Cove Protocol
The one-stop platform for earning onchain
What is the Cove Protocol?
Cove pairs off-chain intelligence with on-chain automation to deliver curated 1-click DeFi vaults that earn higher, safer yield.
- A simplified way to earn onchain that hides the complexity of best-in-class management.
- Easy access to sophisticated strategies run by experts like Gauntlet.
- Earns $1B+ in additional profit for LPs by eliminating loss-versus-rebalancing (LVR) using Programmatic Orders.
- Better execution when internal trades are matched offchain by Cove’s solver and settled without leaking value, like ring trades in batch auctions.
How does it work?
Cove aggregates deposits and rebalances periodically using Programmatic Orders. When rebalancing, strategies may have a coincidence of wants (CoW) like ring trades in CoW Swap’s batch auctions.
Cove maximizes the volume of CoWs using linear programming. This is done by considering the current/target protocol level allocations off-chain. When there are matches, trades occur without losing value from price impact, slippage, fees, or MEV. Any external trades are routed through CoW Swap (which now supports programmatic orders including TWAP via their Programmatic Order Framework) to ensure the best execution and capture positive slippage.
Cove uses the ERC-4626 tokenized vault standard and ERC-7540 Asynchronous ERC-4626 Tokenized Vaults to combine diverse yield sources. The coveUSD vault, for instance, takes USDC deposits and allocates them across a diversified portfolio of high-quality, yield-bearing stablecoins to generate returns.
Deposits & Withdrawals
Cove provides flexible, asynchronous options for moving funds in and out of the coveUSD vault. This model is a core feature designed to protect LPs from value leakage by batching transactions.
Depositing into coveUSD is a two-step asynchronous process designed to align with the protocol’s rebalancing cycle.
Request Deposit
You deposit USDC into the protocol. Your funds are securely held and queued for inclusion in the next rebalancing event.
Claim coveUSD
After the rebalance is complete (typically within 24 hours), you can claim your coveUSD tokens, which represent your share in the vault.
Automated Claiming: This step can be handled automatically for you by our non-custodial off-chain infrastructure. You can also manually claim your tokens at any time.
Depositing into coveUSD is a two-step asynchronous process designed to align with the protocol’s rebalancing cycle.
Request Deposit
You deposit USDC into the protocol. Your funds are securely held and queued for inclusion in the next rebalancing event.
Claim coveUSD
After the rebalance is complete (typically within 24 hours), you can claim your coveUSD tokens, which represent your share in the vault.
Automated Claiming: This step can be handled automatically for you by our non-custodial off-chain infrastructure. You can also manually claim your tokens at any time.
You have two options for withdrawals, allowing you to choose between receiving USDC or a mix of the vault’s underlying assets.
Asynchronous USDC Withdrawal
This is the standard withdrawal method that returns USDC to you.
Request Withdrawal
You submit a request to redeem your coveUSD for USDC. Your request is queued for the next rebalancing event.
Claim USDC
After the rebalance, the protocol processes your request, and your USDC becomes claimable. This process typically takes around 24 hours.
Automated Claiming: This step can be handled automatically for you by our non-custodial off-chain infrastructure. You can also manually claim your tokens at any time.
Synchronous Pro-Rata Redemption
For immediate access to your funds, you can redeem your coveUSD for a proportional share of all the assets currently held within the vault.
For example, if the vault holds assets like sUSDe (Ethena) and sfrxUSD (Frax), a pro-rata redemption would instantly give you a mix of these assets. This option is available at any time except during a rebalance.
The Cove Protocol pauses operations for a daily rebalancing window that typically lasts 15 minutes. During this period, deposits, claims, and withdrawals are temporarily unavailable. The rebalancing process may retry up to two times if needed, potentially extending this window up to 45 minutes.
What makes Cove unique?
Traditional AMMs are not well suited for portfolio or index construction because they suffer from loss-versus-rebalancing (LVR). This is because of toxic order flow: all trades execute at worse-than-market prices.
Cove proposes an innovative new approach that eliminates LVR and offers the best onchain execution. Internal trades avoid slippage, MEV, price impact, and external trading fees. External trades route through CoW Swap which also protects from MEV and captures positive slippage.
Key Differentiators
- Expert strategies - earn best-in-class yields optimized by curators like Gauntlet.
- Automation - no more manual management or rebalancing of positions to chase yield. Cove is the next generation of yield farming and portfolio management.
- Earn the most yield - Cove protects you from loss-versus-rebalancing and common DeFi pitfalls like slippage, MEV, price impact, and external trading fees.
- Fully collateralized - redeemable for a pro-rata share of underlying assets synchronously, or in the base asset asynchronously.
- Less risk - No exposure to cross-chain or duration risk (outside of the rebalancing period).