Easy, low-risk passive income strategy on Avalanche’s TrarderJoe

Earn money while you sleep on TraderJoe with this method

Hey everyone!

Previously, I have published a couple articles about relatively low-risk, passive income strategies in the crypto space. I’ll drop the links below in case you’re interested:

I’ve been looking into other platforms since then. Today I want to talk about TraderJoe.

I’m not discovering anything here. TraderJoe is a massive platform on the Avalanche network — the most popular decentralized exchange on the platform, actually.

TraderJoe has a Medium account, too. Visit their profile here.

However, being on the Avalanche chain, many newcomers fly right past it, landing on other, more beginner-friendly platforms like Anchor or PancakeSwap instead.

Nevertheless, that doesn’t mean TraderJoe is difficult to use. In fact, it has become one of my favourite DeFi platforms, not only on Avalanche, but on the whole crypto ecosystem.

Here’s a passive income opportunity TraderJoe has to offer that I like. I should clarify that this is not financial advice and you should always do your own research before making any transactions.

About TraderJoe

Before we begin, let’s talk about the basics of the platform.

Although its recognized for being the principal decentralized exchange, TraderJoe aims to be a one-stop shop for DeFi applications on the Avalanche blockchain. That is, crypto trading, but also lending and borrowing, launchpad, liquidity farming, staking, and so on.

With its lovely-yet-simple user interface design, unique branding, and community-first approach, TraderJoe instantly secured the support of crypto users worldwide and took Avalanche by storm.

The JOE token

Another core aspect of the TraderJoe platform is its native token, JOE.

JOE is the governance token of the platform. However, it also acts as a seignorage token of sorts, as it also rewards its holders with a share of exchange revenues.

JOE holders can think about the token as owning a part of the platform.

By staking JOE, users have access to the following opportunities:

  • 0.05% of all trades performed on the platform.
  • A share of fees from lending interest and liquidations. The percentage varies according to the lending product.
  • An allocation on all new token sales launched on TraderJoe’s rocket launch program.
  • A boost on liquidity farming rewards.

$JOE has a maximum supply of 500,000,000 tokens, which will be fully released by 2024.

Understanding JOE tokenomics is quintessential to TraderJoe’s functioning, as the token is a critical part of the platform and its passive income instruments.

Now that we’ve established the basics on the platform and the token, let’s dive into the strategies.

My strategy: Lending, staking, reinvesting

As I mentioned, TraderJoe isn’t only a DEX. You can take advantage of its lending and borrowing product, BankerJoe, to secure pretty sweet passive income yields.

AVAX lending pool on TraderJoe.

Users can lock their AVAX, ETH, BTC, and many stablecoin tokens on the lending contract for 1.5–8% APY paid partially in the deposited token and JOE.

Here’s where you get to choose between three options:

  • You can cash out your profits, which would reduce your yield — remember that APY includes compounding interest.
  • You can swap your earned JOE for the deposit token and reinvest, compounding your rewards.
  • Finally, you can stake your earned JOE on the sJOE staking pool.

That last one option is my favourite, as the sJOE staking pool gathers all the revenue from the trading fees paid on the platform, converts it to USDC, and distributes it among stakers. As a result, APR is variable depending on trading volume.

Pretty sweet, right? Hold on, there’s still more to it.

Indeed, you can take the USDC earned from the sJOE pool and reinvest it however you want:

  • You can buy more of the original deposited token and add to your lended balance.
  • You can also buy more JOE to stake in the sJOE pool to increase your yield on stablecoins.

Summing up, this medium-risk strategy would go like this:

  • Deposit any available asset on TraderJoe’s lending platform, earning up to 8% in that same asset and JOE.
  • Claim your earned JOE and reinvest it in the sJOE staking pool, earning a variable yield on USDC. The other portion of the rewards is compounded automatically.
  • Claim the USDC, swap to JOE, and stake it again to multiply your yield.

Risks and considerations

By regularly reinvesting earned rewards into other higher interest-bearing products, this strategy allows for better yield, but is also vulnerable to more risks.

Firstly, you’re exposed to price volatility on the lent asset on BankerJoe. Nevertheless, this risk can be mitigated by depositing stablecoins instead of volatile assets like AVAX, BTC, or ETH.

Secondly, you’re also exposed to JOE price volatility. This is a little less risky, however, since this strategy doesn’t involve buying JOE directly. In other words, you wouldn’t lose any of your initial capital but just the portion of your earnings paid in JOE.

A third risk — which is inherent to all DeFi strategies — is smart contract vulnerability. It’s important to mention that TraderJoe has been audited by the firm Paladin Blockchain Security and implemented a bug-bounty program to keep the platform safe. That said, there’s always at least a minimal risk, so please take that into account.

Final thoughts

I find TraderJoe to be an extremely simple, user-friendly, and versatile platform for all things DeFi. It offers a wide range of options to build a healthy passive income stream, which this strategy is only one of. I hope I find the time in the short-term to further explore more of them and publish them here to share with you.

In any case, please remember that even the low-risk strategies in DeFi are extremely risky compared to TradFi investments. It’s vital to do your own research and thoroughly study each platform, token, and smart contract you interact with before even starting.

I hope you enjoyed the read!

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I’m glad you did! My name is Santi. I’m a marketing professional and independent writer. I enjoy and write about video games, cryptocurrency, and pop culture. If you’d like to read more content like this, consider following me on Medium and Twitter. I’d really appreciate it!

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