What is Trader Joe?
Trader Joe is an AMM that focuses on trading Avalanche (AVAX). This DEX, however, also has services related to lending and borrowing, liquidity pools, leverage trading, yield farming, NFTs, staking, as well as a launchpad. Overall, Trader Joe announces itself as one of the most exhaustive DEXs’s in the DeFi space.
The DEX was founded in 2021 by developers whose identity remains anonymous. The primary objective of the platform is to facilitate the trading of AVAX. Many of the Avalanche projects are modeled after other famous projects in the crypto space. For example, Pangolin and Zero Exchange, copy Uniswap’s model.
Trader Joe has also launched its native token, JOE. Users are rewarded with JOE for contributing to liquidity pools.
How does Trader Joe work?
Trader Joe, much like trading platforms such as dYdX or Sovryn, offers a good deal of services. Let’s see how each of these works.
Trading
The trading pairs option is the main focus of Trader Joe. The platform features a beginner-friendly user interface. Liquidity for trades is derived from pools supplied by Liquidity Providers. These providers can farm JOE. This acts as their incentive.
All trades carry a 0.3% fee. This comprises 0.25% distributed to liquidity providers and 0.05% distributed to the JOE token farm.
Liquidity pools
As mentioned, liquidity pools receive 0.25% of all trades. The liquidity pools contribute to the seamless trade between two cryptocurrencies. The users’ motivation to contribute to these pools involves the LP tokens. These are rewards for the liquidity providers. It represents their share of the entire pool.
Impermanent Loss is the risk that providers face. This represents the difference between the value of the withdrawal as compared to the value of the deposit. The loss is “impermanent” as long as prices return to their original value.
Yield farming
The yield farming process at Trader Joe is relatively standard. This involves depositing Liquidity Pool tokens to earn rewards in the form of JOE tokens. Users need to visit Trader Joe’s farming page and choose the pool to which they are contributing.
Staking
Staking on the platform involves using your JOE to earn xJOE, the main reward for staking on the exchange. As we mentioned, 0.05% of each trade goes into the xJOE pool. This, ideally, means that by holding JOE, each user can earn a higher quantity of xJOE. Finally, when a user trades xJOE back into JOE, they will have a greater quantity than when they started.
DeFi lending protocol
Banker Joe supports the lending protocol on Trader Joe. This is based on the Compound protocol. Tokens can be withdrawn at any stage, provided that the outstanding debt has been paid in full. The collateral value determines the borrowing limit, and users can improve this by adding more funds.
Trader Joe NFTs
The Joepegs Marketplace exists to support the Trader Joe NFTs. It is currently one of the largest NFT marketplaces in the Avalanche ecosystem.
Joepegs includes several interesting features related to auction settings, whitelisting, and presentation. There is also an artist-focused support page that offers information in real-time, as well as extensive NFT filters. Trader Joe is also launching its official NFT collection titled CLUB JOEPEGS.
Last updated
