Michaël van de Poppe - 23 March 2022
Trader Joe: The Best DEX on AVAX
There has been a lot of attention towards alternative Layer 1s in the past couple of months. Layer 1 refers to the underlying main blockchain architecture and most often a smart-contracts platform, like Ethereum. Some of the existing L1s have had large incentive programs to attract users and capital to their ecosystems.
One of those is Avalanche (token ticker: Avax). That launched their Avalanche Rush program of $180 mln back in early August. On that day the chain had a Total Value Locked (TVL) of ~$300 mln. At the time of writing, 13th of October, the TVL of Avalanche is sitting close to $6 bln. That is a 2,000% increase.
Not only did Avalanche grow, so did projects built on the chain. This post will highlight the largest Avalanche native project: Trader Joe. It is arguably the best DEX on Avalanche and has built a very supportive community in its time of existence.
What is Trader Joe?
Avalanche has been an operable ecosystem since the beginning of the year. During that time there was not a lot of activity on the chain and only a handful of active projects. Pangolin was one of the first decentralized exchanges on Avalanche and quickly developed as the go-to trading platform for Avax users. However, Pangolin struggled to stay innovative and failed to listen to the needs of their users. Ultimately, this led to the birth of Trader Joe near the end of June. Their launch was a reaction to the shortcomings of Pangolin.
Trader Joe overtook Pangolin in terms of TVL and daily active users mid-August. The Trader Joe achieved through their appealing UI/UX, improved yield farm products, and most importantly creating a story around Joe. Ironically, memes are very important in the crypto industry and most often grassroots memes can take projects to the top. As was the case for Trader Joe.
The platform gained full recognition on the 2nd of September, when it announced they raised $5 million in a strategic sale. Among the investors were Defiance Capital, Delphi Digital, and Three Arrows Capital. All very big names in the crypto industry and their investment in Trader Joe bolstered the position of the DEX in the Avalanche ecosystem even more.
Performance of Trader Joe
Early September, when we first wrote about Trader Joe in our exclusive discord group, the DEX TVL of Trader Joe was $540mln and that of Pangolin $330 mln. Now, almost a month later, the TVL of Trader Joe is sitting close at $1 bln, while Pangolin’s TVL decreased further to $230 mln. It also experienced a significant growth in volume that is currently hovering on a daily average of $200 mln.
The DEX also has its own token called JOE. It is a reward token for liquidity providers on the Joe platform and functions as a governance token. The latter allows token holders to vote on proposals of changes to be made on the Trader Joe protocol.
Similar to SushiSwap, you can stake JOE on the DEX and receive xJOE. In this model a portion of the fees (0.05%) generated on Trader Joe is redistributed to xJOE stakers. For a long time, stakers enjoyed around an average of 10-15% APY by staking JOE. The DEX was the only source of fee generation. However, recently Trader Joe introduced Banker Joe.
Trader Joe expanding to lending
Banker Joe is the name of the lending product on the Trader Joe platform. The product has been in the works for quite some time, but on 11 October it finally went live. The lending product lets users lend out idle tokens to earn yield and/or use idle tokens as collateral to borrow against.
The TVL of Banker Joe is already sitting at $600 mln, bringing the combined TVL of Trader Joe to $1.6 bln. The introduction of a lending product to the platform made Trader Joe more attractive to other users. The team already stated that they are working on leveraged yield farming. Combining their lending and yield farming product to a higher level. Additionally, a portion of the interest earned and liquidations on Banker Joe are also redistributed to xJOE stakers. In the past 24 hours the APY for stakers is almost 40%. A significant increase from the average APY of 16%.
The story of Trader Joe shows that you do not need to be a first mover in order to become one of the largest protocols in a certain category. By fair-launching their project and putting the community first, the team behind Trader Joe have put their DEX on the forefront of the Avalanche ecosystem. Many consider Trader Joe as the best DeFi project on the Avax blockchain.
There is no doubt that the Avalanche Rush program contributed a lot to the success of Trader Joe. However, innovation, great products, and memes were the key catalyst. For example, the recent launch of Banker Joe really sets Trader Joe apart from other DeFi projects in the Avalanche ecosystem. The expansion to lending opens up a lot of opportunities for Trader Joe. The team already revealed that they are planning to combine their DEX and lending services to offer leveraged yield farming to their users.
And all these things drive more users and capital to the Trader Joe platform. As more people are using Joe’s products, more fees are generated. These are then redistributed to xJOE stakers. The effort from Trader Joe has positioned the protocol to benefit from future adoption of the Avalanche ecosystem. It is also a great example on how anyone is able to participate in and benefit from innovation in the DeFi space.