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Beginner’s Guide to Trader Joe

This AMM DEX dethroned Pangolin to become the best on the Avalanche Network. Read on to find out and make some money out of it!

Not a day passes without the crypto ecosystem witnessing massive changes. With new protocols, cryptocurrencies, crypto assets, applications, networks, and platforms emerging at a rapid pace in the decentralized finance space, it is important to remain on top of things so that you know what best options are available to you for investing. 

Not staying updated with the latest projects in the DeFi space, you might miss out on some great ones. Just like you might’ve missed out on the Avalanche Network’s AMM DEX, Trader Joe.

For the crypto ecosystems, the role of AMM DEX (automated market maker decentralized exchange) projects has become very important because they have a fundamental operation within the decentralized finance space, and these projects can attach cash flow, liquidity, and users to come into the crypto ecosystem. 

Here's everything you need to know about this exceptional crypto project on the Avalanche Network!

What is Trader Joe?

Trader Joe is a popular AMM-based decentralized exchange built on the Avalanche blockchain. AMMs or automated market maker projects on Avalanche are almost new since the network itself is just a little over a year old, having been launched in September 2020 itself.

Most of the projects on the Avalanche blockchain currently are modeled after many other famous projects that exist on Ethereum and the Binance Smart Chain, including Pangolin and Zero Exchange (modeled after Uniswap), or Olive and Lydia Finance (modeled after Pancakeswap).

The decentralized exchange was launched on June 29, 2021, and has plans to offer DeFi lending and leveraged trading in the future. The product is community-driven and is powered by its own governance token, JOE. The platform allocates fees collected from liquidation and gives it back to the users by staking JOE tokens to get xJOE rewards.

Despite all of the features the platform offers, the primary function of Trader Joe is to work as an exchange platform for the users of the Avalanche Network. People can use this decentralized exchange to swap AVAX as well as other cryptocurrencies.

To make this possible, of course, the platform needs liquidity. This means that the tokens need to be provided by the people and available for use. And to do that, the platform allows all visitors to become liquidity providers by letting them buy a certain share of these tokens and then permitting Trader Joe to exchange them. 

For each liquidity pool, you give some tokens and an equal amount in value of the JOE token. For carrying out this action, you will get rewarded with more JOE tokens. It won't be incorrect to say that the JOE token is a reward for providing liquidity to the Trader Joe platform. This is quite similar to the way a bank needs capital to operate. 

The more people who want to exchange tokens on Trader Joe, the higher will be the number of transactions that take place, and higher will be the rewards for the liquidity providers.

And the more people who want to provide liquidity on trader Joe, the higher will be the supply. Unfortunately though, the reward would end up being lowered. 

The liquidity or money you provide gets moved around at least several hundred times in a day, and every time it does, it earns you a share of transaction fees. That said, the safest way to earn a sustained passive income on Trader Joe is by simply staking JOE and just allowing it to compound and grow.

Even though Trader Joe (JOE) has been built quite recently, with it being not too long since the platform went live, it has already surpassed Pangolin (PBNG) to become the AMM DEX with the largest total value locked (TVL) in the Avalanche ecosystem. Total value locked means the number of assets that are presently being staked in the protocol.

What is the JOE Token?

JOE is the native token of Trader Joe. It is also the governance token that rewards its holders with a share of the exchange revenue. 

Some of the key features of the JOE token are as follows:

Token Name: Trader Joe

Ticker: JOE

Blockchain: Avalanche

Token Standard: ARC-20

Token Type: Utility, Governance

Max Supply: 500,000,000 JOE

Total Supply: 133,413,633 JOE

Circulating Supply: 71,961,457 JOE

JOE tokens are issued through liquidity provider rewards. There were no pre-sales, seed investors, or venture capital allocations. However, Trader Joe has declared that it is well aware that its ambitious plans require expenditure, and therefore, 10 percent of JOE tokens are allocated for potential strategic investors.

The amount of JOE is gradually going down year by year as the release schedule moves along. The schedule began on July 3, 2021, and will come to an end on January 3, 2024.

According to this release chart of JOE, there is no visible spike in time, which is a good sign as this indicates that there won't be any sudden increase in supply, which may cause pressure on the market price.

With nearly half of the project's tokens being allotted for liquidity generation, the most important thing when the project decides to issue tokens on a fixed schedule is for the user demand to grow and increase.

The JOE token will primarily be used for two purposes - governance and as a reward for token holders. Let us quickly discuss how each of these pans out:

Using JOE for Governance

When it comes to governance, Trader Joe allows holders of JOE tokens to vote on community proposals. Proposals will be decided using a feature known as JOEVOTE. This includes:

  • Each JOE token in the JOE-AVAX pool has a value of 2 JOEVOTE
  • Each JOE held through xJOE tokens is equal to 1 JOEVOTE
  • Each JOE token is worth 1 JOEVOTE

Using JOE as a Reward for Token Holders

This can include farmers, stakers, and liquidity providers. When you stake your JOE tokens, you are effectively exchanging your JOE for xJOE. For every swap that takes place on Trader Joe, there is a 0.05% fee that has to be paid. This is sent to the xJOE pool. Over a period of time, you will always be able to earn more JOE by holding xJOE tokens. 

To get JOE, users can join Liquidity Mining or Staking JOE to receive JOE tokens as a reward.

How to Earn on Trader Joe?

As we looked at how to buy the JOE token on the Coin98 crypto exchange, let us look at how you can start earning or trading on Trader Joe through the Coin98 mobile wallet. This is available for both Android and iOS users.

Note: Just because we are using the Coin98 mobile wallet doesn’t mean that you should use it too. Feel free to use your favorite mobile wallet that is supported on Trader Joe.

The first thing you need to do if you want to start earning from Trader Joe is to create an Avalanche wallet on the C-Chain. Since Trader Joe is an AMM built on the Avalanche blockchain, you will need to have an Avalanche C-Chain wallet, known as AVAX-C ARC20, to begin using this.

Once you have installed the Coin98 wallet, you can follow the steps below to create an Avalanche C-Chain wallet, or if you want to, you can restore an Avalanche C-Chain wallet from other platforms as well to Coin98 wallet.

If you are already a Coin98 wallet user, you should import multi-chain wallets once again to become updated with the wallets available on Avalanche C-Chain, along with other integrated blockchains on the latest available version, automatically. 

On the Trader Joe website, regardless of whether you are using AVAX or USDT, you can transfer them all to your Avalanche (C-Chain) wallet. Trader Joe makes use of AVAX (C-Chain) for the gas fee, so in order to start earning on Trader Joe, you need to have some AVAX (C-Chain) in your account.

In order to carry out a trade on Trader Joe, you have to have the native AVAX tokens to pay for gas and buy other tokens on the chain. It is important to make a note of your X-Chain address. Your C-Chain address is the same as your Ethereum or BSC wallet address. X-Chain is for AVAX token transfer from the crypto exchange to DeFi, while C-Chain is for DeFi. 

How to Buy AVAX on Trader Joe?

AVAX is available on many crypto exchanges. For example, we use Binance. In markets, you can search for AVAX. There are many pairs to buy AVAX from, including AVAX/USDT, AVAX/BUSD, AVAX/BTC. After purchasing the required AVAX, go to your wallet page.

  • Click on Withdraw, find, and click AVAX.
  • Click on network and select AVAX. It is crucial to make sure that you do not choose BEP20 (BSC).
  • Enter your wallet address.
  • Enter the amount of AVAX tokens and click withdraw.

Once you have the required amount to trade, proceed to the Trader Joe website.

The exchange on trader Joe is where you can trade one token for another. It is a simple swap interface where you just need to select the two tokens you want to exchange.

How to Trade Tokens on Trader Joe?

Step 1: Go to the Trader Joe trading Page at https://traderjoexyz.com/#/trade

Step 2: Unlock your Avalanche wallet. You can find this at the top right side of the screen.

Step 3: Select the tokens that you want to trade and enter the amounts.

Step 4: Check your details once again and then click on Swap.

Step 5: You will see a popup come up asking you to confirm the details. Click on Confirm Swap. You might need to click Approve first. This is to approve Trader Joe to execute the trade for you.

Step 6: Confirm the transaction in your wallet.

Step 7: Now you are done. You can now view the transaction in the Avax Explorer.

The liquidity provided to the exchange comes from Liquidity Providers (LPs) who stake their tokens in pools. In exchange, they get liquidity provider tokens, which can also be staked to earn JOE tokens on the farm. When you make a token swap (or trade) on the exchange, you will pay a 0.3% trading fee. This is broken down as follows:

  • 0.25% - this is paid to liquidity pools in the form of a trading fee for the liquidity providers
  • 0.05% - this is sent to the JOE token farm

How to Stake on Trader Joe?

Step 1: Go to the Stake page at https://traderjoexyz.com/#/stake.

Step 2: Connect and confirm your wallet.

Step 3: Navigate to the Trader Joe dashboard and select the Stake tab. 

Step 4: On the left-hand side, enter the desired amount of JOE tokens and click on 'Approve.'

Step 5: You will receive the xJOE tokens in your wallet.

Step 6: In the central panel, you will see 'XJOE Balance' and 'Staked JOE.'

  • XJOE Balance: Your staked deposit
  • Staked Joe: Staked deposit + share of the fees
  • You can view how this has been calculated by seeing the stadium box placed beneath 'Stake Joe'

Now that you have staked some tokens, it would be useful to learn how to unstake them as well. So here’s how you do it:

Step 1: On the same page look towards the left hand side, and click on Unstake.

Step 2: Enter the amount you want to Unstake in the balance input and select 'Approve'.

Step 3: You will receive your original staked JOE tokens, along with your share of JOE token rewards from the fees.

How to Earn JOE Token Rewards from Yield Farming?

Step 1: Go to the farming page on trader Joe website at https://traderjoexyz.com/#/farm.

Step 2: Connect and confirm your wallet. 

Step 3: Search for the Pool you want to enter Tokens into, for example, AVAX + JOE.

Step 4: Then, go to the Farm page and select the same Farm you entered in the pool (AVAX + JOE)

Step 5: You are now viewing the 'Manage Farm' page.

Step 6: This contains the Farm details, including Liquidity, Pool Weight & APR

Step 7: On the right-hand side of the page, enter the amount of LP tokens you want to deposit and then deposit. 

Step 8: Confirm the transaction in your wallet. 

Step 9: You are done with the process, and you can now start earning $JOE rewards from the Farm!

Now that you’ve learned how to farm on Trader Joe, let’s take a look at how you can harvest your rewards and unstake!

  • JOE rewards get updated every second.
  • To receive your JOE token rewards, click on the Harvest button. 
  • To Unstake your LP Tokens, navigate to the right-hand side of the page. Click on 'unstake' at the top of the panel.
  • Now, go to the Pools page and find the corresponding Pool.
  • Remove your tokens from the Pool.
  • You will now have your original tokens back.

How to Add Liquidity to Liquidity Pools on Trader Joe?

Before we talk about how you can add liquidity to liquidity pools on Trader Joe, let’s take a look at how they work.

Trader Joe charges a fee of 0.3% for all trades, out of which 0.25% is added to the liquidity pool of the token pair that was traded on. A liquidity pool is a pool of tokens consisting of two tokens, for example, AVAX and JOE tokens. This pool is what allows users to exchange or trade between the two tokens automatically. 

Users can also earn a share of the trading fees by depositing a pair of tokens into the liquidity pool, also known as adding liquidity. They will receive a liquidity pool token in exchange. This token represents their share of the liquidity pool.

By adding liquidity, you will earn 0.25% of all the trades on this pair that are proportional to your share of the liquidity pool. Fees that are added to this pool will accrue in real-time, and you can claim by withdrawing your liquidity. 

However, it is important to keep in mind that providing liquidity is not without risk since you are being exposed to impermanent loss (IL). Impermanent loss is the difference that you lose between the holding tokens in an AMM and holding them in your wallet. But then, if the prices of the two tokens revert back to the same prices when you had added the liquidity, you will not suffer any impermanent loss. 

Now that you have a fair deal of understanding about liquidity pools on Trader Joe, it is time now to talk about how you can add liquidity to them.

Step 1: Go to the Pools page at https://traderjoexyz.com/#/pool. On the Pools page, you will find many pools to join. You simply need to click a pool to enter. 

Step 2: Enter the amount of the tokens you would like to deposit and then enter the amount. The ratio of tokens needed will get automatically filled.

Step 3: Approve the transaction. In some cases, you may need to approve twice for each token.

Step 4: Confirm the transaction in your wallet.

Step 5: Click on Supply to deposit the tokens. Check all the details and confirm.

Step 6: You are done with the transaction. You can click 'View on AVAX Explorer' to see your transaction details. You will be able to view the LP tokens in your wallet.

Now, what if you need to remove liquidity? Here are the steps to do that:

Step 1: In the Pool detail page, click on the Remove tab.

Step 2: Select the amount you want to withdraw from the liquidity pool. Click on Approve. You may need to approve the transactions in your wallet.

Step 3: Click on Remove.

Step 4: Check the details and click on Confirm.

Step 5: Confirm the transaction in your wallet.

Step 6: And you are done. You can click on 'View on AVAX Explorer' to see your transaction details. You should see the withdrawn tokens in your wallet now.

FAQs

How to Buy JOE from Crypto Exchanges?

You can also buy JOE tokens from other crypto exchanges. For example, if you want to buy JOE through the crypto exchange Coin98Exchange, here are the simple steps to follow.

  1. Go to the website exchange.coin98.com
  2. You need to have a Coin98 Extension Wallet in order to make any transactions on the website. 
  3. Once you have connected your wallet, select Pangolin.
  4. To choose the trading pair, search for JOE. 
  5. Enter the amount of JOE you want to swap.
  6. Adjust the gas fee, and click on Approve.

How Does Trader Joe Work?

The unique feature of Trader Joe's is that it brings together decentralized exchange and lending and leveraged trading, which helps promote liquidity and also attracts more money into the project. 

When you come to the DEX section, Trader Joe is one of the very first in the crypto ecosystem to plan on executing a limit order to overcome the weakness of decentralized exchanges in terms of price slippage. However, it still remains to be seen if Trader Joe is able to successfully achieve this target or not. If they are able to, then they will be able to make a dramatic mark in the DeFi space.

As mentioned above, Trader Joe is a decentralized exchange. The primary responsibility of the platform, as a DEX, is to provide swapping and trading services. However, at the same time, Trader Joe also offers many other basic DeFi features like yield farming, staking, and lending. In addition, there is a new feature of the project called Zap, which allows users to switch to Tokens LP in just one click.

We’ll discuss these features as well as how you can use them in a bit. For now, let's talk about another important aspect of the project. While it may sound shocking, Trader Joe has not had a Fair Launch event. This means that they did not presell the tokens for raising or increasing investment; most of the JOE tokens were allocated for liquidity.

Is Trader Joe a Good Investment?

There are undoubtedly many advantages to investing with Trader Joe. These advantages include the product integration of utilities for users, the limit order that makes the project stand out, and the lending and leverage mechanism as well.

The project also has a great team, new investors, and there are a lot of opportunities lined up for the Avalanche (AVAX) ecosystem. The Ethereum DeFi space is still unable to solve the problems with transaction speed and gas fees. This is bringing many alternatives such as AVAX.

Trader Joe is today the leading decentralized exchange in the Avalanche ecosystem, which has great potential for growth. It is definitely going to play an essential role in the development of this ecosystem in the coming months.

If Avalanche continues to grow swiftly as it has been in the last year and becomes a major player in the market, we can expect that Trader Joe will also achieve the same position as many of the pioneering AMM DEXs like Sushiswap (SUSHI) and Uniswap (UNI) did within the Ethereum ecosystem.

Are There any Risks Involved with Trader Joe?

There is no doubt that the Trader Joe team has put together a great marketing, branding, and community-building plan. However, as the exchange and lending spaces online continue to evolve, Trader Joe might not necessarily remain at the cutting edge always. This is because they have not yet proven their ability to introduce uniquely innovative products in the DeFi space. 

Nevertheless, there is also no doubt that Trader Joe will be able to take the best parts of the new products and continue to introduce them to their vast, loyal, and growing community.

Another risk involved with Trader Joe is that Avalanche may not remain as hot as it has been in recent times. There are several Ethereum Layer 2s that are already offering a similar value proposition as Avalanche in terms of fast transactions and cheap fees, but also have the added benefit of depending on more battle-tested networks like Ethereum for security.

As these L2s continue to get cheaper and evolve, it is possible that the bigger users will start to prefer them to rely on a newer consensus mechanism in Avalanche.

Before You Go…

Trader Joe is an outstanding AMM DEX project on the Avalanche network. With the many strengths in the Trader Joe project, there is great potential for it to grow and reach even further. 

However, Trader Joe's token release is planned according to its fixed schedule within the next two years. So the big concern of the project lies in attracting users and keeping them within the customer base. 

With the strong and rapid development of decentralized finance and the crypto world in general, the competition between projects is sky high already. So there is tremendous pressure on Trader Joe to maintain product quality while continuing to expand its features and utilities to attract customers. 

It remains to be seen if Trader Joe is able to sustain itself amidst so much competition and hold its own.

Sherwood P

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