Trader Joe joins top 5 DEX list as Liquidity Book model thrives on Arbitrum

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.

Liquidity Book powered 15.7% of all $ARB trading on-chain in the first 7 days pic.twitter.com/qlcYwvXFrp

— Trader Joe | (@traderjoe_xyz) April 2, 2023

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).

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

— yash (@yashcrypto21) April 4, 2023

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…