CoW Protocol raises $23 million and spins out from Gnosis DAO

CoW protocol, which underlines the decentralized exchange CowSwap, has raised $23 million via a token round, according to a release. The funds were raised as the project spins out from Gnosis DAO to become an entity in its own right.

The protocol raised $15 million in the stablecoin USDC in a round closed to specific investors, including Blockchain Capital, Cherry Ventures, and Ethereal Ventures. The remaining funds in ether (ETH), gnosis (GNO) and xDAI were raised from 5,000 members of its community, known affectionately as its "CoWmunity". 

CoW Protocol co-founder Anna George said this was done so that they don't exclude members of their community from the round who she said "contribute much more to [the] project than some VCs do."

The raise was completed via the launch of a decentralized autonomous organization (DAO) that spun out from an existing DAO: GnosisDAO.

A DAO is a decentralized structure that gives investors the ability to vote on proposals ranging from a protocol’s marketing efforts to a new product. Investors are able to vote by using the DAO’s native governance token. Recently, these governance tokens have been sold at the launch of a DAO in order to raise funds (such as for ConstitutionDAO).


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Spinning out from Gnosis DAO

CowDAO was able to spin out from Gnosis DAO by paying back 10% of the funds raised via this round.

“We have been working and building the CoW protocol for the last couple of years,” said George on the decision to launch a specific DAO for CoW. “But we decided that it makes sense now to become independent from Gnosis and launch our own token.” 

Along with difficulties in taking initiative in the token economics of CoW, she also noted that the size of Gnosis as a company made it difficult to build a community around CoW and that much of the branding was inconsistent with the “more serious” tone of Gnosis. 

With the fresh funding, George says CoW is working on a proposal that would facilitate faster voting processes and they are also adding another EVM-based network, with Polygon being the frontrunner. Due to the decentralized nature of the company, however, any such proposal has to be passed via a majority vote. 

Yesterday, a proposal was passed meaning that, as of Monday, the CoW governance token is tradeable via exchanges. 

About Author

Tom is a deals reporter at The Block covering venture capital, fundraises, fintech and M&A. Before joining, he was an editorial intern at the FT-backed platform Sifted where he reported on neobanks, payment firms and blockchain startups. You can reach him by email at [email protected] or Telegram @tommatsuda.