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How to Make Passive Income on Trader Joe

Posted by
Ian Kane

One-Stop decentralized trading on Avalanche

Anybody can make passive income on Trader Joe, but there are some things everybody needs to first know. What is Trader Joe? How does it work and what are the risks involved? It’s important to minimize those risks, even though high risks usually come with big rewards (or losses). 

Trader Joe is a self-proclaimed one-stop trading platform on the Avalanche blockchain. It launched its decentralized exchange on June 29th, 2021, and has plans to offer DeFi lending and leveraged trading at a later date. The product is community-driven through its JOE governance token and allocates fees collected from liquidation and swaps back to the users via staking JOE to get xJOE rewards. Overall, the platform offers a slick and friendly user experience that appears to be attracting traders. 

The core function of Trader Joe is as an exchange platform. People can use the exchange to swap the native Avalanche (AVAX) and other cryptocurrencies. To make this possible, the platform needs liquidity. Simply put, the tokens need to be available and to be provided by people. This is where you come in. Anybody visiting Trader Joe can become a liquidity provider by buying a share of these tokens and then allowing Trader Joe to exchange them. For each liquidity pool, you provide some tokens and an equal amount of value in JOE tokens. For performing this action, you get rewarded with more JOE. In simple terms — the JOE token is a reward for providing liquidity to the platform. In the same way, a bank needs capital to operate. 

The more people who want to exchange tokens on Trader Joe, the more transactions take place and the higher the pay for liquidity providers. The more people who want to provide liquidity, the higher the supply, and unfortunately the lower the reward. Your provided liquidity, or money, gets moved around several hundred times a day, each time earning you a share of transaction fees. Moreover, the safest way to make a sustained passive income on Trader Joe is to simply stake JOE and let it compound. 
Trader Joe and the Avalanche blockchain are quickly rising through the ranks to become leading DeFi solutions. Firstly, we need to get you ready to actually start using your blockchain wallet with Avalanche blockchain dapps. 

Jump right in

Use the links below to navigate to your desired starting point:

Setting Up and Funding Your Avalanche Wallet with AVAX

If you already have an Avalanche Wallet and AVAX tokens, skip this step and move to Set Up Metamask.

  1. Create an Avalanche wallet by visiting https://wallet.avax.network/, clicking on Create New Wallet, and following the instructions provided.
  2. You can get AVAX from any of the supported exchanges listed on CoinMarketCap.
  1. Once you have AVAX, send AVAX to your Avalanche Wallet that was created in step 1. Find your wallet address that starts with “x-avax1” on your Avalanche wallet.
    Now that you have AVAX, you may proceed to Setting Up Metamask.

Setting up Metamask

If you already have a Metamask Wallet then skip this step and move to Fund Your MetaMask Connected to Avalanche. 

  1. Download MetaMask here. Install MetaMask as an extension to your browser. Note that the following browsers are supported: Chrome, Firefox, Brave, and Edge.
  1. This is where you have to create or import an existing Ethereum wallet. If you don’t have an existing Ethereum wallet, please select Create a Wallet. Always keep your Mnemonic and password to yourself and make sure to write it down. Note: This is the wallet that will be used to conduct transactions on Avalanche.
  1. Click the drop-down menu and select Custom RPC.

Enter the following details into the respective fields:

4. Add the Trader Joe (JOE) token to be displayed on your MetaMask. First, select Add Token.

Then select Custom Token

Enter the following information into the available fields:

Token Contract Address: 0x6e84a6216ea6dacc71ee8e6b0a5b7322eebc0fdd

Token Symbol: JOE

Select Next. You have now successfully added the Trader Joe (JOE) token to be displayed in MetaMask.

Fund Your MetaMask Connected to Avalanche

Now it’s time to send AVAX to your Metamask wallet connected to Avalanche. 

  1. Go to https://wallet.avax.network/, and access your Avalanche wallet.
  2. On the left, there is a list of options. Click Cross-Chain.

3. Choose the C Chain (Contract) as the destination chain.

4. Enter the amount you would like to transfer, and then click confirm.

5. Send the AVAX from your Avalanche wallet to your MetaMask wallet.

Select C Contract as the Source Chain.

Enter your MetaMask wallet address by copying and pasting it into the To Address field on your Avalanche wallet.

Confirm and finalize the transaction.

Swap AVAX for JOE

Congratulations! You now have AVAX in your MetaMask wallet and can start using Avalanche dapps. The next step is to swap all or some of the AVAX you purchased for JOE which can be achieved using the Trader Joe token swap.

  1. Navigate to the Trader Joe site and connect your Metamask wallet. If you have not already swapped to the Avalanche network in Metamask you will be promoted to do that. Click confirm. Your Metamask is now connected to Trader Joe. 
  1. On the right of the screen on the Trade page, you will see the swap box. Leave the top token as AVAX and then search and confirm JOE in the bottom box. 

3. In the AVAX box enter how much you want to swap. Hit max if you wish to trade it all. 

4. You will now see how many JOE you will receive for your AVAX.

5. If you are happy, click confirm, and then you will be asked to confirm the transaction in the Metamask wallet. Click confirm. 

6. Once the transaction is complete your JOE tokens will be available in your Metamask wallet. 

Now you have JOE in your wallet, which admittedly is no easy task for a newbie. You’re ready to start using that asset with the Trader Joe platform to earn a passive income. 

Stake JOE to earn xJOE

Users can stake their JOE tokens to xJOE, which has no impermanent loss, and maximizes your profits when JOE tokens go up. It’s also the most straightforward earning opportunity on the platform.

xJOE is the main staking mechanism on the Trader Joe ecosystem. When you stake your JOE, you effectively exchange your JOE for xJOE. Over time, you’ll always earn more JOE by holding xJOE tokens. This is because, for every swap on Trader Joe, a 0.05% fee is charged and sent to the xJOE pool. This fee is used to buy back JOE tokens periodically (currently, buy-backs happen every 2 days). So when you exchange your xJOE for JOE, you’ll get more JOE than what you started with.

  1. Navigate to the Stake tab at the top of the site.
  2. Enter your JOE token amount in the input field and click deposit.
  3. You will now receive xJOE tokens in your wallet.

xJOE token holders receive a share of fees, which is paid as JOE tokens into the staking pool.

You can claim your rewards when you unstake xJOE back to JOE. You will receive your original staked JOE tokens, plus your share of JOE token rewards from fees. You can also click “View Stats” to view Staking APR performance on our analytics dashboard. You may also click “Your Staking Stats” to view your staking profits. 

Adding liquidity 

Trader Joe charges a 0.3% fee for all trades, of which 0.25% is added to the liquidity pool of the token pair that was traded on. A liquidity pool (LP) is a pool of two tokens, e.g. AVAX and JOE tokens. This pool is what allows users to exchange between the two tokens automatically. Users can earn a share of the trading fees by depositing a pair of tokens into the LP. Also known as adding liquidity. Users will receive an LP token, representing their share of the LP. 

By adding liquidity you’ll earn 0.25% of all trades on this pair proportional to your share of the pool. Fees are added to the pool, accrue in real-time, and can be claimed by withdrawing your liquidity. Providing liquidity is not without risk, as you may be exposed to impermanent loss (IL). If the prices of the two tokens revert back to the same prices when you added liquidity, you won’t suffer any IL.  

How to add liquidity 

  1. On the Pools page, you can find pools to join. Click a pool to enter.

2. Enter the amounts of the tokens you would like to deposit. The ratio of tokens needed will be automatically filled. 

3. Approve the transaction. You may need to approve twice for each token.

4. Confirm the transaction in your wallet.

5. Click supply to deposit the tokens. Check the details and confirm.

6. Done! You can click View on AVAX Explorer to see your transaction details. You should see the LP tokens in your wallet.

How to remove liquidity

  1. On the Pool detail page, click on the Remove tab next to the Add tab.

2. Select the amount you wish to withdraw from the pool. Click Approve, you may need to approve the transactions in your wallet.

3. Click Remove. Check the details and click Confirm.

4. Confirm the transaction in your wallet.

5. Done! You can click View on AVAX Explorer to see your transaction details. You should see the withdrawn tokens in your wallet.

Yield Farming 

You can earn JOE tokens by depositing (staking) your LP tokens into farms. JOE tokens will be automatically awarded in proportion to your share of the farm. You may withdraw (harvest) your JOE tokens at any time. You may also withdraw your LP tokens from the farm at any time.

  1. Go to the Farms page. You can find a list of farms to join. Click on a farm to join.
  2. On the Manage Farm page, you may stake your LP tokens to receive tokens.
  3. You may unstake your LP tokens by clicking on the unstake tab on the right-hand side panel.
  4. You may click on the Harvest button to receive your JOE token rewards. They update every few seconds!

That’s it! You are now trading on Avalanche like a pro and potentially dived into one of the fastest rising DeFi dapps on the Avalanche blockchain – Trader Joe. 

The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, ADA, MATIC, SAFEMOON, HEX, LINK, GRT, CRO, OMI, USDT, SOL, SHIBA INU, AVASTR, RAY, BOSON, AND OCEAN

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