hJOE Insights and Report
Insights and updates on the hJOE token.
In December of 2023, SteakHut announced a long-awaited update to the hJOE program. SteakHut successfully transitioned the hJOE token into a Liquid Staking Token (LST), aligning it with sJOE rather than the deprecated veJOE product.
This update has allowed us to generate a source of real yield for hJOE stakers, increase yields, increase liquidity and completely stop deflationary pressures on the $STEAK token.
Today we provide insights into the program, report upon hJOE, and answer FAQs from the hJOE community.
An update on the sJOE program
In December 2023, SteakHut transitioned hJOE to a liquid staking derivative of sJOE. The hJOE token offers users access to a liquid staking derivative of sJOE. hJOE can help users optimize their yield on-chain and passes sJOE yields onto hJOE stakers.
hJOE: 0xe7250b05bd8DEE615ecC681eda1196aDD5156F2B
hJOE accrues yield by staking underlying JOE into sJOE to accrue USDC rewards. These rewards are converted to $STEAK and distributed to hJOE stakers.
In-depth sJOE product and underlying treasury
hJOE remains, and will always remain, fully backed by JOE. At the time of writing there are ~1.5 Million hJOE in circulation. This number can be tracked on the Avalanche block explorer here.
The underlying JOE is held within SteakHut’s Master-Multisig, which can be tracked in real time here.
The underlying JOE is staked on Trader Joe in the sJOE staking contracts allowing the accrual of USDC token rewards.
Upon harvesting these rewards are converted to $STEAK on-market and currently paid out in full to hJOE stakers. By staking your hJOE on the legacy SteakHut dApp you can earn your share of accrued rewards.
Why reward hJOE in $STEAK?
One of SteakHut’s goals has always been to create a strong dedicated community of aligned users. The choice to pay out sJOE yields in the form of $STEAK has multiple advantages for the community.
Traditionally $STEAK was rewarded to hJOE stakers in the form of inflationary emissions, which had the detrimental effect of inflating circulating $STEAK to reward hJOE holders. With the introduction of the sJOE program, $STEAK rewards are no longer inflationary but instead generated via real-yield.
This helps to align the interests of both hJOE and $STEAK-holders and aligns hJOE with the success of SteakHut. The relationship between hJOE and $STEAK is mutually beneficial, rather than historically where hJOE would put inflationary pressure on $STEAK.
The legacy hJOE rewarder contract was also created for the rewarding of $STEAK-tokens to hJOE stakers, meaning no new contracts were necessary to facilitate the revenue switch to sJOE.
What is sJOE yield used for?
All sJOE yield accued by hJOE is passed onto hJOE, SteakHut currently does not take a performance fee on the hJOE product, and all yield is passed onto hJOE.
At the time of writing, over 14,000 $STEAK has been accrued and passed onto hJOE stakers since the switch to the sJOE yield source.
Why can hJOE yields fluctuate from sJOE yields?
Although sJOE yields are fully passed to hJOE stakers, the calculated hJOE staking yield will often differ from the sJOE staking yield. This is caused by several factors:
hJOE rewards are paid in $STEAK, fluctuations of $STEAK prices will impact yield.
sJOE is paid out sporadically every few days, hJOE rewards are paid out at a set reward rate per second.
sJOE yields are calculated based on a 30 Day APR, hJOE yields are calculated in real-time based on the reward rate and influenced by the price of $JOE, $STEAK, and TVL of the pool
sJOE rewards are fully passed onto hJOE stakers. However, the methods of calculating APRs between sJOE and hJOE differ for the above reasons, meaning the yields are not directly comparable and will often differ.
Accruing Yields Outside of sJOE
Currently, there are a number of yield sources available for accruing yield on the underlying JOE, from additional protocols, such as through lending.
SteakHut remains adamant that the protection of underlying JOE is of utmost importance, and thus won’t accept the risk of any third-party protocols in search of higher yields. For this reason, yields will continue to come from sJOE.
hJOE Liquidity
In the previous hJOE update in December, the SteakHut protocol funded a Liquidity Pool for hJOE/JOE established on Uniswap V3. This pool provides liquidity for users to trade hJOE and JOE if they wish. This liquidity pool currently holds approximately 70k JOE + 70k hJOE, it can be viewed here.
Creating and using a liquidity pool is completely permissionless on Uniswap V3. Keep in mind that the conversion rate (Peg value) of hJOE and JOE will fluctuate with market dynamics. SteakHut has no control over the trading of this pool as it is fully permissionless. The exchange rate is determined by free market users who wish to trade hJOE and JOE at whichever price they choose to.
In the early stages of hJOE SteakHut experimented with creating a “Burn hJOE” function allowing users to burn hJOE for JOE, when there was sufficient liquidity to do so, details can be found here. The downside of this approach is users could only convert when there was sufficient liquidity to do so, and with the sunsetting of veJOE there is very little reason for users to zap JOE to hJOE, leading to no liquidity within the reserve.
Seeding the Uniswap liquidity pool allows a source of liquidity for users to access if they wish. Which unlike the burn mechanism has the advantage of practically always having liquidity available.
Fees the protocol earns from liquidity providing are added back into liquidity providing to grow hJOE liquidity.
Merchant MOE
In January, Merchant Moe, a derivative of the Trader Joe DEX on the Mantle network, allowed users to stake JOE to receive a $MOE airdrop. SteakHut successfully staked all underlying JOE tokens backing hJOE on the Mantle Moe platform to partake in the airdrop.
SteakHut received approximately 99,000 MOE from the airdrop. This airdrop has been optimized in two use cases, firstly the airdrop was bridged to Arbitrum and used to accrue yield in sJOE, with the yield being passed onto hJOE stakers. Secondly, the airdrop has been used to buy back hJOE to help boost hJOE liquidity and increase hJOE peg conversion rates.
Future roadmap and outlook for hJOE
Currently, the hJOE LSD program has been working as intended, accruing and optimizing yields from sJOE and rewarding it fully to hJOE in the form of STEAK. This program has boosted both the utility and liquidity of hJOE over the past four months since deployment. hJOE yields have increased, and liquidity has increased with the introduction of the protocols hJOE-JOE LP.
The community has expressed many opinions on the path forward for hJOE. Likewise, we have also seen the other veJOE-based protocols take differing approaches based on their unique situations. With a clear difference in opinion and in the spirit of DeFi, SteakHut currently plans to conduct a governance vote to allow the community to decide on the appropriate approach.
Once the date and details of this vote are confirmed they will be communicated with the community.