What is Trader Joe?
Trader Joe is the ultimate DeFi hub on Avalanche. Whether you are an average Joe at crypto, or a DeFi degen, Trader Joe is the place to be! The DEX derives its value from the sheer number of financial operations you can make on the protocol. From swaps to NFTs, Trader Joe makes it easy to put your crypto at work.
Trader Joe also has a token, called $JOE. It is a governance token and a reward incentive for staking. Its price is tightly correlated to the number of JOE tokens in circulation and the number of protocol users.
Community members that hold JOE tokens, will be able to raise a proposal, rally support for that proposal and then initiate a binding, on-chain vote to ratify the proposal and have the proposal implemented. JOE Governance will initially be used to determine tokens pairs that will be added to the Liquidity Book. Any JOE holder can participate in the governance process as the DEX doesn't require KYC.
Governance will not be able to vote on new quote assets or market configurations of new liquidity pools. This will be decided by the core team to ensure that only healthy and viable markets are opened.
Because the fees on Avalanche are cheap, Trader Joe enjoys $100M+ in liquidity. Furthermore, the team decided to allocate all trading fees towards LPs and stakers. This approach invites more user participation leading to healthy liquidity for the protocol. Recently, Trader Joe has decided to go multi-chain and deploy the DEX is on Arbitrum and BNB Chain. As a result, JOE stakers and LPs will earn trading fees across all deployed blockchains.
Trader Joe hasn't been hacked to date. This is an important milestone for a DEX that captured $2.5B in TVL at its peak.
How does Trader Joe work?
Trader Joe started out as a fork of Uniswap V2, and has since added a suite of new services that closely trail the ones existing on Ethereum i.e concentrated liquidity, NFT trading, and more. If you've interacted with DEXs like Uniswap and SushiSwap, you will find the interface of Trader Joe very familiar.
Trader Joe Trading
The most popular service is trading. On Trader Joe, users can find the most popular trading pairs for native Avalanche tokens, as well as wrapped version of tokens on other chains. Liquidity for trades is derived from pools supplied by Liquidity Providers. With a clean and simple user interface, users can swap their tokens with minimal slippage. As the largest DEX on Avalanche, Trader Joe boasts $100M+ in TVL, with 50 trading pairs available.
Trader Joe Liquidity Pools
Liquidity pools are the blood of every decentralized exchange. On Trader Joe, liquidity providers collectively receive 0.25% of all trades.
The users’ motivation to contribute to these pools involves the LP tokens. This basically acts like a receipt and proof that you contributed your tokens to the liquidity pool, and you will use these LP tokens to swap back for your deposited tokens once you are ready to withdraw from the pool. This is standard across all DEXs.
Trailing Uniswap, Trader Joe has come up with their own implementation of the concentrated liquidity concept. To explain how concentrated liquidity on trader Joe works, let's see how traditional liquidity pools work.
In the previous versions, the pool buys and sells tokens at all prices, including when they approach 0 and infinity. This is very convenient for traders, as they always have a place to sell and buy. However, many coins trade at particular levels most of the time. Therefore, spreading liquidity evenly along all possible prices becomes very capital inefficient.
Banker Joe Lending
Banker Joe is Trader Joe's lending protocol based on the Compound protocol. Banker Joe offers investors the ability to lend or borrow against whitelisted assets, enabling them to increase their buying power without selling the underlying asset.
How to make money on Trader Joe?
The mechanics of making money on Trader Joe are the same as on other DEXs. All you need is some spare crypto and some AVAX for transaction fees. Because the transaction fees on Avalanche are cheap, trading opportunities and strategies are much easier to apply.
Trader Joe Swaps
Swaps are useful for capitalizing on arbitrage opportunities, or simply changing one crypto asset for another. Trader Joe charges a 0.3% trading fee, whenever you make a swap.
To make a swap on Trader Joe, follow these steps:
1. Open the Trader Joe app
2. Click on the "Trade" tab at the top of the window
3. Select the two tokens you would like to swap and the amount
4. Click "Swap"
5. Approve the transaction
6. Profit!
The trading engine automatically calculates the amount of tokens you can receive. Make sure you check the pool liquidity before swapping. The interface will notify you about the trade impact. Usually, the lower the liquidity, the higher the trade impact.
Trader Joe Liquidity Pools
As an LP on Trader Joe, you can earn passive income from providing liquidity to one of the 200+ liquidity pools. The only requirement is that you deposit 50/50 of the token pairs. In exchange, you will receive an LP token that accrues the trading fees happening inside the liquidity pool.
To provide liquidity on Trader Joe, follow these steps:
1. Open the Trader Joe app
2. Click on the "Pool" tab at the top of the window
3. Select the desired pool
4. Click into the Pool to enter the Pool page
5. Add your Tokens by selecting quantities
6. Approve the transaction
7. Profit!
In return for depositing tokens to a pool, you will receive a "JLP Token" you can further deposit into one of the farms to earn extra yield (on top of the trading fees) in the form of $JOE tokens.
To farm tokens on Trader Joe, follow these steps:
1. Open the Trader Joe app
2. Click on the "Farm" tab
3. Locate the Farm you wish to deposit your Tokens into
4. Enter the amount of LP tokens you wish to deposit
5. Approve the transaction
6. Profit!
The advantage with yield farming is that you can harvest your gains at any time and it won't affect your underlying LP position. Simply press the Harvest button and any pending rewards, will be added directly into your wallet.
Trader Joe Staking
sJOE provides stakers with a share of trading fees accrued on the DEX. For every swap on Trader Joe, a 0.05% fee is charged and accrued by the protocol, this is converted into USDC and then distributed to the sJOE Pool every 24 hours. Staking sJOE is highly accessible as it can be withdrawn at any time, without penalties.
To stake JOE, follow these steps:
Price Prediction for Trader Joe — Can it hit $1000?
Buying and hodling JOE — the native token of Trader Joe— is one way of potentially making money on Trader Joe.
By looking at its current price, it’s natural to think about the chance of JOE hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the JOE token by analyzing its tokenomics. JOE’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} JOE tokens being in circulation today, that means a price of {PRICE} per JOE.
How did we come to that calculation? It’s quite easy, the price of a JOE token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each JOE coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of JOE at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for JOE to hit that price.
At a price of $1000 per token, that means the current market cap of JOE would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. JOE’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} JOE which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of JOE? Taking into account the current price of a JOE token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. JOE coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a JOE token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the JOE protocol fully diluted market cap.
These are all crucial details to know when calculating if JOE can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of JOE depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some JOE to your portfolio, the most trusted places to get some are Binance and Coinbase.