Uniswap and PancakeSwap are the leading DEXs of the blockchains they represent.
In this new series, we compare some major crypto assets and how they have performed recently. In doing so, we ask this question: If an investor has Rs.1,000 left today, how can he/she allocate the capital between these assets? Today we want to compare Uniswap (UNI) and PancakeSwap (CAKE).
In the age of growing use cases of decentralized finance or DeFi tools, the role played by a decentralized exchange or DEX matters. A DEX is a peer-to-peer marketplace where crypto traders transact directly with each other. Two of the most popular DEXs, Uniswap and PancakeSwap, work towards the same goal – to allow users with compatible crypto wallets to access a wide range of financial services directly from their wallets.
Today we would like to compare the two DEXs to examine their future potential.
Uniswap (UNI)
Uniswap, the largest DEX, is a collection of computer programs operating on the Ethereum blockchain, enabling decentralized token swaps. Uniswap uses Constant Product Market Maker, a type of Automated Market Maker (AMM). In this model, users contribute Ethereum tokens to Uniswap’s “liquidity pools”. Smart contracts are used to execute trades and mathematical formulas are used to set prices. Each liquidity pool has funds for two cryptocurrencies. When users make trades, it draws on pools of liquidity instead of an order book.
UNI is Uniswap’s native cryptocurrency. The UNI token was introduced to allow the Uniswap community to become the owner of the Uniswap ecosystem. It allows stakeholders to vote on major protocol changes and development initiatives. Uniswap offered 400 UNI tokens for users who had previously used Uniswap’s decentralized exchange protocol during its launch. Around 2,50,000 Ethereum addresses received approximately $1,500 worth of UNI at the time of the airdrop.
Today, users can earn UNI tokens by staking tokens in Uniswap’s liquidity pools. UNI owners who own 1% or more of the total UNI supply can submit development proposals. UNI has a total supply of 1 billion with a market cap of $5.8 billion and is among the top 25 cryptocurrencies.
PancakeSwap (cake)
PancakeSwap is another decentralized exchange, although it is powered by Binance Smart Chain. PancakeSwap works on an automated market maker model (AMM).
PancakeSwap is only used for BEP-20 tokens on Binance Smart Chain. However, tokens from other platforms can be brought over via Binance Bridge and “wrapped” as BEP-20 tokens for use on the DEX. CAKE is PancakeSwap’s native utility token.
CAKE is used for a variety of purposes. Its main functions are yield farming, staking, participation in the PancakeSwap lottery, and creating and voting on governance proposals through the platform’s community governance portal. PancakeSwap rewards those who use CAKE.
With a market cap of $2.7 billion, CAKE ranks 42nd among cryptocurrencies.
UNI vs. CAKE: Verdict
Recent performances from UNI and CAKE v/s BTC
Source: TradingView, Binance
The main difference between PancakeSwap and Uniswap is that PancakeSwap works on the Binance Smart Chain while Uniswap works on the Ethereum blockchain. The former offers significantly lower transaction costs. On the other hand, the latter uses ETH for each transaction, thus significantly increasing transaction costs compared to other platforms.
Although CAKE offers unique features like lotteries, UNI has a much higher TVL (Total Value Locked) than CAKE. While CAKE uses PoS (Proof of Stake) consensus, UNI uses PoW (Proof of Work) consensus.
In 2022, UNI significantly underperformed Bitcoin, losing 44% in value. While CAKE underperformed by just 12% — although that could be partly due to CAKE falling significantly in value at the start of 2021.
Both UNI and CAKE both work on regular updates to make their respective platforms better. The world of DEX is expected to improve as these two platforms continue their journey as #1 on their own blockchain.
Both UNI and CAKE are promising altcoins and choosing between them is comparable to choosing between Ethereum and Binance Smart Chain. To answer our question – we believe that the ideal is to invest a 60% stake in UNI and the remaining 40% stake in CAKE.
After registering, use promo code TNM51 at www.giottus.com/profile#promo to get Rs.51 worth of bitcoin for free.
Disclaimer: This article was written by Giottus Crypto Exchange as part of a paid partnership with The News Minute. Investments in crypto assets or cryptocurrencies are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about investing.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.