parties shall use their best efforts to settle the disagreement through good faith negotiation. 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.

[karolak]

It is a good idea to split the proposals. Now it looks much cleaner and understandable in terms of OPEX. I am sure it will pass this time and leave cow compensation for another topic after funding for the next year is secured.