Support Login
Login

Trader Joe

Exclusive Research

  • Trader Joe is a decentralised exchange and lending protocol that is taking over the Avalanche ecosystem.
  • The biggest risk factor is that the Trader Joe team is not agile enough to evolve the product and to compete with upstarts.
  • Trader Joe’s protocol token, JOE, could continue to appreciate by EOY.

Investment Thesis

Trader Joe is a decentralised exchange on the Avalanche blockchain. Avalanche is an Ethereum competitor with extremely low transaction fees which supports high throughput without sacrificing decentralisation.

Avalanche has been growing explosively since they announced a $300m incentive programme in August of this year. Avalanche has a blockchain token called AVAX. The incentive programme distributed millions of dollars of AVAX to users of protocols built on Avalanche. Prominent Ethereum projects like Aave, Curve and Sushiswap deployed their code to Avalanche and billions in liquidity was pulled from ETH and other chains to Avalanche to get access to these rewards.

At the same time, Avalanche-native projects such as Trader Joe and Benqi have greatly benefited from the flood of liquidity.

Potential

Trader Joe was the 12th DEX to launch on Avalanche, but has now become Avalanche’s largest DEX due to its unique branding and ability to attract a loyal following. It is now the second largest protocol on Avalanche, with $2.6bn in total value locked (TVL), which is around 23% of Avalanche’s entire TVL.

Earlier this month, Trader Joe launched their second product called Banker Joe. Banker Joe is a lending protocol very similar to Compound and Aave. It reached $2.89bn in deposits and $1.6bn in withdrawals as of 25 October 2021.

banner

The JOE token captures a share of protocol fees. It could be an incredible investment if the team continues executing the way it has. JOE currently has a fully diluted valuation of $1.73bn, but Trader Joe could become one of the largest protocols in DeFi and capture a significant amount of upside if Avalanche continues growing as it has.

Risk

The Trader Joe team has mastered marketing, branding, and community building. But as the lending and exchange spaces evolve, Trader Joe may not necessarily always be at the cutting edge because they have not proven their ability to introduce uniquely innovative products in the space. However, there is no doubt that Trader Joe will be able to take the best parts of the new products and introduce them to their loyal and growing community.

Another risk is that Avalanche will not remain as hot as it has been recently. There are a number of Ethereum Layer 2s that offer a similar value proposition as Avalanche in terms of cheap fees and fast transactions, but have the added benefit of relying on an even more battle-tested network for security. As these L2s continue to get cheaper, it is possible that the largest whales in crypto will prefer them to relying on a newer consensus mechanism in Avalanche.

Conclusion
A cursory glance at Trader Joe’s Discord, Twitter or website, will give an idea of the blend of fun humour and art that has captured the hearts of thousands of crypto users. With a brilliant team behind the product, there is incredible upside potential ahead.

Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.

The full article is only available for Numbrs clients.

Unlock the full potential of Numbrs Research

Only Numbrs Bitcoin Account holders get full access to our original written research analyzing the consequences of the new monetary system.

Open Bitcoin Account
Subscribe to our Newsletter