Discover how multisignature wallets elevate token swaps for teams, DAOs, and institutions in this complete guide. Learn how Safe{Wallet} leverages its secure multisig setup and CoW Protocol to deliver seamless, cost-effective, and MEV-protected token trading. From performing straightforward swaps to employing advanced features like limit and TWAP orders, this guide walks you through each step, empowering you to execute secure and efficient trades with confidence.

A Complete Guide to Token Swaps with Multisig

Why Swap with a Multisig?

A multisignature (multisig) wallet is a digital wallet that requires multiple approvals before executing a transaction, rather than relying on a single signature. Using a multisig setup for token swaps is a powerful approach for teams, DAOs, and institutions that manage significant amounts of digital assets. By requiring consensus from several trusted parties, multisig provides enhanced security and collaboration, addressing common concerns around control, risk, and team coordination in financial transactions.

Key benefits of doing swaps with a multisig include:

• Enhanced Security: Multisigs require multiple approvals before any transaction can be executed. This added layer of security means that no single person can make a unilateral decision, reducing the likelihood of unauthorized actions and protecting against potential errors or malicious activity.

• Collaborative Control: Multisigs ensure that swaps execute only when a set number of team members agree, promoting team oversight and accountability. This process allows team members to review, verify, and align on each transaction, creating an approval process that strengthens internal collaboration.

• Risk Mitigation: By distributing transaction responsibility across multiple people, multisigs reduce the impact of individual errors or potential compromises, helping organizations maintain a secure environment for asset management.

This guide will walk you through the features of multisig-enabled swaps with Safe{Wallet} and show how they can support secure, efficient, and consensus-driven transactions for your team.

Introduction to Safe{Wallet} Native Swaps

Safe{Wallet} is a leading multi-signature wallet platform renowned for its robust security features and collaborative asset management capabilities. Widely adopted by teams, DAOs, and institutions, it provides a proven framework for managing digital assets through a consensus-driven approach, reducing risks associated with single-point control.

Building on this strong foundation, Native Swaps in Safe{Wallet} allow users to trade tokens directly within the wallet environment. This feature leverages the enhanced security of Safe’s multisig setup alongside the convenience of integrated swapping. Powered by CoW Protocol, Native Swaps deliver secure, cost-effective, and efficient token trading. This integration offers access to competitive pricing, gas savings, and improved safeguards against potential transaction exploits, all within Safe{Wallet}'s reliable ecosystem

Key Benefits of Using Safe{Wallet} Native Swaps

Ease of Use: Seamless Swapping Within Safe{Wallet}

Native Swaps allow you to trade assets directly within the Safe{Wallet} interface, eliminating the need to connect to external platforms. This setup makes swapping tokens faster, simpler, and more secure, as all trading activities remain within Safe's secure environment. Additionally, you can batch multiple transactions together in a Safe in one go, enhancing efficiency and saving time—something not possible with an Externally Owned Account (EOA) — for example, token approval and order submission transactions can be batched.

Optimized Pricing: Aggregated Liquidity for Better Rates

CoW Protocol can match trades peer-to-peer by finding coincidences of wants, where one user's sell order directly matches another user's buy order. This direct matching avoids using automated market makers (AMMs), thereby eliminating AMM fees and reducing slippage. Additionally, any trade matched against a CoW AMM pool is treated like a CoW, further enhancing price efficiency.

Access to Diverse Liquidity Sources:

Solvers in the CoW Protocol are not limited to on-chain liquidity. They can access and pool liquidity from centralized exchanges, private market makers, and even their own private inventories or others'. This means solvers can tap into off-chain liquidity sources to find better trading opportunities, providing users with improved pricing that might not be available through traditional DEX aggregation alone.

Batch Auctions and Bundling:

Through batch auctions, CoW Protocol groups multiple orders together, minimizing slippage and often achieving better prices. By pooling demand from several trades, Safe{Wallet} Native Swaps improve pricing efficiency, making each trade more cost-effective for users. Bundling transactions together in batches also saves network fees (gas), further reducing the overall cost of trading.

No Fees for Failed or Cancelled Transactions

One of the standout features of CoW Protocol is that users incur no fees for failed or cancelled transactions. This benefit removes the frustration and cost associated with transaction failures, providing a more user-friendly trading experience.

No-Fee Limit Orders and Multiple Limit Orders with One Balance

Unlike some platforms that charge fees for setting or cancelling limit orders, CoW Protocol offers no-fee limit orders. Additionally, users can place multiple limit orders using the same token balance. This means you don't have to lock up separate funds for each order, providing flexibility and efficiency in managing your trading strategies. For example, while platforms like 1inch may charge fees for these services, CoW Protocol keeps it cost-effective.

Surplus Generation: Getting More Than You Ask For

With CoW Protocol, users can sometimes receive more than they requested in a trade. This surplus generation occurs due to positive slippage and the protocol's unique ability to find better trading routes after providing a quote. Expert solvers may discover opportunities for improved pricing, resulting in users gaining additional value on both market and limit orders. While some platforms might offer surplus on market orders, CoW Protocol extends this benefit to limit orders as well, thanks to its batch auction mechanism.

Improved Prices Through Order Batching

Through batch auctions, CoW Protocol groups multiple orders together, minimizing slippage and often achieving better prices. By pooling demand from several trades, Safe{Wallet} Native Swaps improve pricing efficiency, making each trade more cost-effective for users.

MEV Protection: Safeguarding Users from Exploits

MEV (Maximal Extractable Value) refers to the potential profit that can be extracted by reordering, including, or censoring transactions within a blockchain block. Malicious MEV practices, such as sandwich attacks, exploit users' slippage tolerance for profit, leading to unfavorable trade outcomes.

CoW Protocol protects users from MEV in two main ways:

1. Solver Competition and Slippage Protection: CoW Protocol employs a competitive system where multiple solvers vie to provide the best possible price for users. Solvers compete by offering the highest surplus to users, ensuring that traders receive the best price available. This competition discourages solvers from exploiting users' slippage tolerance because if one solver attempts to do so, another solver can outbid them by offering a better price. As a result, users are protected from price manipulation and slippage exploitation, which are common indicators of sandwich attacks.

2. Solver Execution Risk and Commitment to Trade Prices: Once a solver wins the auction to execute a trade, they assume all execution risk associated with that transaction. This means that even if the solver's own MEV protection strategies fail, they are obligated to deliver the trade at the price they committed to in their winning bid. If market conditions change unfavorably, the solver may incur a loss, but the user will still receive the agreed-upon price. This commitment ensures that users are shielded from adverse price movements and potential MEV exploitation during trade execution.

Additional Protections:

Peer-to-Peer Matching (Coincidence of Wants): When traders' orders are directly matched peer-to-peer within the CoW Protocol (a coincidence of wants), there is no opportunity for MEV exploitation because the trade does not interact with external markets or AMMs. This direct matching eliminates intermediaries and potential points of attack.

Uniform Clearing Prices and Batch Auctions: CoW Protocol processes trades in batch auctions with uniform clearing prices. This approach means that all trades within a batch are executed at the same price, preventing individual transactions from being reordered within the batch. While the entire batch could theoretically be reordered within the blockchain, the uniform pricing mechanism reduces the risk of MEV exploitation among the trades included in the batch.

These mechanisms collectively provide robust protection against MEV, ensuring that users' trades are executed fairly and securely without the negative impacts of front-running, sandwich attacks, or other forms of transaction manipulation.

How to Use Native Swaps

What Is a Swap? A swap is the exchange of one type of token for another (for example, swapping ETH for USDC). Safe{Wallet} Native Swaps optimize these trades by sourcing liquidity from multiple decentralized exchanges (DEXes) and implementing protections against MEV attacks, ensuring more secure and efficient transactions.

How to Perform a Swap in Safe{Wallet}:

1. Open Safe{Wallet}: Navigate to the “Swap” section within your Safe{Wallet} interface.

2. Choose Tokens: Select the token you want to trade and the token you wish to receive.

3. Enter the Amount: Input how much of the initial token you want to swap. The interface will automatically display an estimated return for the transaction.

4. Review and Confirm Details: Carefully examine the transaction details, including gas fees, price impact, and other relevant information.

5. Execute the Swap: Confirm the swap. The transaction will then be processed using CoW Protocol’s batch auction system, which aims for optimal execution by finding the best available prices and routes.

Before approving you can view a detailed breakdown of all fees and estimated costs.

Limit Orders: Trading with Precision

Limit orders allow users to set a specific price at which they want to trade. This feature is valuable when aiming for a particular price level and willing to wait for the market to reach it. Recommended scenarios for limit orders include:

• Targeted Price Movements: When you expect an asset’s price to move favorably, limit orders let you capture that price without constant market monitoring.

• Price Control: Limit orders enable you to set a maximum buy or minimum sell price, avoiding trades at unfavorable price points.

How to Set a Limit Order in Safe{Wallet}:

1. Access Limit Order: In the “Swap” section, select "Limit Order".

2. Set Parameters: Define the desired price and the amount of tokens.

3. Set Expiration: Set an expiry time for the order.

4. Submit Order: Confirm the details and submit. The order will execute when market conditions match your specified price.

Your Open orders will be displayed on the right hand side with information on how close they are to executing and all other essential information.

Actionable Tip: Use limit orders in volatile markets or when aiming for specific price levels to maximize favorable trade outcomes.

TWAP (Time-Weighted Average Price) Orders: Minimizing Price Impact

TWAP orders break down large trades into smaller segments, executed over time, which reduces the impact on market prices. This approach is especially useful for:

• High-Value Transactions: TWAP can prevent large price swings that may occur if a significant trade is executed all at once.

• Long-Term Strategies (e.g., Dollar-Cost Averaging): TWAP supports DCA strategies by spacing out purchases, which can help smooth out price volatility.

• Volatile Markets: TWAP minimizes the risk of price impact by distributing trades over intervals, providing consistency.

Setting Up TWAP in Safe{Wallet}: Choose intervals and amounts for each segment of your transaction, which aligns with your strategy and reduces price swing risks.

1. Access TWAP Order: In the “Swap” section, select "TWAP Order".

2. Set Parameters: Define the total trade amount, duration, and trade intervals.

3. Review and Submit: Confirm the setup and submit. Trades will automatically execute over the specified time, reducing market impact and improving price stability.

Actionable Tip: Use TWAP for high-value trades, volatile markets, or long-term investing strategies to avoid significant price impacts.

Wrap-Up: Making the Most of Native Swaps

Safe{Wallet} Native Swaps offer a powerful combination of security, ease of use, and cost savings, especially when combined with multisig for enhanced collaboration and control. Advanced features like limit orders and TWAP allow users to trade with precision and confidence. Start by experimenting with small trades to become familiar with these tools, and explore Safe{Wallet}’s resources or follow Safe on social channels for more tips and updates​.