A Guide To Investing In PancakeSwap (CAKE)
PancakeSwap is an exchange and a DEX and an AMM that is powered by Binance’s Smart Chain, allowing users to exchange BEP-20 tokens safely and efficiently. Like Uniswap, the platform combines a decentralized trading experience with liquidity pools. PancakeSwap is seen by many as a project with limitless potential since it is the most prominent DAPP on the Binance Smart Chain. Therefore, the platform is extremely popular and currently has $4,720,303,152 in locked liquidity.
PancakeSwap: what is it?
PancakeSwap is a decentralized exchange for Binance smart chains that allows you to swap BEP20 tokens. With PancakeSwap, users trade against a liquidity pool using an automated market maker (AMM) model. Users’ funds are included in such pools. These tokens are deposited into the liquidity pool where liquidity provider (LP) tokens are received. With these tokens, they can reclaim their share and portion of the trading fees.
LP tokens are known as FLIP tokens. In addition to CAKE and SYRUP, PancakeSwap allows users to farm other tokens. By depositing LP tokens on the farm, users lock up their assets, receiving CAKE as a reward. Users may stake CAKE tokens to obtain SYRUP, which will additionally serve as governance tokens.
The BEP-20 token standard is based on the Binance Smart Chain standard, created with the intention of extending the Ethereum ERC-20 token standard. In BEP-20, a token can be given and spent by any entity, and its overall use is regulated.
As a result of its derivation from and full compatibility with the ERC-20 standard, the BEP-20 standard is largely a modification of the ERC-20 standard. As a result of these modifications, the protocol has been optimized both for speed and for transaction cost. BEP-20 was actually designed to provide the Binance Smart Chain with a flexible format through which multiple developers can launch tokens. Depending on the nature of the token, it could be indicative of anything from shares within a company to dollars stored in a bank account.
Creating smart contracts and the staking mechanism for BNB were two of the main objectives of the BSC. A BEP-20 standard was designed by Binance’s development team to accomplish this goal. In essence, BEP-20 serves as Binance’s equivalent of the highly popular ERC-20 standard. On the other hand, the BEP-20 tokens are stored on the BSC, which means they can be traded for a lot less. Additionally, they offer users some unique features beyond what is currently offered by Ethereum.
PancakeSwap Addresses What Type of Issue?
In the current market, PancakeSwap plays an important role. The platform helps to solve various problems plaguing the market. By applying an innovative approach and providing a high level of security, PancakeSwap has established itself as a viable alternative to Uniswap, the market leader in DeFi and DEX.
The Issue Of Centralization
PancakeSwap aims to address first the growing centralization of the market. DeFi’s evolution couldn’t have happened without the Ethereum blockchain. ERC-20 is the standard used by the majority of tokens. In the aftermath of the ICO boom of 2017, the standard quickly became the norm. With the advent of the DeFi (decentralized finance) platforms on the internet in 2020, ERC-20 tokens saw another boost from the market.
At first glance, it may seem that all of this development is amazing. However, when you actually get into the market, it quickly becomes apparent there are problems. One of the big problems with Ethereum is its Proof-of-Work (PoW) network and lack of scalability. As a result of the over-utilization of the network, the transaction time is prolonged and charges go up.
In Ethereum, every node in the network is paid a fee called Gas that can be used to run instances of Ethereum Virtual Machines (EVM), in turn allowing the network to function efficiently. EVMs can be considered as a collection of smart contracts gathered to perform an action. There is more activity than ever on Ethereum today. The cost of completing transactions has thus increased. Thus far in 2021, there has been an average of $20 in GAS charges per transaction. Furthermore, trades take around five minutes to complete on the network.
What Are Some of The Things You Can Do With PancakeSwap?
In a nutshell, PancakeSwap lets users trade BEP-20 tokens. Besides enabling them to profit by offering liquidity for exchange pools, they can also earn tokens by using their cryptocurrencies. PancakeSwap also offers the possibility of staking tokens to gain more tokens.
All of the following are possible with PancakeSwap:
- BEP20 tokens can be traded
- Earn fees by providing liquidity to the exchange
- Earn CAKE tokens by staking your LP (liquidity provider) tokens
- Get more CAKE when you stake it
- Gain access to other projects by staking CAKE
An Overview of PancakeSwap Benefits
Taking part in a pancake swap has a number of advantages. The obvious advantages of PancakeSwap outweigh some of its less-publicized benefits, but those benefits are no less valuable.
Getting New Tokens
Through its deposit features, PancakeSwap enables users to send USDT, BTC, BUSD, and ETH from the ETH chain to the BSC chain. The market’s most popular projects are available to you. Also available are a number of BEP-20 exclusive tokens, along with a number of rare tokens.
It’s Faster with PancakeSwap
Users benefit from a more seamless connection with the BSC. Users of PancakeSwap complete their transactions in a matter of seconds. As a result of faster transaction times, investors have a greater chance to earn more through arbitrage trading. Trading with them also allows traders to keep up with trends, as well as reduce slippage.
Transactions on PancakeSwap are Cheaper
Low fees are perhaps PancakeSwap’s biggest appeal. Compared to its predecessor, the network isn’t dependent on gas prices. With PancakeSwap, you can trade at a fraction of the price of Ethereum-based AMMs like Uniswap and SushiSwap. On average, PancakeSwap transactions cost only $0.08.
The Platform is Secure
PancakeSwap demonstrates a high level of security. Due to its non-custodial nature, it does not hold your assets in a big hot wallet directly on the platform. Because of this, DEXs are preferable to centralized exchanges. It has also taken measures to boost its reputation for security. PancakeSwap had a third-party audit done by CertiK, a renowned cyber-security group.
During the audit, enterprise-level security was validated for the platform. The opportunity also allowed PancakeSwap to expand its features. CertiK’s Security Oracle, CertiK Shield, DeepSEA, and Virtual Machine are the key features that the developers have added.
PancakeSwap presents novel methods for generating additional revenue sources. Users may secure revenues and benefit from decreased costs by using the DEX. They may also stake and farm their tokens to easily gain prizes. Non-fungible tokens can be traded and issued on the network (NFTs). These collectible tokens are now one of the fastest-growing areas in the blockchain market. They are rapidly increasing in value, with some recent NFTs selling for millions of dollars.
Trades Conducted Privately
PancakeSwap is a wonderful alternative for private trade experiences. Registrants are not required to provide KYC/AML information. Connect your wallet and you’re ready to trade. Those worried about their privacy may see this method as an additional degree of defense against hackers or anybody else monitoring their profits.
Protocols For Deflation
In light of its deflationary technologies, PancakeSwap preserves the value of its token. Several tokens are being burned in connection with these protocols. The platform’s native token, CAKE, gets burned when it is raised in Initial Farming Offerings (IFOs). Also, 10% of the profits from the PancakeSwap lottery and cake grown in farms are burned. Developers can use such systems to keep up with the market’s rapid change and protect their investors from losses caused by oversupply.
The Pancake Swap: How Does It Work?
AMMs connect buyers and vendors without using order books. Platforms use liquidity pools and advanced algorithms to engage these parties directly. AMMMs can minimize slippage, increase rates, and enhance speed. As a result, several top platforms, such as Uniswap and SushiSwap, function as AMMs.
PancakeSwap Liquidity Pools
LP tokens are awarded to users who provide liquidity to the pools through PancakeSwap. As the value of the pool increases, the tokens appreciate. Through these illicit liquidity pools, users gain immediate access to their assets without exchanging them. PancakeSwap has over 69 different liquidities pools. The average return to users ranges between 23.52 percent and 378.19%. These awards are especially awarded in CAKE, the native cryptocurrency of the site.
There are also many special pools available in Pancake Swap for the SYRUP pool equation. Liquidity pools such as these offer excellent rewards. In some of these pools, you can earn rates ranging from 44.33 % to 275.12 %. Taking part in SYRUP pools can also earn you CAKE tokens. Prizes are awarded in UST, LINA, SWINGBY, and others.
PancakeSwap Yield Farm
Using yield pools is possible with PancakeSwap. Similar to staking, yield farming involves lending your crypto to various projects via smart contracts for rewards. In farming protocols, there is generally no lockup period between staking and yielding.
For farming CAKE tokens, Initial Liquidity Pools (LPs) included:
- BAKERY LP
You can yield farms with PancakeSwap by clicking the Farms tab. Make sure the toggle is set to Live farms so you can see what is currently going on. There will be a long list of options on this page, including many farms with both BUSD and BNB bases.
Find out how much each farm earns by clicking the details link after selecting the farms you’re interested in. Many of PancakeSwap’s pairs are currently earning well above 200% APY, including farms like DUSK-BNB.
On the Details page, you will be prompted to unlock your wallet before PancakeSwap can detect the currencies inside and allow you to deposit them on the farm. You will be able to see how much CAKE you have earned once you’ve deposited.
The PancakeSwap platform allows users to stake tokens easily in exchange for earning more. On the platform, you stake CAKE. For those new to crypto, staking is a better choice because it is much less labor-intensive than trading. Profits can be earned when staking without monitoring multiple platforms or learning advanced trading strategies. Staking is as simple as locking your crypto into a pool and leaving the rest on the platform. The amount you stake and the length of time you stake determines your rewards.
Holders of liquidity pool tokens are thus able to benefit from multiple revenue streams as a result of their participation. The platform distributes some of the trading fees generated to its users. Out of the average 0.2% fee, 0.17% is distributed directly to holders of LP tokens.
As expected, PancakeSwap’s best feature is its decentralized exchange (DEX). From the beginning, the DEX was built to ensure that all the features needed to trade tokens effectively were accessible to new users. It takes only a few seconds to trade tokens. To make matters even better, an impressive assortment of tokens is available to choose from.
IFO: Initial Farm Offerings (PancakeSwap)
One other unique aspect of PancakeSwap is its Initial Farm Offering (IFO) protocols. IFOs differ in several ways from ICOs. For users to access the sale of the newly issued token, they must hold LP tokens from a supported pool, instead of buying the token directly. There are numerous advantages to IFOs over ICOs, including democratic participation and decentralization. The best part is that by only seeding a farm pool, new firms can launch IFOs.
With PancakeSwap, traders can take advantage of the growing network of NFTs. Several unique digital assets are supported on the platform for trading and staking. NFT rewards were even made available for PancakeSwap lottery winners. This push for highly profitable tokens aligns with BSC’s strategy. BEP-721 is a protocol developed by the network to simplify the creation and launch of non-fungible fractional tokens (NFTs).
Check out the NFT page for more Info
Funds for the further development of PancakeSwap are provided by the PancakeSwap Treasury. It is estimated that 0.03% of all trading fees go to this protocol. As market conditions dictate, the Treasury conducts token burns as well.
Those with 10 CAKES or more are welcome to participate. From NFTs to CAKE payouts directly, the rewards are varied.
During each lottery session, six hours are required. The ticket costs 10 CAKE and you’ll get a 4-digit number between 1 and 14, like 10-6-5-2. All four numbers on your ticket need to match the numbers shown on the winning ticket to qualify for the jackpot (50% of the entire lottery pool).
Do you still get points if you do not match all four? Yes, you will still get your points. Your numbers will be rewarded if more than two of them match the winning number.
Historical Background of Pancake Swap
PancakeSwap started on September 20, 2020. It was a recent practice taken by DEX to name platforms after cuisine preferences that gave origin to the platform’s name. In BSC, the AMM for farming and staking output is now the largest and most widely utilized. This rise is mainly attributable to the Binance Accelerator Fund.
PancakeSwap became the first billion-dollar project on Binance Smart Chain on February 17, 2021.
Here’s How To Buy PancakeSwap (CAKE) On Binance (Video Attached)
What Makes PancakeSwap Better Than Uniswap?
I’m sure that you wonder what makes PancakeSwap better than its competing exchanges like Uniswap or SushiSwap. PancakeSwap has considerable liquidity, thus it’s a big decentralized exchange.
Although PancakeSwap is a Binance Smart Chain-based exchange, we hesitate to call it a truly decentralized exchange due to BSC’s non-decentralized nature. Although not fully decentralized, there are advantages to not being totally decentralized as well.
A couple of reasons why PancakeSwap is better than Uniswap include its quick and affordable user interface and liquidity levels. It’s only an issue if you wish to trade ERC-20 tokens, since you will need to use Binance Bridge to enter and exit Ethereum, which, depending on gas prices, could be prohibitively expensive for some.
Consequently, those who already own BEP-20 tokens and are seeking to keep doing their transaction via Binance Smart Chain will have the best experience with PancakeSwap. In addition, the rate of expansion at BSC should make it easier to accomplish that goal as well.
Ethereum has been one of the first blockchains to support smart contracts, so the bulk of DeFi activity has been centered on it. Users and developers of the platform have made it an ideal place to create decentralized applications (dapps).
As a result of an increase in interest towards the end of 2020 and the start of 2021, however, Ethereum applications are no longer in the spotlight. The issue with Ethereum in the DeFi space is that as gas prices have risen, users are finding alternative payment methods that are more affordable. Binance Smart Chain and DeFi dapps within their ecosystem are experiencing strong growth.
Is it Safe To Use PancakeSwap Exchange?
PancakeSwap is audited by CertiK. Nevertheless, it isn’t completely safe. The possibility of bugs and risks is inherent in smart contracts. The platform may suffer from smart contract flaws, which could result in bugs or errors that might cause the platform to suffer substantial losses. If you cannot afford to lose, do not deposit more than you can afford.
📢 This article and blog post contain information that is solely meant for educational and entertainment purposes. The only thing I am is a crypto enthusiast who believes that blockchain technology will change the world, not a financial advisor or legal expert. Be sure to do your own research before investing in any crypto and or platform, and be aware of the risks! Cryptocurrencies are extremely volatile digital assets that come with significant risks.