Grant Application - Arcadia Finance integration rewards + audit

CoW Grants Program
1

Author(s)

Arcadia Finance Team (contact: @hodljoseh on telegram)

Thomas: https://x.com/ThmsSmts

Jasper: https://x.com/jasper_vp

Jose: @hodljoseh on telegram

Grant Description

We propose to integrate CoW Protocol into Arcadia’s automated asset management infrastructure, enabling both automations and end users to consistently receive decentralized, best execution pricing. This integration will offer users a seamless swap experience routed exclusively through CowSwap, ensuring trustless execution and reduced slippage across LP strategies.

This integration requires two main things:

  1. Audit – ensuring the security of our integration and smart contract infrastructure.

  2. Development Cost/Time – the engineering resources already invested in building the CoW Swap integration into Arcadia’s automated yield management layer.

We’re proposing to use this grant to cover only our audit cost for the integration. The development cost will be covered by the Arcadia team. In this way, the cost split is 50:50 between Cowswap and Arcadia.

About the integration:

This integration strengthens the CoW Protocol ecosystem by embedding CoW Swap directly into Arcadia Accounts and automated liquidity management. It will expand swap volumes, onboard new user flows into the protocol, and enhance the composability of CoW within DeFi automation frameworks. This integration will be exclusive to Cowswap only.

The smart contracts and flow for this integration are custom built to work with Cowswap’s FlashLoanRouter and CoWSettlement. This is why this integration is exclusive to Cowswap and won’t work with other aggregators.

Scope of the integration

In the short term we foresee the following features, using CoW Swap under the hood:

  • Automated compounding of staking rewards into LP positions.

  • Automatic repayment of debt of Arcadia Margin Accounts.

  • Automated execution of stop losses when certain price triggers are hit.

Type of Grant

Milestone-based

Milestones

Milestone Title Due date (weeks after acceptance) Funding request
1 CoW Swap integration beta test (onchain test end-to-end) 2 weeks $0
2 Smart contract audit completed 4 weeks $20,000
3 Public roll out with core automations (compounding of rewards into LP positions, repayment of debt of margin accounts) 8 weeks $0

Milestone 1

Tasks & Deliverables:

  • Complete smart contract integration with CoW Swap.

  • Onchain test end-to-end via draft deployed contract: Internal QA testing with automations executing via CoW routing

Outcome: Verified functional integration with CoW Swap routing.

Funding Request: $0

Milestone 2

Tasks & Deliverables:

  • Engage external auditor for CoW Swap integration contracts.

  • Resolve all critical and high issues flagged by audit.

  • Publish audit report publicly.

Outcome: Published audit report by auditor addressing all critical findings, if any

Funding Request: $20,000

Milestone 3

Tasks & Deliverables:

  • Deploy audited contracts

  • Enable Arcadia automations to route swaps via CoW Swap by default: compounding staked rewards, repaying debt in an Arcadia account.

  • Public announcement and onboarding of user strategies

Outcome: Production-ready deployment integrated with CoW Swap on Base, Unichain and Gnosis.

Funding Request: $0

Duration

Program commencement: Upon successful Snapshot approval.

Completion timeline: ~8 weeks.

Funding Request

Total Requested: $20,000 (in xDAI, COW, or a mix)

  • $20k for audit only

This funding request reflects the cost of security audit only

Gnosis Chain Address

0xBEB56fbEf3387af554A554E7DB25830eB7b92e32

Team Background

The Arcadia team has a background in building MEV bots and strategies, being the first one to create MEV strategies around NFTs back in 2021 and among the first ones to run long-tail arbitrage strategies in DeFi back in 2020. The team has been in crypto since 2017.

On the business side, the team has a background in venture capital and working at venture-backed startups.

Other Information

Arcadia Finance enables both professional market makers and everyday DeFi users to seamlessly earn yield from AMM liquidity positions across leading DEXs such as Uniswap and Aerodrome. With one-click deployment, best-in-class analytics, and automated strategies, Arcadia makes advanced liquidity provision simple and efficient. By supporting both virtual and concentrated liquidity, it unlocks sophisticated, capital-efficient strategies that were previously out of reach for most users

Traction on Base:

  • $13.5 million Total Value Locked

  • +8000 user Accounts

  • +$588M swap volume

  • +100,000 transactions

  • Integrations with Harvest, Superform, Aerodrome, Uniswap, Nexus mutual, OpenCover, Spectra, among others

Terms and Conditions

By submitting this grant application, I acknowledge and agree to be bound by the CoW DAO Participation Agreement and the CoW DAO Grant Agreement Terms.

NOTE TO COMMITTEE:

Please notify the Grantee of their reviewer and their steward in the thread and latest upon successful approval of the Grant on Snapshot

2 Likes
2

Hi, thanks for the grant application. As a quick question, do you have a repository handy that contains the contracts that would be subject to audit?

2 Likes
3

Hey, yes. You can check it out here asset-managers/src/cow-swapper at feat/swapper · arcadia-finance/asset-managers · GitHub

4

Hi,
Thank you for the repository link.

I kindly note that the contracts that you have linked are licensed BUSL. Please kindly be aware that the remit of the CoW DAO Grants Committee is limited to GPL / MIT per the CoW DAO Grant Agreement Terms.

Would Arcadia be open to changing / modifying the license of the contracts to GPL3.0-or-later or MIT ?

mfw

1 Like
5

yes, we can change the CoWswap contracts to MIT

6

OK, great. This was an initial blocker for consideration. Having said that, we have been discussing internally and are wondering if Arcadia would be open to a joint 50/50 financing of the audit associated with this grant, as opposed to the full amount. We view this as more appropriate for incentive alignment providing joint skin in the game (not just up-front skin in the game, but post-completion incentive alignment), and further we would sweeten the deal by aligning on a performance basis such that:

  • Milestone 1: First 1$ million in volume → 5,000 COW

  • Milestones 2: First $25 million in volume → 30,000 COW

  • Milestones 3: Additional $100 million in volume → 75,000 COW

  • Milestones 4: Additional $250 million in volume → 150,000 COW

This is in alignment with the RFP for Volume Based Integration.

mfw

1 Like
7

Understood. To clarify, we’ve already structured the grant application as a 50/50 joint initiative. This integration requires two months of engineering resources, which Arcadia will cover in full and will not seek reimbursement for, as well as the security audit cost. Our proposal is structured so that Arcadia covers 100% of the engineering expenses, while ideally, Cowswap covers 100% of the audit cost—resulting in a balanced 50/50 financing of the integration. I apologize if this was unclear in our initial proposal. That said, we’re open to adjusting the structure to an 80/20 split on the audit cost, where Cowswap (via this grant) would fund 80% and Arcadia would fund the remaining 20%

1 Like
8

Hi @jdotfinance,
Thanks, but we must kindly push back a little on this. The reason is that if we entertain post-facto accounting (we hadn’t entered into any agreement beforehand), this sets / establishes precedence that allows for projects to pitch grants and point to previous development costs as a means of negotiating up their position for grant funding - when there was no agreement to start off with.

Additionally with the way the funding is currently aligned, there’s no future incentive, so this is primarily the area where we seek alignment to ensure that the project is economically motivated into the future to continue and support the integration that the Grants Committee may end up subsidising.

Having said this, we are open to continuing to negotiate and would encourage that you reach out to us on Discord so that we can have more interactive communications. Primarily, I think it would be helpful to understand how the $20K was arrived at for smart contract audit (who is the auditor, has there been quotes, are they familiar with the CoW Protocol infrastructure etc).

mfw