> For the complete documentation index, see [llms.txt](https://docs.yodl.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.yodl.fi/strategy-and-execution/types-of-strategies/cow-construction-strategy.md).

# CoW Construction Strategy

The Coincidence-of-Wants (CoW) construction strategy is YODL’s first listed strategy, allowing Operators to earn **fee-backed revenue** without taking any directional exposure. In this strategy, cycle pairs offset trades into a self-contained CoW loop. The strategy operates in two stages:

**Pre-Trade:**\
The Operator quotes the same price for both buying and selling a token pair across connected order-flow venues, maintaining neutrality and avoiding speculative pricing.

**Post-Trade:**\
The algorithm identifies the optimal path to close the CoW loop based on the evolving state of fills, dynamically adjusting pairs and amounts in future quotes to neutralize exposure. (For a detailed explanation, see the [CoW Research Paper](https://arxiv.org/pdf/2507.10149).)

YODL hosts the [CoW construction logic](https://arxiv.org/pdf/2507.10149) and delivers proprietary identification and construction signals (pair, side, size, quote, expiry, batchId) to Operators. No models or code are provided.

***

**Execution Flow**

1. **Pre-Slash (if required)**
   * Pre-slash vault inventory into the [Orchestrator](/technical-components/smart-contracts.md#orchestrator-per-execution-vault-per-operator) to make liquidity instantly available for low-latency venues such as 1inch.
2. **Quote Submission**
   * The Settlement Relayer receives the Operator’s quote and relays it to the connected order-flow venue.
3. **Accounting Transaction**
   * When a trade request is received, the [Operator Binary](/technical-components/operator-binary.md) sends a signed accounting transaction authorizing execution.
4. **Finalization Transaction**
   * After taker tokens arrive in the Operator’s Orchestrator, a finalization transaction segregates the fees earned on that trade.
   * Finalizations can be batched per taker token but must occur before repayment.
5. **Repayment Transaction**
   * Repay each Curator Vault to restore the vault’s balance and close the execution cycle.

***

**Price Discovery**

By default, quotes use oracle-based price discovery through YODL-approved oracles. Operators may select from the governance-maintained list.

Operators may integrate custom or proprietary strategies alongside the CoW construction module.

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**Quick Reference Table**

| Transaction          | Trigger Event             | Constraint          | Purpose                           |
| -------------------- | ------------------------- | ------------------- | --------------------------------- |
| Accounting (txn-s)   | Quote accepted by OFV     | Immediate (≤ 500ms) | Authorize trade execution         |
| Finalization (txn-f) | Taker tokens received     | Before repayment    | Segregate operator / curator fees |
| Repayment            | Epoch end / vault closure | Before epoch end    | Restore the vault’s balance       |