2021 will go down in crypto history as the year that blockchain broke free of its Ethereum-based shackles and began to embrace other platforms. One of this year’s standout winners in this regard has been Avalanche. The finance-focused platform has been flying high – particularly so following the summer launch of Avalanche Rush, its $180 million liquidity mining program that pulled in $1.5 billion worth of liquidity from Ethereum. In early September, the Avalanche Foundation disclosed it had completed a private sale, raising $2.3 million for development on the platform.
As a result, the DeFi ecosystem on Avalanche is now thriving. Pangolin, a Uniswap clone, was the first DEX to set up home on the network, kickstarting liquidity. Over recent months, Trader Joe has emerged as Pangolin’s biggest rival, overtaking the latter in total value locked.
But side by side, is one better than the other? In this guide, we compare Pangolin and Trader Joe to see how Avalanche’s two biggest DEXs measure up.
A Brief Overview of Pangolin and Trader Joe
Pangolin and Trader Joe are both decentralized exchanges using automated market maker (AMM) smart contracts and liquidity pools. As they’re based on Avalanche, they offer the benefits of very fast transaction times and low network transaction fees.
Pangolin was created by AvaLabs to be the flagship DeFi app and DEX on Avalanche. It launched in 2021 with the vision of being an entirely community-owned and community-driven project.
Today, Pangolin has over $250 million in total value locked from around 5,000 daily users. It’s also been voracious in pursuing partnerships with other projects, having secured over 30 collaborations since launch, including with lending protocol Benqi Finance and liquidity aggregator OpenOcean.
Trader Joe aims to be the one-stop trading platform on Avalanche. While its initial scope is as a DEX, Trader Joe also plans to expand into lending, enabling leveraged trading. Its focus is on fast and secure development and innovation.
The DEX launched in early July and had accrued $20 million in total value locked within two weeks. Currently, it holds over $2 billion in total value locked.
From the trader’s perspective, token swaps on both exchanges incur a standard fee of 0.3%, which is typical for DEXs. Like most DEXs, Pangolin and Trader Joe differentiate themselves based on other factors – mainly user experience, rewards, and governance.
Pangolin is a fork of Uniswap, and its current user interface is therefore very familiar for Uniswap users. You can select whether you want to swap or deposit tokens in a pool from the header menu and view the state of the markets via the charts interface.
Trader Joe has developed its own interface, which integrates the charts feature directly into the main menu options. So the “Trade” feature includes a candle chart, while the “Pool” section shows the liquidity available in each token pool.
In terms of token options, both Pangolin and Trader Joe allow users to swap any Avalanche-compatible token with any other. However, while the WETH.e-AVAX pool is the biggest in both exchanges, the liquidity in other pools varies.
As the exchange with more value locked, Trader Joe is likely to offer less slippage, at least in the larger and more liquid pools.
Pangolin has one killer feature available that could give it the edge over Trader Joe and even other DEXs on other platforms. It allows users to onboard straight to Avalanche’s native AVAX token from fiat using Apple Pay or a credit card. The feature is thanks to a partnership with Wyre.
Pangolin Newsletter #21 is live! Don’t forget to subscribe to get the news immediately.
— Pangolin 🔺 (@pangolindex) October 30, 2021
Fiat integration has been a bridge too far for many DeFi applications. However, Pangolin has made it a priority to build bridges with CeFi to help broaden its appeal to a large community of users, so the fiat integration is part of this commitment.
Tokenomics, Rewards, and Governance
Like many competitor exchanges, Pangolin and Trader Joe both use their native tokens as a way of incentivizing users through rewards and participation in the protocol’s governance.
Pangolin’s PNG token model reflects its commitment to being a community-driven project. 95% of the total supply of tokens, or 512 million, is dedicated to the community treasury, which funds liquidity mining. The other 5% is ring fenced for a community airdrop. No PNG has been allocated to investors or insiders.
PNG holders govern the protocol, holding decision-making capacity over liquidity pool modifications and the “fee switch” mechanism. The fee switch allows the community to vote to divert 0.05% of swap fees to a designated address, allowing the collection of funds for any significant initiatives.
Trader Joe’s token has a different model of distribution and fee allocation. 50% of the total JOE supply is allocated to liquidity providers, while a further 40% is split equally between the team and the project treasury. The remaining 10% was earmarked for potential strategic investors. Trader Joe later held a token sale where it raised $5 million from private investors, including Defiance Capital.
🌿Cultivation Club – Vote has passed
First action: New farm landing tomorrow 📅
Get ready to ape 🦍 pic.twitter.com/2MK84ws3j7
— Trader Joe (🎩,🔺) (@traderjoe_xyz) October 29, 2021
In contrast to PNG which focuses on rewarding those who provide liquidity, the JOE rewards model works similar to SUSHI. 0.05% of all trading fees are diverted into rewards for JOE holders, who can stake their JOE for xJOE to earn their share.
Current Developments and The Road Ahead
Pangolin’s roadmap details several areas of development, including CEX listings, a tokenomic upgrade, and a user interface redesign. The project has also sought legal advice in order to open up trading of PNG tokens to US customers on established exchanges, broadening the potential base of buyers.
Trader Joe is focused on expanding its footprint into lending and leveraged trading, having launched its “Banker Joe” arm shortly after launching. It also recently launched a new initiative called “TRACTOR” – a token designed to burn JOE tokens to create supply pressure.
Things move fast in crypto, but nowhere more so than in DeFi. Pangolin was quick to be the first to market, but it wasn’t long before Trader Joe swept in and raised the stakes. But based on recent developments and a solid roadmap that’s making inroads to bridging Avalanche to CeFi, then Pangolin is very much still a worthy competitor. Furthermore, its community-focused credentials are unimpeachable.
Given how rapidly events are playing out in 2021, we can bet there are going to be plenty more twists and turns in the road ahead for DeFi in 2022.
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