PancakeSwap, one of Smart Chain’s most popular decentralized exchanges (DEXs), has become a blockchain sensation in recent months due to its vast user base and massive liquidity.
PancakeSwap launched in 2020 as a cheaper and faster-automated market maker (AMM) than Uniswap Exchange. While PancakeSwap Exchange began as a copy of Uniswap on another blockchain, it has evolved into a far more popular platform than Uniswap.
PancakeSwap has surpassed $100 million in daily trade volume and is one of the most popular DApps ever. In addition, it has surpassed Binance’s own Binance DEX as the most popular DEX on Binance Smart Chain in less than a year. But what exactly makes it so special, and what has caused it to be so successful?
What Is PancakeSwap?
As mentioned above, PancakeSwap is by far the most popular decentralized exchange on Binance Smart Chain. Clients may safely exchange Binance Coin (BNB) and a wide range of BEP-20 coins without depending on centralized services. All transactions on PancakeSwap are handled via smart contracts as a decentralized exchange, eliminating the need for a middleman.
The PancakeSwap smart contract code is open-source and everyone can read it. Despite this, the team is believed to include more than a dozen people, featuring two co-leads and a variety of software engineers.
The platform first launched in September 2020; since then, it has witnessed a significant increase in the number of customers and the range of features it provides. PancakeSwap has grown into a DeFi ecosystem focused around CAKE, the platform’s primary utility currency.
What Is CAKE?
CAKE is PancakeSwap’s native token, and you can use it for many things in the expanding ecosystem. Yield farming, staking, partaking in the PancakeSwap Lottery, and voting on governance ideas through the platform’s community governance site are the platform’s key features.
How To Use PancakeSwap
PancakeSwap calls itself AMM, which stands for Automated Market Maker, although that is just a more fancy way of saying exchange.
In a nutshell, a decentralized liquidity protocol such as PancakeSwap is used to create the foundation of liquidity for the platform’s trading function. Users like you supply liquidity, so others may utilize the decentralized exchange to effortlessly transfer tokens.
As a result, PancakeSwap AMM takes the place of centralized order books like those found on other cryptocurrency exchanges. Users who wish to use PancakeSwap to swap cryptocurrencies or offer them in exchange for incentives would want this feature, thus making the platform achieve high numbers of users.
Before you start using PancakeSwap, you’ll need to know how to connect MetaMask to Binance Smart Chain. So before you start your journey on PancakeSwap, here’s a little tutorial showing you just that.
PancakeSwap DEX
To get started with PancakeSwap, first, you must hop onto pancakeswap.finance and then click Trade from the menu.
After clicking trade, you will get two options: Liquidity and Exchange. Next, toggle the tool in the center of your screen to the Swap option by clicking exchange.
You may now choose the exchange’s inputs. Then, select the coins you wish to trade from the drop-down menus on each line. You trade crypto on PancakeSwap with user-generated AMM liquidity pools instead of an order book, making exchanges quicker, simpler, and more versatile.
After choosing your preferred assets, click on the Swap button and then confirm the transaction in your wallet, and then you’re finally finished!
Binance Bridge
To trade ERC-20 tokens on PancakeSwap, you first need to wrap them on the Binance Bridge and convert them to BEP-20 assets.
To do just that, go to the Binance Bridge and link your digital wallet there. Next, you’ll need to verify the transaction on the Ethereum network, which will require an amount of Ether known as gas fees. This is assuming you’re connected from a MetaMask wallet on the Ethereum blockchain, of course.
While this may be pricey due to high Ethereum gas fees, after you’ve wrapped and bridged your crypto assets to BSC, PancakeSwap’s low rates will save you a lot of trading fees. When you’ve completed your transactions on PancakeSwap and wish to convert your BEP-20 assets back to ERC-20, simply use Binance Bridge to reverse the process. So, through this bridge, you can purchase tokens such as ApeCoin using BSC.
How To Provide Liquidity To PancakeSwap
On PancakeSwap, you may earn incentives by being a liquidity supplier. It’s simple to do, and it maintains the AMM liquid for other exchange users.
Ensure your wallet is unlocked by clicking liquidity, then Add liquidity. Afterward, you’ll need to select the tokens for which you’re offering liquidity. Remember that on PancakeSwap, you must give two tokens to provide liquidity.
Liquidity can be provided to either:
- Existing Pools
- Pools created by you
New projects that want to launch their cryptocurrency token frequently create their own pool. If that doesn’t seem like you, the preferable choice is to provide liquidity to an already existing pool.
Once you’ve chosen the pair for which you’ll provide liquidity, proceed to deposit by completing the transaction. You’ll receive FLIP, an LP token that symbolizes your pool stake following your investment. When you possess the FLIP-LP token, you will get a percentage of the benefits from every exchange that dips into your pool’s liquidity. Simply exchange your FLIP tokens to access the assets, which may have increased in value over time.
How To Yield Farm On PancakeSwap
Yield farming entails depositing one pair of tokens to create a new token.
Click the Farms tab to create a farm with PancakeSwap. To view what’s happening, make sure you turn Live farms on. A broad list of possibilities, including several farms with cryptocurrencies such as BUSD and BNB base pairs, should appear on the website.
Select the farms that spark your attention, then go to the Information tab to check how much CAKE each farm generates. PancakeSwap’s farming APY is currently quite high across several pairings.
After clicking on Details, PancakeSwap will ask you to open your wallet before identifying the currencies within and letting you deposit them on the farm. The website will refresh with your CAKE earned after you’ve deposited.
Playing the PancakeSwap Lottery
One of PancakeSwaps prominent features is the PancakeSwap Lottery; it allows you to gamble using your CAKE tokens as a currency. Who knows? You might even get lucky and hit the jackpot.
To do this, Click Lottery, then use CAKE coins to purchase lottery tickets. You have a higher chance of winning if you spend more CAKE. You earn a percentage of the entire CAKE prize if you strike two or more of the winning numbers on your tickets.
Lottery sessions take place numerous times a day, roughly every six hours. This maintains a high turnover rate and increases your chances of you being lucky.
Is PancakeSwap Better Than Uniswap?
The short answer is no, although it is more complicated than just that. On the other hand, PancakeSwap has more liquidity making it a popular and decent decentralized exchange.
We can’t truly label PancakeSwap a real decentralized exchange because it operates on Binance Smart Chain, which isn’t completely decentralized. However, a certain level of centralization has some advantages.
PancakeSwap, for example, is significantly quicker and less expensive to use than Uniswap, with an equal degree of liquidity. But, most importantly, if you want to trade ERC-20 tokens, you’ll have to use the Binance Bridge to move funds in and out of Ethereum, which may be very costly for certain people depending on gas prices in their area.
As a result, people who already own BEP-20 tokens and want to retain their transactions on Binance Smart Chain will have the greatest experience with PancakeSwap. It’s not difficult, though, given BSC’s current expansion rate.
What Makes PancakeSwap Unique?
PancakeSwap, which is based on Binance Smart Chain, uses a number of its features to provide a better trading experience to its consumers. For example, it has very cheap transaction costs and short verification times, guaranteeing that deals are completed swiftly.
PancakeSwap also has many auxiliary features, many of which are useful to CAKE holders (HODLers). Nowadays, the most notable of them are Yield Farms, Syrup Farms, Lottery v2, NFT Collectibles, Prediction Markets, and Initial Farm Offerings. Some of these we have mentioned above; here is some insight on the ones we didn’t mention.
Syrup Pools
Syrup pools replace the simple staking mechanism of PancakeSwap. Instead, customer tokens may be staked in the Syrup pools of the platform to receive a return, which can be in CAKE or other cryptocurrency tokens.
The APY for every pool might change significantly, similar to its yield farms, and users must include in the fluctuating value of their staked assets while calculating their return.
Prediction Markets
The prediction market feature on PancakeSwap allows users to forecast if the value of BNB will increase or decrease in the next five minutes. Users pool their money into a reward pool, split among those who accurately anticipate the market’s future. The bet sum is forfeited by the losers.
NFT Collectibles
PancakeSwap introduced NFT Profiles in February 2021, allowing customers to select an NFT profile photo after obtaining one of the various Bunny NFTs. Users that fill up their profiles completely will be able to join a team and engage in special team activities to gain prizes.
Frequently Asked Questions (FAQ)
Is PancakeSwap Safe?
Especially when compared to other DeFi yield farming platforms, PancakeSwap provides a better level of security. If you’re wondering how safe this DEX is, note that it has a significantly better level of security than other DeFi protocols.
What Is The Difference Between Staking And Farming?
Joining PancakeSwap allows you to earn more CAKE by staking in Syrup Pools and farming using Yield Farming. To earn CAKE or other tokens through staking, simply contribute some CAKE to a Syrup Pool. While on the other hand, farming is more difficult and requires LP Tokens to earn CAKE.
What’s The Best Wallet For PancakeSwap?
We have mentioned MetaMask above due to convenience, but choosing the best digital wallet for PancakeSwap is completely up to the user. Some wallets offer more features than others, and the best wallet is the one the user feels the most comfortable using.
What Is The Maximum Supply Of CAKE?
CAKE does not have a maximum supply cap. They regulate the circulating supply by using built-in burning and regular burning events.
What Cryptocurrencies Can I Trade With?
PancakeSwap allows you to exchange a broad selection of cryptocurrencies. The coin will be available on PancakeSwap as long as it is a Binance Smart Chain token.
What Are The Benefits of CAKE?
PancakeSwap’s position as a pioneering decentralized exchange backs up the token’s significant growth potential. CAKE is more liquid and has cheaper fees than its competitors. CAKE has a high yield and offers significant passive income possibilities.
What Are The Best Tokens On PancakeSwap?
We have sifted through to compile this list of the hottest new tokens on this DEX, which should help you limit your investing options. If you don’t want to read lengthy explanations, here’s a quick rundown of the top five new currencies on PancakeSwap in 2022.
- Lucky Block (LBLOCK)
- Mobox (MBOX)
- Cake (CAKE)
- Shiba Inu (SHIB)
- SafeMoon (SAFEMOON)
Takeaways
- PancakeSwap is the biggest decentralized exchange on Binance Smart Chain.
- All transactions on this DEX are handled via smart contracts as a decentralized exchange. This means it does not need a middleman.
- PancakeSwap calls itself AMM, which stands for Automated Market Maker. AMMs make it possible for executing P2P trades.
- CAKE is PancakeSwap’s utility token which you can use for several things in this expanding ecosystem.
- Yield farming on this DEX entails depositing one pair of tokens to create a new token.
- PancakeSwap takes advantage of various qualities to give end-users a better trading experience, such as Yield Farms, Syrup Farms, NFT Collectibles, Prediction Markets, etc…
- PancakeSwap is more secure than other DeFi yield farming platforms.
- All in all, PancakeSwap is a great place to swap your BEP-20 tokens and explore many other platform features.