Trader Joe is Fastest-Growing DEX After Shift to Uniswap v3-Like Model

Decentralized exchange Trader Joe is growing faster than its counterparts in 2023 thanks to a shift to a Uniswap v3-like model.

The DEX’s JOE token has more than doubled in the past two weeks to hit $0.57 as of Mar. 29. It’s up over 10% in just the past 24 hours.

JOE Price. Source: The Defiant Terminal

Volume for the exchange isn’t far behind — Trader Joe has processed $609M in transactions in the past week, which represents a 28% jump compared to the previous seven-day stretch.

The DEX ranks fifth among all exchanges in terms of weekly volume, according to DeFi Llama, a data provider, and is growing faster than all DEXs in the top five this year.

In the depths of a bear market, any kind of momentum is noteworthy. Zooming out, Trader Joe has proved to be one of the more successful projects of 2023 — daily volume bottomed below $10M daily toward the end of 2022, but has averaged well over $50M in the latter half of March.

Trader Joe 6=month volume. Souce: DeFi Llama

A combination of factors is behind the momentum. For one, Trader Joe launched a new model for users to provide liquidity, called Liquidity Book in November, and has progressively been adding tradable tokens to the feature since then.

“It’s been a grind but people are coming around to the possibilities that come with Liquidity Book,” Blue, the pseudonymous marketing and community lead at Trader Joe, told The Defiant.

Liquidity Book, is similar to Uniswap’s V3 in that it allows users to provide liquidity along specific price bands. It differs from V3, which launched over two years ago, in that Trader Joe’s Liquidity book further divides liquidity into discrete price bands called “bins.”

Liquidity Book graphic. Source: Trader Joe

The advantages of the Liquidity Book’s bin model is that, if trades are executed within a specific bin, there is no slippage, Blue said. Slippage is the amount a trade changes the price of the assets involved, and often cuts into traders’ bottom line.

The bin model allows for increased customization for liquidity positions and higher yield on those positions, the marketing and community lead also said.

Trader Joe also launched on Arbitrum at the end of December. Like Gains Network, a leveraged trading platform, trading activity on Trader Joe has increased since launching onthe Ethereum scaling solution.

Trader Joe originally launched in July 2021 on Avalanche, another blockchain generally seen as a competitor to Ethereum. Trader Joe is still the clear leader on Avalanche with its $274M in volume over the past week nearly 10 times larger than the next biggest exchange on Avalanche, called WOOFi, according to DeFi Llama.

The exchange was also awarded just over 900,000 ARB tokens as part of an airdrop by Arbitrum, a scaling solution for Ethereum, to decentrazed organizations (DAOs).

Despite its momentum, neither the JOE token, nor Trader Joe’s volume have surpassed the heights reached in the bull market — JOE is still down over 88% from its all-time high of $5.09, according to CoinGecko. Volume nearly eclipsed $1B in a day in November 2021 and hasn’t been close to that amount in over a year.

Trader Joe volume since inception. Source: DeFi Llama

Still, to grow in a bear market and try to ship new products in a DeFi landscape which sometimes appears starved for new ideas, is at least worth a hat tip.

Looking forward, Blue told The Defiant, the Trader Joe team has a few features for its Liquidity Book on the horizon — namely a layer to automate providing liquidity, and a staking mechanism for the JOE token which entitles stakers to a portion of trading fees.

“Our vision is essentially to serve all types of users in DeFi,” Blue said, saying that the Trader Joe team hoped to attract those wishing to actively market make with Liquidity Book, as well as those looking to just set and forget their liquidity positions.