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FM-AMMs

The “Function-Maximizing” AMM is a novel AMM mechanism that tackles the shortcomings of the CF-AMM design and eliminates LVR. The FM-AMM batches trades together, executing all the orders in a batch at the same uniform clearing price. This price is such that the AMM “moves up the curve” with each trade. Since anyone can submit trades to the FM-AMM while its batch is open, competition between arbitrageurs guarantees that FM-AMM always trades at the correct, equilibrium price.

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CoW AMM

CoW AMM is a production-ready implementation of an FM-AMM that supplies liquidity for trades made on CoW Protocol. Solvers compete with each other for the right to trade against the AMM. The winning solver is the one that moves the AMM curve higher. CoW AMM pools are optimal for every token pair that is not stable-to-stable. Since volatility dictates the amount of LVR that takes place in any given liquidity pool, CoW AMM pools are most effective for volatile token pairs where arbitrage outweighs LP fees.

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Contract architecture

CoW AMM is built as a set of contracts that integrate natively with Balancer’s infrastructure and CoW Protocol’s solver competition:
  • BCoWPool: The AMM pool contract, which extends Balancer’s BPool. Each CoW AMM pool is a BCoWPool instance that holds liquidity and defines the trading function. It implements the IConditionalOrder interface from ComposableCoW, which allows the CoW Protocol watchtower to poll the pool for tradeable orders.
  • BCoWFactory: The factory contract used to deploy new CoW AMM pools. It creates BCoWPool instances with the correct configuration for CoW Protocol integration.
  • BCoWHelper: A helper contract for solvers. Given a pool and the current on-chain state, it generates valid order parameters that solvers can include in their settlement batches.
The end-to-end flow works as follows:
  1. Pool deployment — An LP deploys a new pool via BCoWFactory and adds liquidity.
  2. Watchtower polling — The CoW Protocol watchtower periodically calls each pool’s getTradeableOrderWithSignature (via the IConditionalOrder interface) to discover when the pool has a tradeable order.
  3. Solver queries — When a solver identifies a CoW AMM order, it can use BCoWHelper to compute valid order parameters that move the AMM curve higher.
  4. Batch settlement — The solver includes the CoW AMM order in its settlement batch alongside user orders, enabling coincidence of wants.
  5. Pool rebalances — After settlement, the pool’s reserves are updated and the AMM curve moves to reflect the new balances.
CoW AMMs are not based on Safe (the old architecture). They are native Balancer pools with direct CoW Protocol integration via the ComposableCoW programmatic order framework.

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Getting Started with CoW AMM

To facilitate easy liquidity providing, CoW DAO has partnered with Balancer to implement CoW AMMs into the Balancer ecosystem. LPs can use the Balancer app to LP direclty on one of over a dozen liquidity pools. In the next section, LPs can learn how to create their own CoW AMM pools for brand new assets either on Balancer or outside the platform.
Last modified on March 12, 2026