Trader Joe has risen to the top five decentralized exchanges by trading volume after the launch of its V2 platform on Arbitrum on Feb. 1, 2023.
The project launched a liquidity incentive program to boost deposits for ARB, ETH and USDC trading which shared 300,000 JOE token rewards worth around $171,000. The incentive program ends on April 6.
The project’s social media account reported that Trader Joe accounted for 15.7% of the total ARB trading volume in the first week.
We do a little trading at Trader Joe's.— Trader Joe | (@traderjoe_xyz) April 2, 2023
Liquidity Book powered 15.7% of all $ARB trading on-chain in the first 7 days pic.twitter.com/qlcYwvXFrp
While JOE token incentives played a hand in increasing the liquidity for ARB token, innovation from the team in developing the capital efficiency of the DEX is the primary reason behind its growth.
Trader Joe climbs up the ranks in DEX space
Trader Joe launched a Liquidity Book (LB) model with its V2 upgrade in Q4 2022, which competes against the Uniswap’s (UNI) V3 liquidity model.
Trader Joe’s model allows liquidity providers (LPs) to add liquidity in designated “price bins” to improve capital efficiency. The Delphi report noted that its design offers “zero-slippage” and “provides much more flexibility due to its fungible nature and provides better flexibility and experience for LPs.”
Power DeFi-user Yash praised the DEX Joe for its innovation, which is transpiring into organic growth.
It took 3 months, but here it is. @traderjoe_xyz is at 2nd rank on Arbitrum by volume(7 days).— yash (@yashcrypto21) April 4, 2023
Ponzinomics can help protocol gain usage & token price go up in short term. But for long-term sustainability, you need innovation at the protocol layer. https://t.co/WVY8joULYn pic.twitter.com/AAWKz2dkOL
The aim of Uniswap V3 and LB models is to concentrate liquidity around active trading ranges to bring maximum fees for liquidity providers and reduce slippage for traders.
Currently, Trader Joe appears well positioned to capture market share across newer ecosystems like Ethereum (ETH) Layer-2s and sidechain. However, besides Uniswap, the project faces competition from a crucial event imposed by source code licensing policies.
Uniswap V3’s code license expired on April 4, allowing teams to fork their design in their DEX. PancakeSwap, the leading DEX on Binance Chain, is one of the first teams to fork Uniswap’s model to launch trading desks on BNB Chain (BNB), Aptos (APT) and Ethereum-based blockchains..
JOE price analysis
The Delphi report estimated a price-to-earnings ratio (P/E) to reach between 15.5 and 7.5 (adjusted for the last trading price of $0.57) for sJOE token holders after the launch of V2.1, which is expected by the second week of April.
A P/E ratio lower than 15.2 would place Trader Joe in the top fifteen protocols concerning real earnings for token holders, per Token Terminal data. The P/S ratio, calculated using dividing the fully diluted market capitalization of a token by its annualized revenue for token holders, is higher than 15 for popular DeFi protocols like dYdX, SushiSwap and Convex Finance.
The price of JOE token broke out of its deep slumber from last year with the progress made with LB design and migration to additional platforms beyond Avalanche.
The token currently eyes upside toward the 2022 breakdown levels around $1.01 and January 2022 high of $1.52. To the downside, support lies between the $0.13 to $0.20 level.
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