Pancakeswap has taken the BNB chain by storm and continues to innovate and bring excitement to the field of decentralized finance.
What is PancakeSwap:
PancakeSwap is the leading Multichain Decentralized Exchange (DEX) for Decentralized Finance (DeFi). Since establishing itself as one of the first DEXs on the BNB chain in November 2020, PancakeSwap has grown to become the top protocol in all of DeFi with a range of innovative products and a strong community.
PancakeSwap landed at the end of DeFi summer alongside other famous projects like SushiSwap, BakerySwap. With CAKE, PancakeSwap’s native token, deployed as a BEP-20 token via BNB Chain, users can boast fast transactions and fees that have made it the most widely used DEX ever.
PancakeSwap is the number one Automated Market Maker (AMM) platform on BNB Chain, putting it in the same league as ERC-20 based AMMs like Uniswap and Sushiswap. The DEX uses permissionless liquidity pools operated by algorithms and this process creates what is known as an Automated Market Maker (AMM).
For those unfamiliar with AMMs in DeFi, they allow people to trade their digital assets against pools of liquidity. This differs from traditional financial markets, which use an order book to match buyers and sellers. On AMMs, users can deploy their funds and after deposit become Liquidity Providers (LP) for the respective pool to receive LP tokens.
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Key Features Benefits of PancakeSwap
Earn tokens from PancakeSwap
PancakeSwap has its own native BEP-20 token, CAKE, which can be staked or distributed across syrup pools. Syrup pools offer tokens from other notable BNB chain projects. PancakeSwap issues hundreds of thousands of CAKE tokens every day, but these tokens are a great way for users to earn passive income in a variety of ways.
The CAKE token, like most cryptos, has a volatile history. The token has seen highs above $40 but has been living below the $10 mark lately. The token held its value better than Ethereum and Bitcoin in the second half of 2022.
No Know Your Customer (KYC) policy
Unlike Centralized Exchanges (CEX), anyone can trade hundreds of digital assets with over $100,000,000 in liquidity. Did I mention it’s super easy to use? There will be more information below.
Low fees and super fast transactions
As mentioned, PancakeSwap runs on BNB Chain and uses BEP-20 tokens. BNB Chain has much lower fees than most blockchains, with fees ranging from $0.04 to $0.20 and transactions taking around five seconds on BNB Chain.
The speed on Ethereum and Aptos multichain options is also very fast. For example, PancakeSwap users can take advantage of Aptos’ transaction speeds, which process 100,000 tx per second, while Ethereum’s speed comes with its robust security. Aptos and Ethereum fees are negligible and vary.
PancakeSwap also has one of the fastest ZAP functions in DeFi. Zap was developed by PancakeSwap to make adding and removing liquidity to PancakeSwap easy for all levels of users. With Zap, liquidity providers on PancakeSwap can add liquidity to the trading pair of their choice with a single token.
Multichain Interoperability
2022 was a big year for PancakeSwap as the project became multichain. Using Celer Network’s C-Bridge technology, PancakeSwap was able to successfully bridge its decentralized application (Dapp) with Ethereum and Aptos. And with the CAKE Bridge, users can easily swap their tokens between Aptos and BNB Chain.
PancakeSwap currently dominates both the BNB chain and Aptos, with over 50% of total volume (TVL) locked on both chains. Ethereum integration is a much tougher hill to climb, with PancakeSwap retaining a small market share.
PancakeSwap is secured and verified
PancakeSwap has done everything and received audits from leading security protocols such as Slowmist, Peckshield and CertiK. PancakeSwap has also participated in several bug bounty programs to protect user funds.
tokenomics
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The CAKE bosses have worked extremely hard to get the token to where it is today. After launching inflationary and with an unlimited supply, the token fought its way through the adversities of the market and to maintain its market share today.
It is important to note that according to v2 tokenomics, CAKE now has a total supply of 750 million across all blockchains. Currently, over 285,000 new CAKE tokens are added to the supply daily.
The current stock of the CAKE token can be tracked on their website. There is currently a circulating supply of over 160 million CAKES. To date, more tokens have been burned than are available in total: 700 million.
Some strategies PancakeSwap team uses to control the token supply are regular token burns built into the lottery system and a new 0.05% burn derived from each trade from the latest PancakeSwap V2 update originates.
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yield farming
One of the main reasons most users are drawn to PancakeSwap is returns that you can’t even imagine from centralized finance (banks). They’re a few different ways to earn yield rewards at PancakeSwap. After starting out with just under thirty pairs, there are dozens of liquidity pools at PancakeSwap. They also offer Annual Percentage Yields (APYs) that run into the hundreds to provide liquidity and work in boosts.
To name a few:
· CAKE BNB FLIP
BUSD BNB FLIP
ADA BNB FLIP
BAND BNB FLIP
DOT BNB FLIP
EOS BNB FLIP
LINK BNB FLIP
· BAKE-BNB Bakery LP
BURGER BNB FLIP
The yield from the LP is rewarded in CAKE and sometimes other tokens. The CAKE governance token can also be stacked and used to enter a deflationary lottery.
In providing liquidity to these pools, it is important to understand how AMMs work and the arbitrage opportunities they provide, exposing the LPs to impermanent loss (IL) risk. This can be exceptionally risky when uncorrelated assets are pooled and exhibit high volatility, so it is important to understand the risks involved.
Yield can also be generated by staking CAKE tokens. CAKE can be staked in the SYRUP pools. There are fewer than twenty of these staking pools, and they usually rotate. Staking proved extremely valuable in the early days of PancakeSwap, with APYs up around 500%, but now averaging around 20-30% APY at the time of writing. As mentioned earlier, you can stake CAKE to earn tokens like INJ, CTK, CAKE and even TWT.
Pancake Non-Fungible Tokens (NFTs)
In late 2021, PancakeSwap ventured into the world of Non-Fungible Tokens (NFTs). The team has developed a marketplace to launch and sell NFTs that has maintained a stronghold on the BNB chain. The two main collections were released by the developers of PancakeSwap: Pancake Squad and Pancake Bunnies. Crafted by artist Cecy Meade, Squad NFTs are some of the most popular and expensive on BNB Chain. Each collection is among the hottest NFT releases on BNB Chain, and more collections are on the way.
Access PancakeSwap
To access PancakeSwap you need to use one of the following crypto wallets. In this guide, we will show how to create a custom network in a Metamask wallet and connect it to the BNB chain.
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If you are unfamiliar with navigating Metamask, follow this tutorial on setting up a BNB chain wallet on MetaMask. Remember to protect your account and never share your seed phrase.
Once you’re done, you can access PancakeSwap and start swapping, staking, and providing liquidity.
Once the liquidity is provided, simply navigate to the farm tab, select your specific pool, approve the FLIP tokens and start farming.
To stake PIE, navigate to the SIRUP POOL tab and approve the contract, then stake PIE on the appropriate pool.
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General Thoughts
PancakeSwap is the most used AMM and Farming projection on the BNB chain. It has a TVL of over $2 billion and close to a quarter billion in daily volume. DEX currently has over a million Twitter followers. It is the largest DEX on the BNB chain and the second largest in all of DeFi.
PancakeSwap will continue to provide high volume and plenty of liquidity to the BNB Chain, especially as the world of DEFI expands. DeFi on BNB Chain is a massive alternative as it allows users to participate in DeFi without worrying about exorbitant fees seen on Ethereum.
Overall, the DeFi space is expanding rapidly and PancakeSwap has made a name for itself in the space where it continues to innovate. The team has plans to evolve and bring more innovation to both DeFi and BNB Chain, making it a project worth paying attention to.
Where to find PancakeSwap:
Website | Twitter | Medium | GitHub
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