CoW Protocol batches trades and auctions them between public and private liquidity sources. It aims to achieve better prices than other exchanges by matching trades via Coincidences of Wants (CoWs) and protecting from MEV.

CoW Protocol is a meta-DEX aggregation protocol that acts as a batch settlement layer on top of all other AMMs & DEX aggregators. CoW Protocol is a spin off from Gnosis DAO that launched in February 2021.

COW tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue).

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CoW Protocol

# CoW Protocol Gross profit Methodology

## 1. Overview

Gross profit measures the value retained by CoW Protocol after accounting for solver incentives. CoW Protocol's Gross Margin provides for Revenue minus Solver incentives. This metric represents Revenue (CoW Fees and revenue from partner integrations) minus Solver incentives / rewards (cost of revenue), representing the 'pure' Gross Margin assuming no losses on inventory exists during the collection process. Known data gaps include zero protocol fee revenue between January and September 2024 due to API data unavailability, and specific order gaps on Ethereum and Gnosis during mid-2024.

## 2. Data sources

- **Blockchain events**: `bill` function calls from `MevBlockerFeeTill` contracts, native token transfers, and ERC-20 `Transfer` events from COW token contracts, covering Ethereum, Gnosis, Arbitrum, Base, and 5 other chains
- **External data**: End-of-day price feeds for native assets and COW tokens
- **Scraper data**: Trade-level metadata and protocol fee arrays captured from the CoW Protocol API

## 3. Step-by-step calculation

### Component A: Revenue aggregation

- **Purpose**: Sum all protocol-retained income streams
- **Logic**: Protocol revenue is aggregated from five distinct streams. First, the protocol share of non-partner trade fees is extracted from trade-level data using a basis point heuristic where standard rates (0.3 bps or 2 bps) are retained. Second, the CoW DAO cut of partner fee distributions is identified from weekly native token transfers emitted by distributor contracts, where the cut is identified as the second consecutive transfer to the same DAO safe address. Third, 100% of RPC rebates are captured from native inflows to the solver payout address on Ethereum. Fourth, 50% of MEV blocker fees are parsed from `bill` function calls on `MevBlockerFeeTill` contracts. Finally, 50% of proceeds from MEV Blocker asset sales are included as one-off revenue events.

### Component B: Cost of revenue extraction

- **Purpose**: Capture the value of incentives paid to solvers for transaction execution
- **Logic**: Cost of revenue is calculated as the total value of COW token rewards distributed to solvers for transaction execution. These payments are identified via ERC-20 `Transfer` events from designated solver payout addresses. Gas reimbursements are explicitly excluded from this component to avoid double-counting with supply-side fees.

### Component C: USD conversion and final aggregation

- **Purpose**: Normalize all components to USD and calculate the final margin
- **Logic**: All revenue and cost components are normalized by decimal precision and converted to USD using end-of-day price feeds. Gross profit is calculated by subtracting the cost of revenue from total revenue. Daily values are aggregated using UTC day boundaries.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Revenue remaining after subtracting cost of revenue.

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Gross profit

Gross profit

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