Trader Joe [JOE] rises up the ranks, gauging what’s behind the scenes

• Trader Joe’s DEX volume exploded 19x on a year-to-date (YTD) basis.
• Native token JOE retraced some of its gains made earlier as it recorded a 9% weekly fall.

Trader Joe’s [JOE] trading activity surged significantly over the last month, pushing the decentralized exchange [DEX] to sixth position in the list of top DEXs by volume, per DeFiLlama.

Read Trader Joe’s [JOE] Price Prediction 2023-2024

In fact, till recently, its 24-hour volume was second only to DeFi behemoth Uniswap [UNI]. At the time of writing, its volume in the last 24 hours was $58.45 million, having exploded 19x on a year-to-date (YTD) basis.

Source: DeFiLlama

One of the biggest factors behind its success was a shift to a Uniswap v3-like liquidity model.

DEXs and the ‘Bin’ Model

Concentrated liquidity is the new buzzword in the world of DEXs. In simplest terms, it is the capacity of liquidity providers (LPs) to supply liquidity in a specific region along the price curve. This way, they earn more trading fees with their capital.

Uniswap was the first to popularize this concept through the launch of its V3 two years ago. Subsequently, its competitor PancakeSwap [CAKE], launched its own V3 by copy-pasting Uniswap’s code. Forking of codebases was a common practice in DeFi world.

However, as per an analysis by Messari, Trader Joe took the path less traveled by and launched a new model for users to provide liquidity, called Liquidity Book (LB).

While there are a lot of similarities with Uniswap’s V3, LB further divides liquidity into discrete price bands called ‘bins.’ In this case, price changes happen when one asset in the pair is depleted, as opposed to every deal, resulting in zero slippage.

1/ It has been essential for DEX platforms to incorporate concentrated liquidity models to stay competitive.

Rather than waiting to fork the codebase made popular by @Uniswap, Trader Joe built its own architecture.@chasedevens breaks down @traderjoe_xyz's Liquidity Book ⬇️ ? pic.twitter.com/H8RqsAKneI

— Messari (@MessariCrypto) April 6, 2023

Trader Joe attracts users

Trader Joe’s liquidity model was working in its favor at press time, as the total value locked (TVL) on the protocol’s smart contracts surged 24% in the last 30 days, per Token Terminal data.

Additionally, more LPs were attracted towards the efficiency of its model, as the number of daily active users more than doubled in the same time period.

Source: DeFiLlama

The native token, JOE, made the most of the favorable sentiment around its parent DEX. It grew a whopping 143% in value over the past month, per Santiment’s data.

How much are 1,10,100 JOEs worth today?

However, it retraced some of its gains as it was down 9% in the last week. This could be due to the dip in the token’s trading volume.

The daily active addresses have grown 60% in the last 10 days, indicating that JOE garnered interest from investors.

Source: Santiment