Avalanche Ecosystem DEX+ Lending Program Trader Joe
Trader Joe is a one-stop trading platform on Avalanche. It offers trading and lending features, and combines them to offer leveraged trading.
The Total Volume Locked (TVL) of Trader Joe is currently $2.823 billion and the TVL of the Avalanche Protocol is currently around $10 billion. According to CoinGecko and data, Trader Joe is ranked 10th among DEXs and 2nd in the Avalanche Protocol Ecosystem.
Normally, if you wish to become a liquidity provider but you do not have the corresponding two tokens, you will need to convert them separately before providing liquidity.
In contrast, the Zap feature provided by Trader Joe supports converting tokens into the two tokens needed for liquidity at once and adds liquidity.
A 0.3% transaction fee is charged when trading tokens on Trade Joe.
0.25% of this fee is used for the liquidity pool mining bonus.
The other 0.05% is used for the xJOE pool mining bonus.
xJOE has a stablecoin-like feature on Trader Joe. When pledging JOE, it can be converted to xJOE at a fixed exchange rate to avoid unpredictable losses due to price fluctuations.
Trader Joe sends a commission of 0.05% for every transaction fee (0.3%) to the xJOE staking pool. This commission is used to repurchase JOE tokens on a regular basis (currently once every two days). This means that for users who hold JOE for a long time and mine it, it will be more profitable to use the xJOE pool for mining to get more JOE tokens.
According to the official disclosure, after the lending feature is launched, some fees will also be used for the xJOE staking pool.
Lending Feature Banker Joe
Banker Joe is a decentralized lending protocol built on the Trader Joe platform which was officially launched on October 11, 2021.
Banker Joe provides investors with the ability to carry out the lending of whitelisted assets, enabling the deployment of flexible DeFi investment strategies on the extremely fast, low-cost Avalanche network.
First you need to deposit the supported tokens on the Lending page on the home page of the website.
Then the platform will provide a receipt, for example, if the user deposits AVAX, he/she will receive jAVAX as the corresponding receipt.
The interest will increase over time (similar to xJOE). When the asset is withdrawn, jAVAX needs to be returned and then you will receive the principal along with the interest.
Collateralizing and Lending
In addition to making deposits, users can also carry out collateralization and lending.
For example, a borrower can provide ETH to a jETH contract and then borrow AVAX from a jAVAX contract. The amount of AVAX the borrower can borrow is determined by the collateral factor of the ETH. If a borrower collateralizes 1 ETH and the collateral factor of ETH is 65%, then he can borrow 0.65 ETH worth of AVAX.
Liquidation Mechanisms and Rates
Liquidation may occur if market prices suddenly fluctuate and cause the value of the collateral to be less than the value of the loan. Banker Joe uses Chainlink as the oracle. In addition, liquidation may also occur if the total APY deposited < total APY lent over a period of time. More information about APY can be found online. A positive APY means that the interest of the deposits is sufficient to cover the interest of the loans, otherwise there is a risk of liquidation.
Liquidation Bonus: When liquidation occurs, 8% of the liquidated assets will be used for liquidation bonus, part of which will be allocated to xJOE’s liquidity bonus.
Collateral Factor: It is the influence factor of collateralizing a certain asset to make loans, similar to Loan to Value (LTV). For example, if you collateralize 100 AVAX, you can lend 75 AVAX worth of tokens, as calculated according to 75%.
Lightning Transaction Fee: Lending transaction fee is 0.08%.
Reserve Factor: The Reserve Factor is a risk reserve product that is applied as a percentage of the accrued interest and is retained as a reserve fund.
For example, if AVAX has a reserve factor of 20%, then 20% of all accrued interest goes into the reserve fund of that market and the rest is paid to the provider. The purpose of the reserve fund is to be able to insulate the entire protocol from losses in the event that liquidation does not recover enough of the debt assets.
In addition to this, 2.8% of the liquidated collateral is also used for the reserve fund.
The chart below shows the current supported project collateral factor and reserve factor.
Total Volume: 500,000,000 tokens
Liquidity Providers: 50%
Potential Strategic Investors: 10%
Token release will be based on the release curve, starting on July 30, 2021 and ending completely on January 3, 2024.
For mining rewards
For lending and collateralization
Participation in governance via voting
Team cash out (less pre-release, lower possibility)
Contract security risk (has already been audited by HashEx)