CoW DAO Addresses Surplus Shifting Concerns in CoW Protocol

According to Foresight News, CoW DAO has acknowledged an instance of surplus shifting that negatively impacted traders on CoW Swap while benefiting liquidity providers of CoW AMM. The CoW Protocol team expressed an unfavorable view towards surplus shifting, citing concerns over its potential to undermine user fairness. Surplus shifting is a known but rare issue, and when it occurs, CoW DAO actively penalizes solvers and compensates users. Upon completing the investigation, CoW DAO plans to take appropriate measures to address the issue. The specific transaction involved a CoW Protocol batch where a solver incorporated liquidity from the CoW AMM pool as part of its solution. In this scenario, the solver won the right to execute the batch, offering CoW Swap traders a worse price than expected while providing more surplus to the CoW AMM pool than anticipated. The solver's actions led to winning the batch execution rights in the solver competition.