Ethereum’s solver wars heat up as $19bn Barter acquires competitor Copium

Barter, a so-called ‘solver’ on Ethereum, has acquired the codebase of competitor Copium in a push to improve its transaction quality and capture a larger share of the red hot trade routing market.

Solvers compete to route trades from decentralised exchanges to offer users on other exchanges like CoW Swap or UniswapX the best prices. They operate behind the scenes and are rarely mentioned, but they’re one of the most critical components of DeFi infrastructure.

“Barter’s acquisition is less about scale and more about elevating execution quality,” Nikita Ovchinnik, co-founder and CEO of Barter, told DL News.

Integrating Copium’s strategy library and simulation frameworks with its own code will deliver gains in price improvement, reduce slippage, and enhance protection against toxic MEV, Ovchinnik said.

The firm declined to disclose the terms of the acquisition, but said it includes Copium’s routing codebase, back-testing libraries, and select orchestration modules.

The acquisition didn’t include Copium’s team members, who are moving in a different direction and will continue building independently, Ovchinnik said.

Big business

Barter is one of the biggest solvers on CoW Swap, having settled over $19 billion worth of transactions since January 2023, per onchain data.

CoW Swap is among the biggest decentralised exchanges, facilitating approximately $136 billion worth of trades since its 2021 launch.

Competition on the exchange is fierce. There are dozens of other active solvers, with the biggest ones, such as Rizzolver, Quasi, and Portus, also handling millions of dollars worth of trades every week.

“The teams behind the Barter and Copium have a consistent track record of shipping high-quality innovations,” Alex Marsh, head of growth at CoW Swap, told DL News.

“Ultimately, this will make CoW Swap an even better product that delivers even better outcomes for its users.”

CoW Swap works differently to most other decentralised exchanges and aggregators.

Instead of using liquidity pools to facilitate trades, like Uniswap, it uses a peer-to-peer system. Users submit trades and solvers like Barter compete to match buyers with sellers efficiently in a single transaction.

The main benefit of this system is that it prevents traders falling victim to negative forms of MEV, like sandwich attacks.

Sometimes solvers are able to work together. But more often than not they’re in competition with each other to offer the best prices and get picked by CoW Swap to settle trades.

There’s a big financial incentive. Solvers get to keep a share of the price improvement they offer to traders. So the better prices solvers can offer, the more money they make.

“Even incremental improvements in execution can yield millions of dollars in aggregate savings for traders each month, translating directly into higher realised value per transaction,” Ovchinnik said.

Reduced competition?

Barter’s acquisition of Copium should help it compete against other solvers. But with one fewer solver in the mix, the move also reduces competition.

Ovchinnik said this doesn’t hurt competition because solvers often specialise in routing specific types of trades, rather than attempting to win as generalists.

“Some teams excel at niche pairs, some win with best routes, others utilise their private liquidity to provide better prices,” he said. “Those specialisations win different order profiles, so a higher win-rate from our side doesn’t suppress competition.”

Barter will start testing new software that integrates Copium’s codebase within 60 days, with a broader rollout dependent on the new product’s initial performance and a security review, Ovchinnik said.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.