DEX TraderJoe on the Avalanche Blockchain
DEX TraderJoe on the Avalanche blockchain. It is time to take a closer look at decentralized exchanges. Right now I am on the TraderJoe exchange — one of the largest decentralized exchanges on the Avalanche blockchain. I will show how the swap process works and then demonstrate what you need to do to earn money by providing liquidity to a trading pair.
Every blockchain has its own top decentralized exchange. There are always many trading pairs, and, as a reminder, everything works only because users choose to provide liquidity to certain pairs and earn fees from swaps. This is exactly why I am able to exchange tokens.
I go to the Trade section. My wallet is already connected, and here I can select USDT — the amount left from the previous lesson — and, for example, swap four USDT for USDC. I receive less than four. Why? Because there is a fee, and this fee goes to the people who provided liquidity to this trading pair. My swap is possible only because the USDT–USDC pool has sufficient liquidity, and at the end of this lesson I will show how to become a liquidity provider for this pair so that I can earn fees as well.
To exchange USDT for USDC, I press the Swap button. A transaction appears in the wallet, I sign it, and wait for confirmation. I have just used a decentralized exchange and swapped four USDT for 3.999 USDC, using decentralized liquidity supplied by other users who earn fees from each transaction. This is why I received less than four — part of the amount was taken as fees.
How to become a liquidity provider
As I previously explained, you can provide liquidity to a large number of trading pairs — ETH pairs, BTC pairs, stablecoin pairs. Every blockchain has a major decentralized exchange where you can supply liquidity.
Now I will show, using TraderJoe as an example, how liquidity provision works. Every exchange has a Pool section — this is where you can select trading pairs that may be interesting to you for adding liquidity and earning fees.
Here you can see various trading pairs such as AVAX–USDC, USDT–USDC, and many others. The 0.3% value is the swap fee charged on every transaction and distributed among all liquidity providers in the pool.
Here you can also view Liquidity, which is the total value of assets supplied as liquidity to this trading pair. Volume shows the trading volume over the past 24 hours. Fees are the commissions earned by liquidity providers during the last 24 hours. And APR shows the annual yield based on the previous day’s data. For example, if you add liquidity to the AVAX–USDC pair, you can earn around thirteen percent per year, with rewards paid in AVAX and USDC.
Let’s find the pair I used earlier for swapping USDT to USDC. Here it is. I need this exact trading pair, and this is where I can add liquidity. I currently have 4 USDT and 3.999 USDC. I enter 3.5 here and 3.5 here, because liquidity in the standard model is supplied in a fifty–fifty ratio.
There are also other liquidity provision options that can significantly increase your yield, because TraderJoe is a unique exchange where you can supply liquidity within different price ranges and across different price levels to increase your return on one or both assets. This can greatly boost yield, but you must understand how it works and why it is used.
All of these features and all the different liquidity provision models are explained in detail in the module — not only for stablecoins but also for many other assets. Because if you simply provide standard liquidity to a stablecoin pair, as in this example, the yield will be around two to three percent per year, which is very low. There are much higher yields available in other places.
But if you use one of the advanced liquidity provision methods, the yield increases significantly, and you can earn around fifteen percent annually or even more — if you manage your position properly. You can truly earn meaningful returns on stablecoins without interacting with volatile assets at all.
The same applies to other trading pairs — these three tools provide very high yields on pairs such as AVAX or sAVAX (staked AVAX on Benqi). Those pairs can also generate substantial returns.
Therefore, if you are interested in maximizing yield using all available tools and hidden opportunities that few people talk about, you should study the module in full detail.
Adding liquidity (step by step)
Now, I will add liquidity to the pair. I click Approve — this is the first transaction that allows the exchange to use my tokens. In the standard model, most exchanges require liquidity to be supplied in a fifty–fifty ratio.
Now it shows me the Supply button. Yes, that’s correct — I signed the transaction to supply stablecoins to the pool, it was confirmed, and now my position appears in the Liquidity section. Its total value is seven dollars. I originally supplied eight, but the balance has already shifted slightly. This is exactly what I explained in one of the previous lessons: when one asset is swapped for another, the internal ratio of assets inside the pool changes, and this affects the total amount of tokens attributed to my liquidity position.
From this point on, I will earn two percent in fees from every swap, according to the size of my position relative to the total liquidity in the pool. Currently, the pool holds nine hundred twenty thousand dollars in liquidity, the daily trading volume is eight hundred twenty-eight thousand dollars, and daily fees total one hundred seventy-eight dollars. And with every swap, my position will grow.
When someone performs an exchange, the rewards will show up here — in the liquidity management panel. After a few minutes, even if someone swaps only a small amount, my earned fees will appear here.
All interaction in DeFi happens strictly between users. Some users provide liquidity; others swap assets using that liquidity, paying fees to those who supplied it.
Final notes
Different blockchains have their own decentralized exchanges, and as I mentioned before, all top exchanges, all liquidity positions, hidden tools, advanced strategies, and techniques are covered in detail in the module. So go ahead and start learning how to earn more using DeFi tools.
In the next lesson, I will show an example of working with lending markets. I will supply my AVAX as collateral and take stablecoins against it, demonstrating the basic principles of lending protocols: what to pay attention to, what risks to consider, and how the borrowing process itself works in decentralized finance.
These materials are created for educational purposes only and do not constitute financial advice.