How to use Trader Joe – Trade, Lend and Earn

Trader Joe is the leading Decentralized Exchange (DEX) and DeFi Hub on the Avalanche network (C-Chain). In addition to the AMM DEX, where someone can trade, provide liquidity, farm, and earn rewards, Trader Joe offers lending & borrowing capabilities as well as a launch platform. This article is a comprehensive step-by-step guide on how to use Trader Joe. More specifically, the guide is focused on the trading and lending capabilities of Trader Joe.

Prerequisites

To use Trader Joe, you will need to have your Metamask wallet set up on Avalanche C-Chain. In addition, you will require to have some AVAX tokens in your wallet in order to use Trader Joe on Avalanche C-Chain. These tokens are needed to pay gas fees for each transaction.

Metamask is not the only non-custodial wallet you can use. Other non-custodial wallets you can use include Coinbase Wallet, Rabby, Coin98, WalletConnect, etc. However, for this guide, we use Metamask.

To set up Metamask, you can follow the guides below:

NetworkNative TokenNetwork ProfileMetamask Guide
Avalanche C Chain$AVAXAvalanche NetworkHow to set up Metamask on Avalanche
Guides for setting up your Non-custodial wallet

Finally, the other pre-requisite is to have the tokens you want to swap or provide as collateral in your wallet. If you’re going to exchange USDC for JOE, CRA, or any other ARC20 token, you need to have USDC in your wallet (in addition to AVAX that you need for paying gas fees).

How to Trade on Trader Joe

How to trade on Trader Joe -  How to swap on Trader Joe
How to trade on Trader Joe

Step 1: Navigate to Trader Joe and connect your wallet

Use the following link to navigate to Trader Joe’s Trade page: https://traderjoexyz.com/trade. Click on the upper right of the screen to connect your Metamask or any other non-custodial wallet.

Step 2: (Optional) Configure your trade settings

On the upper right corner of the swap section, is the settings button. Once you click on the button, the pop-up, as shown on the screenshot above will appear.

On the setting pop-up, you will find the following four configurations you can change:

  1. Slippage Tolerance: Slippage allows you to specify the difference in the price you are willing to accept. On the screen above, I specify that I am willing to accept a 0.5% change in price. Therefore, in the worst-case scenario, I will receive 0.5% fewer tokens, compared to the one shown on Trader Joe’s screen. This is required, since the price can change by the time your transaction is executed, due to trading activity on the exchange. Your transaction will revert if the price changes unfavorably by more than this percentage.
  2. Transaction Deadline: Since Trader Joe operates in a Decentralized Environment, your transaction is not executed immediately. When you send your transaction to the network, it goes into what is called a “Transaction Pool”, and remains pending until a validator executes it. Based on transaction activity, gas fees, etc, your transaction can remain pending for a long time. Here you can specify, how long you are willing to wait for the network to execute your transaction. Your transaction will revert if it’s pending for more than the specified amount.

Overall, the default settings are the most appropriate for general use. Change these settings if and only if you know what you are doing. Make sure that you switch the settings back to the default once you finish with risky transactions. Otherwise, you might end up executing the wrong transaction and accepting slippage that you shouldn’t be accepting.

Step 3: Configure your trade’s parameters

In the middle of the screen, you will find four sections associated with your trade that you need to fill up. 

  1. From the first drop-down, select the token you want to sell.
  2. From the second drop-down, select the token you want to buy.
  3. On the first text box, specify the amount of tokens you want to sell. 
  4. On the second text box, specify the amount of tokens you want to buy.

Regarding steps 3 and 4 from above, you need to perform only one of them. If you specify the number of tokens you want to sell, Trader Joe will calculate and show you the number of tokens you should expect in return. This calculation is done based on the Automated Market Maker algorithm built in the exchange. On the other hand, Trader Joe will calculate and show you the number of tokens you have to sell if you specify the number of tokens you wish to buy.

Step 4: Execute your swap (or trade)

To execute your swap, click “Swap.” Metamask will prompt you to sign the transaction. If it’s the first time trading on this pair, you might need to execute two transactions:

  • Approve: Authorize the protocol to use the tokens from your wallet
  • Swap: Perform the actual trade/transaction

Once the transaction is completed, Metamask and Trader Joe will notify you.

Below the Swap Button, you will find some additional information associated with your swap. This includes:

  • Minimum received: That’s based on the slippage configuration we describe above. This indicator tells you what is the minimum amount of tokens you will receive, otherwise, the transaction will revert.
  • Price impact: This indicator tells you the impact that your trade has on the price. In the case shown in the screenshot above, your trade will cause the price to change by 0.03%.
  • Liquidity Provider fee: The fee that will be deducted from your trade and be paid to liquidity providers.
  • Route: The route shows you how your swap is going to be executed. The exchange is based on Liquidity Pools and each pool is associated with one pair. Sometimes the exchange doesn’t have one pool for each pair and rather re-routes the trades through multiple liquidity pools to exchange some token pairs. For example, in the case shown in the screenshot above, there’s no liquidity pool of AAVE.e/USDC, but there are liquidity pools for the pairs AAVE.e/WAVAX and WAVAX/USDC. The exchange uses the combination of the two pools to allow the trading of AAVE.e/USDC.

How to provide liquidity on Trader Joe

Step 1: Find a liquidity pool

How to  provide liquidity on Trader Joe - Find a liquidity pool
Find a liquidity pool

To find a liquidity pool on Trader Joe and become a liquidity provider is fairly straightforward. First, you need to navigate to the pools section (https://traderjoexyz.com/pool) and then connect your wallet as shown in step 1 of the previous section.

On the Pool page of Trader Joe you will find a list with all existing liquidity pools for which you can provide liquidity. You can also create your own liquidity pool if you wish, from the create pool page.

On the liquidity pool list you will find 5 different columns that provide information associated with each pool:

  • Name: The name of the liquidity pool which indicates the two tokens (pair) correspond to each liquidity pool.
  • Liquidity: Indicates the amount of liquidity that has already been deposited in each pool. Usually the higher the liquidity the healthier the pair, as it leads to lower slippage when traders trade on the pair.
  • Volume (24H): The transaction volume on each pair/liquidity pool. Usually, the higher the transaction activity the higher the fees collected on the pool.
  • Fees (24H): The transaction fees collected in the pool within 24H, based on the transaction activity.
  • APR: Indicates the return on the liquidity provider’s capital deposited in the pool. The APR stands for annual percentage return. APR is calculated based on the fees collected in relation to the capital deposited in the pool. The higher the fees collected the higher the APR, the higher the capital deposited in the pool the less share of the fees each liquidity provider will receive. The fees are distributed to liquidity providers based on their share of the pool. For example, if your capital corresponds to 1% of the overall capital deposited in the pool, then you will be receiving 1% of the fees collected on that pool.

To proceed, select the pool that you wish to provide liquidity for.

Step 2: Select the amount to be deposited

How to use trader Joe - How to provide liquidity
Liquidity provision on Trader Joe

Once you select a pool, you will transition to the Trader Joe’s “Manage Pool” page. On this page, you will find some stats similar to the ones you’ve seen on the previous page as well as some additional information associated with your position in the pool (if you have one).

Assuming that you are here to provide liquidity for the first time, the important section is on the right-hand side. Similar to the swap screen, select the two tokens (pair) you wish to provide liquidity for. In the screen above, PTP and AVAX are selected. Then, select the amount of tokens you wish to deposit. By selecting the amount of one of the two tokens, Trader Joe will calculate and show you the amount of tokens you will have to deposit for the other one. The calculation is based on the current price of the tokens on the exchange, which is defined by the AMM formula.

Step 3: Deposit your tokens in the pool

In the final step, click “Supply”. A pop-up will appear showing you for the final time the information associated with the liquidity you are about to deposit. If everything is fine, then click “Confirm Supply”. Metamask will prompt you to sign the transaction. Once you do that, then the transaction will be executed and Trader Joe will notify you.

The first time you provide liquidity for a specific pair, you will see an “Approve” button on top of the “Supply” button. Similar to the swap case, by approving you authorize the protocol to use the tokens from your wallet.

How to remove liquidity from Trader Joe

How to remove liquidity from Trader Joe - How to use Trader Joe
How to remove liquidity from Trader Joe

To remove your tokens from the pool is fairly easy. Navigate to the pools section and select the liquidity pool you want to remove your funds from. The manage page will show up and then:

  1. Navigate to the remove section as indicated in the screenshot above.
  2. Select the amount of LP (liquidity pool) tokens you wish to withdraw. It is easier to specify the amount using the percentage buttons.
  3. Click “Approve” and “Remove”. Sign the transaction on your Metamask wallet.

How to farm on Trader Joe (Yield Farming)

Step 0: Become a liquidity provider.

That’s more of a prerequisite. In order to use the yield farming capabilities of Trader Joe (or any other AMM), first, you have to become a liquidity provider for the corresponding pool. To do so, follow the previous section on “How to provide liquidity on Trader Joe

Step 1: Select a farm / pool

How to use Trader Joe - How to Farm on trader joe - Trader Joe Yield Farming
How to farm on Trader Joe

First, navigate to the farm section of the platform either by clicking on the Farm tab on top of the screen or directly using the following link: https://traderjoexyz.com/farm.

On top of the screen, you will see the Top Farms on Trader Joe. You can select one from there, or alternatively, you can select one from the main section below.

In the main section below you see all the farms currently available at Trader Joe. You can filter by different parameters or search for a specific farm. Each farm is represented as a Card providing the following information:

  • Liquidity: Amount of funds deposited in the farm
  • Pool APR: That is the base APR (Annual Percentage Yield) that someone earns from the fees by just becoming a liquidity provider.
  • Farm APR: That’s the reason you are here. This is the additional APR that you can earn by depositing your funds on the farm. Your overall APR is equal to the Pool APR plus the Farm APR.
  • Your Stake: Once you deposit funds in a farm, then you will be able to see here your stake in the farm.
  • On the right top corner of each card, you also see whether the farm is eligible for a “Boost” or the type of reward given to the farm. For example, in the screenshot above AVAX/USDC farm is eligible for a “Boost”. You can get a boost if you stake your Joe token and accumulate veJoe. The Booster further increases the APR of the pool. In the second farm shown in the screenshot above, AVAX/sAVAX, on the top right corner it shows “JOE+QI”. It implies that the farming rewards are given in $JOE and $QI tokens.

Step 2: Select the amount of LP tokens

How to use Trader Joe - How to farm on Trader Joe - Yield Farming
How to farm on Trader Joe

Second, select the amount of LP tokens you wish to deposit. LP tokens are the tokens Trader Joe gives you which represent your share in the liquidity pool.

Step 3: Deposit your LP tokens for farming.

Finally, just click “Approve”. This will allow you to then stake your tokens. Once the “Approve” transaction goes through, then a “Stake” button will appear. Click “Stake”, sign the transaction, and you are done. Congratulation, you are now a Yield Farmer on Trader Joe.

How to unstake your tokens from Trader Joe’s farms

That step is fairly easy. Move to the Manage Farm page, as shown in the screenshot above. Then, switch to “unstake”, select the amount of LP tokens you wish to withdraw, and “unstake”. To fully withdraw your liquidity, then you need to withdraw your tokens from the liquidity pool as well. Therefore, follow the steps on how to remove liquidity, to fully remove your funds from the pool.

How to Lend on Trader Joe – Banker Joe

Step 1: Select the pool you wish to deposit your funds

How to Lend on Trader Joe - Banker Joe - How to use Trader Joe - Selecting a pool
Selecting a pool

First of all, you will need to navigate to Banker Joe’s either from the “Lend” tab on the top of the page or go directly to https://traderjoexyz.com/lending. At the bottom left of the screen, you can find all assets that are available for lending out. To select a pool just click on the corresponding type of asset.

For each asset you will see the following information:

  1. Token: The name of the asset
  2. Deposit APY: The expected annual percentage yield on each pool. Rewards are paid and compounded in the currency of each corresponding pool.
  3. Reward APR: Additional Rewards that might be provided by Trader Joe to incentivize market participation. This can be paid in JOE or AVAX.
  4. Deposits: The amount of funds deposited in each pool.
  5. Collateral: Once you deposit some funds to a pool a button will appear. Using this button, someone can select the assets he or she is willing to use as collateral for borrowing funds from the platform.

Step 2: Define amount of funds to be deposited

How to use Trader Joe - How to use Banker Joe - How to lend on Trader Joe
How to deposit funds – Banker Joe

Once you select the pool you wish to deposit your funds, Trader Joe will take you to the Deposit page as shown above. Just define the amount of funds you wish to deposit as indicated on the screenshot above.

Some additional information shown on this screen includes:

  1. Util Rate: Percentage of funds lend out in relation to the total funds available in the pool.
  2. Collateral Factor: Each asset has a collateral factor, that represents the amount of funds, as a percentage, you can borrow out for using this type of asset as collateral. For example, if you deposit 1 AVAX as collateral, you can borrow out funds equal to 0.75 AVAX, given a collateral factor of 75%.
  3. Collateral Value: The value of your collateral in that specific pool.
  4. Liquidation ratio: If the token price of your underlying collateral falls below this price, you may be liquidated.

In a liquidation event, your collateral is taken and sold in the market to repay the debt. This process is automated by Smart Contracts. To avoid a liquidation event you need to make sure that your debt position is healthy. You can always add more collateral in case the value of your collateral drops. For more information, you can always visit Trader Joe’s Docs here.

Step 3: Deposit your funds

Finally, once you define the amount of funds you wish to deposit, the “Enter Amount” button will turn to “Deposit” button. Click on the button to deposit your funds and sign the transactions using your wallet.

Step 4: How to withdraw your funds

If you decide to withdraw your funds at any point in time, go to the Redeem tab as indicated on the screen above. The page is similar to the one shown above. Select the amount of funds you wish to withdraw, send and sign the transactions.

How to Borrow on Trader Joe – Banker Joe

Step 0: Ensure that you have funds deposited as collateral

In order to borrow funds from Banker Joe, you first need to deposit some funds that can be used as collateral. To do so, follow the previous section process and make sure that you enable a type of asset to be used as collateral.

Step 1: Select the type of asset you wish to borrow

How to use Trader Joe - How  to borrow from trader joe - selecting a type of asset to borrow.
Selecting a type of asset to borrow

First, you will have to choose the type of asset you wish to borrow. Similar to the previous section, you can do that on the main page of Banker Joe. In the bottom right of the page, you will find all funds that are available on the platform for borrowing. You can select an asset by just clicking on the corresponding line.

Some important information presented for each asset includes:

  1. Token: The name of the asset.
  2. Borrowing APY: The interest paid when borrowing this type of asset from Banker Joe.
  3. Reward APR: Sometimes the platform might give rewards for borrowing, in order to incentivize market participation on the platform.
  4. Borrowed: Amount of funds borrowed from the pool.
  5. Liquidity (USD): Available liquidity for each type of asset.

Step 2: Define the amount you wish to borrow

How to use Trader Joe - How to borrow on Trader Joe - How to borrow on Banker Joe
How to borrow funds – Trader Joe

Once you deposit some funds for collateral and select the type of asset you wish to borrow, Trader Joe will take you to the “Borrow” page as shown above. Just define the amount of funds you wish to borrow from the pool as indicated with the number 2 on the screenshot above.

Some additional information shown on this screen includes:

  1. Util Rate: Percentage of funds lend out in relation to the total funds available in the pool.
  2. Collateral Factor: Each asset has a collateral factor, that represents the amount of funds, as a percentage, you can borrow out for using this type of asset as collateral. For example, if you deposit 1 AVAX as collateral, you can borrow out funds equal to 0.75 AVAX, given a collateral factor of 75%.
  3. Collateral Value: The value of your collateral in that specific pool.
  4. Liquidation ratio: If the token price of your underlying collateral falls below this price, you may be liquidated.

Step 3: Borrow funds

Finally, once you define the amount of funds you wish to borrow, the “Enter Amount” button will turn to “Borrow” button. Click on the button to borrow funds from the protocol, and sign the transactions using your wallet.

Step 4: How to Repay your Debt

To repay the debt, go to the “Repay” tab, as indicated by the screenshot above. The process steps are similar to the borrowing process. You specify the amount of debt you wish to repay and sign the corresponding transactions.

Wrapping Up

Trader Joe has a very simplistic and elegant design, that makes it extremely easy to use the various functionalities of the platform. If you ever decide to use Avalanche network, either for DeFi, GameFi, or any other purpose, you will most likely also need to use Trader Joe. Trader Joe is currently the biggest Decentralized Exchange on Avalanche C-Chain when it comes to available liquidity.

Aris Ioannou
Aris Ioannouhttps://coinavalon.io
Aris created Coinavalon with the purpose of helping the average person navigate the decentralized web. Aris has been passively in the space since 2017 and full time since late 2020. Before Coinavalon, Aris worked as a Business & IT Architect in the financial services sector. Aris holds an MSc in Advanced Computing from Imperial College London, a BSc in Computer Engineering from University of Cyprus and currently pursuing an MBA degree from CIIM.

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