Banker Joe: DeFi lending protocol
Trader Joe is a one-stop decentralized trading platform on Avalanche.
Banker Joe is Trader Joe's lending protocol based on the Compound protocol. Next up we will show you how the lending protocol can be combined with our decentralized exchange to offer non-custodial leveraged trading.
Banker Joe - Introduction
Banker Joe is a decentralized lending protocol built onto the Trader Joe platform.
Banker Joe offers investors the ability to lend or borrow against whitelisted assets, enabling the deployment of flexible DeFi investment strategies on the blazingly fast, low-cost Avalanche network.
What exactly can you do at Banker Joe?
So how does Banker Joe work?
To engage with Banker Joe’s services, users will navigate to the Lending page on the website and deposit one of the whitelisted tokens. In return, we’ll provide them with a receipt, e.g. a user deposits AVAX and they receive jAVAX in return. The interest accrued will be increasing over time (this works in the same way as xJOE). When the user returns the jAVAXreceipt to Banker Joe, they will receive their original AVAX + the additional earned AVAX on top.
As well as supplying an asset, users can also borrow against that asset which is used as collateral. For example, a borrower can supply ETH to the jETH contract and then borrow AVAX from the jAVAX contract. The amount of AVAX the borrower can borrow is defined by the collateral factor of ETH. If for example, the borrower has supplied 1 ETH as collateral and the collateral factor of ETH is 65%, then he can borrow up 0.65 ETH worth of AVAX.
The protocol has safety measures to restrict users from taking actions (such as borrowing more tokens or withdrawing collateral) that would cause them to exceed their borrowing limit.
Borrowers can repay tokens to Banker Joe up to the borrowed balance. If partial repayment is made, the borrow balance may be non-zero, and continue to accrue interest. Repayment is a transfer of tokens from the borrower back to the token market.
It is important to point out that the above use-cases for Banker Joe do not come risk-free. Borrowers of tokens risk liquidation if they are unable to keep a leveraged trade open, which in turn places lenders at risk of being unable to withdraw their deposit.
In the event of a shortfall, which is when a borrowing balance exceeds that of the borrowing limit, a portion of the borrower’s collateral will be liquidated to return the account to good standing. If your account is in a shortfall position, a liquidator can liquidate it to return your position to a balanced position; liquidation comes with a discount to help incentivize proper risk management for users of the protocol.