As the world of decentralized finance (DeFi) continues to evolve, platforms must adapt and innovate to stay ahead of the curve. TraderJoe is doing just that with its recent tokenomics revamp, expansion into the BNB chain and Arbitrum through its integration with LayerZero, and the introduction of new liquidity strategies. These changes are redefining TraderJoe’s value proposition, providing a clearer use-case, and capitalizing on new opportunities in the emerging multichain landscape. TraderJoe has already become popular for its playful art style and smooth platform operations on Avalanche. With its fixed supply cap in conjunction with these new features, the value of the JOE token and TraderJoe platform as a whole has never been higher.
Multichain Expansion: Bringing JOE to BNB and Arbitrum with LayerZero
TraderJoe is taking its native token, JOE, to new heights as it becomes a multichain token. As the DEX goes live on Arbitrum and BNB, JOE will be bridged across these chains, opening up new possibilities for its token holders. This multichain expansion will undoubtedly strengthen TraderJoe’s position in the DeFi ecosystem and attract even more users to its platform.
With the direct integration of LayerZero into the platform, JOE is now truly multichain. During the Arbitrum airdrop, it took <1 minute to bridge JOE between the Avalanche C-Chain and Arbitrum despite the overwhelming traffic on the chain. LayerZero is one of the leading “omnichain” interoperability protocols that allows dApps to build across multiple blockchains in a trustless, efficient manner. It greatly simplifies moving tokens between chains and provides liquidity providers easy ways to move between pools on different chains. For more information on LayerZero you can check out their website here: https://layerzero.network/ .
JOE Tokenomics Updates: sJOE, veJOE, and rJOE
TraderJoe’s tokenomics updates play a crucial role in enhancing the platform’s value proposition and improving the overall user experience. These updates focus on the platform’s modular staking system, providing new utilities and opportunities for holders of sJOE, veJOE, and rJOE tokens.
sJOE tokens provide stakers with a share of trading fees accrued on the DEX. With the launch of Liquidity Book V2.1, sJOE stakers will benefit from fee sharing on the V2 AMM, in addition to the existing V1 AMM fee sharing. Furthermore, sJOE staking will be available on Arbitrum and BNB, in addition to Avalanche, making it a multichain staking option – more chains = more fees!
This update enhances the utility of sJOE tokens and expands their scope to a wider user base. Every single swap incurs a 0.05% fee, which is used to purchase stablecoins that are distributed to JOE stakers (who received sJOE for doing so). At the time of this writing there is nearly $55million in JOE tokens staked in the sJOE pool. As platform use grows the value of these rewards will increase as well.
Liquidity Strategies: Basic and Advanced
TraderJoe has introduced a variety of liquidity strategies that can be deployed using the platform’s Liquidity Book AMM. These strategies are split between basic and advanced, catering to users with varying levels of expertise.
Liquidity strategies play a significant role in maximizing yield generation and enhancing capital efficiency for users providing liquidity on TraderJoe’s Liquidity Book AMM. These strategies can be tailored to meet individual goals and adapt to market conditions. Here, we will elaborate on the basic and advanced liquidity strategies available on TraderJoe’s platform.
Basic Strategies
- Curved This strategy is ideal for calm markets and offers high capital efficiency. However, it comes with an increased risk of impermanent loss (IL) and requires constant rebalancing around the current price for maximum effectiveness.
- Spot – Concentrated This strategy is perfect for stablecoin pairs, offering very high capital efficiency. The drawback is a significant risk of IL if the price leaves the designated range. It can be used in volatile pairs to capture the most fees, but at the expense of higher IL risk.
- Spot – Spread This strategy offers high capital efficiency but comes with a high risk of IL. It is recommended to monitor this position daily, especially in volatile markets like AVAX-USDC.
- Spot – Ultra Wide This strategy provides more capital efficiency compared to standard x*y=k AMMs but has the lowest capital efficiency among all other strategies. It requires users to define their exact range using Spot and deploy liquidity in multiple transactions, which may not be gas-efficient for smaller liquidity provisions.
- Wide This strategy has a lower risk of IL and is ideal for users who do not want to monitor price action regularly. It offers reduced capital efficiency compared to other strategies but still performs better than x*y=k exchanges.
- Bid-Ask This strategy captures market volatility and allows users to DCA in and out of positions. However, it is riskier than other strategies and requires constant rebalancing to stay effective.
Advanced Strategies
- Ranged Limit Orders Users can place single-sided, one-bin spot liquidity limit orders outside the current price. Once the price reaches these limits, liquidity will be converted from one token to another.
- De-peg Bets By combining two spot shapes above and below the current price, users can earn fees during minor depegs in both directions.
- Dollar Cost Average While Earning This strategy combines a one-sided bid-ask shape with uniform distribution to allow users to buy tokens at lower prices while earning fees from swaps around the current price.
- Gradual Ladder Orders By layering multiple spot uniform shapes on top of each other in one direction, users can gradually scale in and out of positions with market movements.
- Sell / Buy Walls Combining normal and uniform shapes allows liquidity providers to form liquidity “walls,” making the liquidity deeper on one side of the price while maintaining exposure if the price moves in the opposite direction.
These liquidity strategies offer users a range of options to suit their individual goals and risk tolerance. It is essential to understand the potential risks and rewards of each strategy and monitor positions closely to maximize yield generation and minimize impermanent loss.
TraderJoe has been a staple on Avalanche for quite some time, peaking at over $4 a token during the last bull run. With the customizations available within the Liquidity Book AMM users are able to provide liquidity with however much or little risk they wish to have. Each strategy has pros and cons, but with the fee structure and platform expansions, JOE is here to stay. The fixed supply will ultimately serve to provide upward price pressure as the platform grows in these new ecosystems. CoinBusters has been following JOE for quite some time. Check out our first article on it here https://www.coinbusters.io/most-recent-micro-joe-on-avalanche/
