Grant Application: Concentrated liquidity CoW AMM + Rehypothecation-adapter

CoW Grants Program
5

Hi,
Sorry for the delays in response, things have been busy with Devcon and some time off.

Thanks for the detail submission. I too share some of the concerns in regards to those mentioned by @middleway.eth as well as some additional:

  1. Solver support is very, very difficult. Even with adaptors, getting solvers to support these kinds of instruments is very difficult and represents a high degree of risk that this project itself, while perhaps getting built, may remain very ineffective (worst case, receives on usage). For concrete research on this aspect, see [research] Calculating CoW AMM Trade Envy and Potential Missed Surplus.
  2. CoW AMMs, or FM-AMMs per the research paper, are hypothesized to be most beneficial on unstable pairs (i.e. pairs whereby the potential MEV risk is high, and therefore benefit from being contained within a batch auction). Therefore, I’m unsure about the potential benefit for this writ large in the CoW Swap ecosystem, and would like to see some weigh in from @AndreaC or @harisang from the solver team as to its potential benefits (or if they would indeed be limited).
  3. The methodology that has been outlined with regards to the pre and post hooks is sound, but does require very careful handling in order to make it effective. There are also potential gas concerns surrounding this (which in effect would act as a tax on pool, and therefore present some minimal TVL requirement in order for this to be sufficiently amortised). Getting some visibility into the team’s capability of enacting this is critical in order to determine the feasibility of the grant.
  4. The requested funds are, IMO, very much on the high side - especially with no previously completed grants for us to be able to objectively assess capabilities.

In general, I think it would be appropriate to

  1. Have weigh in from the solver team / mechanism team about the hypothesized benefits of concentrated liquidity.
  2. Divide the grant into multiple pieces, primarily informed by (1)
  3. Revised funding requested taking into account goal alignment between the grantee and CoW DAO (for such a large grant request, to request no $COW is somewhat misaligned IMO).

mfw78