> ## Documentation Index
> Fetch the complete documentation index at: https://docs.cove.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Cove Protocol

> The one-stop platform for earning onchain

<img className="block dark:hidden" src="https://mintcdn.com/stormlabs/qew6jsW71Sw-JZvn/images/headers/light-cove-protocol.svg?fit=max&auto=format&n=qew6jsW71Sw-JZvn&q=85&s=8411f611590036d57017f9f9157d2276" alt="Cove Protocol Light" noZoom width="1065" height="383" data-path="images/headers/light-cove-protocol.svg" />

<img className="hidden dark:block" src="https://mintcdn.com/stormlabs/qew6jsW71Sw-JZvn/images/headers/dark-cove-protocol.svg?fit=max&auto=format&n=qew6jsW71Sw-JZvn&q=85&s=6d28cb73d1bc11d5898cbf3ce46937f6" alt="Cove Protocol Dark" noZoom width="1065" height="383" data-path="images/headers/dark-cove-protocol.svg" />

### 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](https://www.gauntlet.xyz/).
* Earns \$1B+ in additional profit for LPs by eliminating [loss-versus-rebalancing (LVR)](https://a16zcrypto.com/posts/article/lvr-quantifying-the-cost-of-providing-liquidity-to-automated-market-makers/) using [Programmatic Orders](https://docs.cow.fi/cow-protocol/concepts/order-types/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](https://docs.cow.fi/cow-protocol/concepts/how-it-works/coincidence-of-wants).

### How does it work?

Cove aggregates deposits and rebalances periodically using [Programmatic
Orders](https://docs.cow.fi/cow-protocol/concepts/order-types/programmatic-orders).
When rebalancing, strategies may have a [coincidence of
wants](https://en.wikipedia.org/wiki/Coincidence_of_wants) (CoW) like ring
trades in [CoW Swap's batch
auctions](https://docs.cow.fi/overview/coincidence-of-wants).

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](https://blog.cow.fi/introducing-the-programmatic-order-framework-from-cow-protocol-088a14cb0375))
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](https://eips.ethereum.org/EIPS/eip-7540) 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.

<Tabs>
  <Tab title="Deposit USDC">
    Depositing into `coveUSD` is a two-step asynchronous process designed to align with the protocol's rebalancing cycle.

    <Steps>
      <Step title="Request Deposit">
        You deposit `USDC` into the protocol. Your funds are securely held and queued for inclusion in the next rebalancing event.
      </Step>

      <Step title="Claim coveUSD">
        After the rebalance is complete (typically within 24 hours), you can claim your `coveUSD` tokens, which represent your share in the vault.

        <Info>
          **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.
        </Info>
      </Step>
    </Steps>
  </Tab>

  <Tab title="Withdraw Funds">
    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.

    <Steps>
      <Step title="Request Withdrawal">
        You submit a request to redeem your `coveUSD` for `USDC`. Your request is queued for the next rebalancing event.
      </Step>

      <Step title="Claim USDC">
        After the rebalance, the protocol processes your request, and your `USDC` becomes claimable. This process typically takes around 24 hours.

        <Info>
          **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.
        </Info>
      </Step>
    </Steps>

    #### 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.

    <Note>
      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.
    </Note>
  </Tab>
</Tabs>

<Warning title="Rebalancing Window">
  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.
</Warning>

### What makes Cove unique?

Traditional AMMs are not well suited for portfolio or index construction
because they suffer from [loss-versus-rebalancing
(LVR)](https://a16zcrypto.com/posts/article/lvr-quantifying-the-cost-of-providing-liquidity-to-automated-market-makers/).
This is because of [toxic order
flow](https://insights.deribit.com/market-research/toxic-flow-its-sources-and-counter-strategies/):
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**

1. Expert strategies - earn best-in-class yields optimized by curators like
   [Gauntlet](https://www.gauntlet.xyz/).
2. Automation - no more manual management or rebalancing of positions to chase
   yield. Cove is the next generation of yield farming and portfolio management.
3. Earn the most yield - Cove protects you from loss-versus-rebalancing and
   common DeFi pitfalls like slippage, MEV, price impact, and external trading
   fees.
4. Fully collateralized - redeemable for a pro-rata share of underlying assets
   synchronously, or in the base asset asynchronously.
5. Less risk - No exposure to cross-chain or duration risk (outside of the
   rebalancing period).