PancakeSwap is the third most popular decentralized cryptocurrency exchange in the world, offering users fast transactions and low fees of 0.25%.
On the exchange you can sell and buy BEP 20 tokens – a token developed from the Binance Smart Chain Blockchain (BNB Chain) platform. PancakeSwap offers a number of unique features, including a liquidity pool and staking rewards, a lottery system, and the ability to exchange tokens without intermediaries.
Most DEXs are based on the Ethereum network, which is known for slower transaction times and higher fees. This can make trading cryptocurrencies a little more expensive and a lot more stressful.
PancakeSwap is an alternative and offers users several lucrative options to keep them on the platform.
In this PakecakeSwap guide, we cover how PancakeSwap works, the exchange’s founders, how you can farm the native token CAKE, its lottery benefits, and how it compares to other decentralized exchanges.
How does PancakeSwap work?
The PancakeSwap exchange is an automated market maker (AMM) that helps remove middlemen from the trading process. Instead of relying on a counterparty to provide liquidity, programming defines the price of cryptocurrencies and provides liquidity in the form of a liquidity pool.
This pool consists of funds deposited by investors, which are then converted into smart contracts to provide liquidity. For buyers, this means they no longer have to wait to be matched with a seller, but can instead deposit their current cryptocurrency into the pool and withdraw the cryptocurrency they want.
For example, if an investor wants to trade their Binance USD (BUSD) with CAKE (PancakeSwaps’ native token), they can use a BUSD/CAKE pool to deposit BUSD and receive CAKE based on the exchange rate at the time of the transaction.
Users can also earn rewards from PancakeSwap as a liquidity provider. Liquidity providers can deposit tokens into a liquidity pool to earn a share of trading fees. Each trader pays a fee of 0.25%, of which 0.17% is added to the liquidity pool and divided among providers. The greater the liquidity you offer, the more rewards you can earn.
PancakeSwap also allows users to generate rewards through CAKE farming, where a user deposits liquidity pool tokens to earn CAKE – we will go into more detail on how you can do this later in this article.
A unique feature of PancakeSwap is the daily lottery drawing, which requires a $5 CAKE entry fee. The drawing works similarly to a traditional lottery, where players must match their numbers to win.
The winning pools come from three sources:
- Ticket costs
- Rollover prices
- Cake treasury
Rewards start with the general ticket cost combined with CAKE tokens from the treasury. On average, 35,000 CAKEs are added from the treasury every week (10,000 CAKEs every other round), and the funds roll over if no one wins.
This unique feature, not available on any other decentralized exchange, highlights PancakeSwap’s fun and friendly trading approach.
Who are the founders of PancakeSwap? (History of PancakeSwap)
PancakeSwap was created as a fork of Sushi Swap in September 2020 using an almost identical code but based on the BNB chain.
The founding team is anonymous, but the team is believed to consist of over a dozen members, referred to as chefs. Two of these members are known as Hops and Thumper, but their identities remain unknown.
Although PancakeSwap is almost identical to SushiSwap, it has several Benefits including faster transactions and a lower swap fee of 0.2% (industry average is 0.3%).. It also offers several additional features such as: B. Yield Farming across other protocols, Initial Farm Offerings (IFOs) and its daily lottery.
Although PancakeSwap was founded by an anonymous team, it is managed by its community. CAKE holders can use PancakeSwap’s voting portal to discuss and vote on a range of governance decisions as well as create their own proposals.
This feature is available to all CAKE holders, with voting power proportional to the number of tokens a user owns. The more you own, the more power you have.
What is the CAKE token and how to farm it?
If you came here to learn how to grow chocolate chip cookies on a tree, we have bad news for you… you won’t find a chocolate cake here!
CAKE is a BEP20 token launching on the Binance Smart Chain. It incentivizes PancakeSwap users to provide liquidity on the DEX and receive rewards for locking their tokens.
As of June 2022, one CAKE token is worth $3.24 and has a trading volume of $144,809,842. It has a total supply of 750,000,000 CAKE with 148,603,636 tokens and is the 69th largest cryptocurrency in the world with a market cap of $481,653,827.
How to farm the CAKE token: A quick and easy guide
First you have to start Adding liquidity to PancakeSwap.
1. Start with Connect your wallet to PancakeSwap via the “Connect Wallet” button in the top right corner.
2. Once connected, Go to the “Trading” tab and click on “Liquidity”..
3. You will be redirected to the liquidity page to click on Add liquidity and select the token pair you want to deposit. You need to deposit both tokens according to the ratio stated on the website.
4. After selecting the pair, you need to do the following Sign the transaction from your wallet, and you will receive Liquidity Provider (LP) tokens based on your share of the liquidity pool.
This is the first step! Now you can actually start farming by depositing your LP tokens on a farm to receive CAKE tokens.
Farms are similar to liquidity pools and allow you to earn interest on your holdings. Here’s how you can start farming on PancakeSwap.
5. Go to the PancakeSwap homepage and click on the “Earn” tab. and select the “Farms” option.
6. You will be redirected to a page listing all available farms.
7. Choose a farm that is compatible with your LP tokens. You can also look at the annual percentage rate (APR) offered.
8. After When you select a farm, click Activate.. You then need to confirm the transaction in your wallet.
9. After confirmation, The “Activate” button switches to “Stake LP”. Click on it and select the number of tokens you want to stake
Now we’re almost there, we promise!
10. Click Confirm and confirm the transaction in your wallet.
11. Once you’re done, The LP balance you use shows how much you have on the farm.
12. You will do it Have your earnings paid out at any time. Simply click “Harvest” and PancakeSwap will return your tokens.
And that’s it! Now you farm CAKE and receive rewards based on the farm you choose.
If you don’t want to farm CAKE, you can buy it on one of the following exchanges:
- Binance
- VCC replacement
- BKEX
- KuCoin
- MXC.COM
After purchase you can store your cake in it MetaMask, Binance Smart Walletor Trust Wallet.
Is the PancakeSwap lottery feature legit?
We briefly mentioned the PancakeSwaps lottery above, but let’s explore what it is and how it works.
The PancakeSwap lottery is a daily event. To win, players must hold a four-digit winning combination consisting of numbers between 1 and 14, for example 4-8-9-12.
For each lottery ticket purchased, a random combination is created and 50% of the lottery pool is awarded to players who have a winning combination. This combination must be done in the same order as shown below.
If a player does not have a matching ticket, they can still receive rewards if two or more numbers match those on the winning ticket – but they must be in the same position as the winning combination.
If no one wins, the prize money rolls over to the next day, increasing the total pool for the next group of players.
Syrup pools, cake cultivation and…. NFTs!
In addition to the Pancake Swap Exchange, users can also invest in non-fungible tokens (NFTs) through PancakeSwap’s new NFT shop. The store houses NFTs based on the BNB chain, including Pancake Squad, Gamester Apes and BornBadBoys. Although not as popular as NFT stores like OpenSea, these collections are valued at over $1 million, with many NFTs selling for over $1,000 each.
How does PancakeSwap compare to other decentralized exchanges?
Although it is a relatively new addition to the market, PancakeSwap is already the third most popular DEX in the world.
It houses by far the largest number of markets with over 3798 options to choose from. The closest is Uniswap V3 with 613 markets. Other competitors such as Curve Finance and dYdX are significantly smaller with 59 and 10 markets.
In terms of trading volume, PancakeSwap ranks third globally with an average volume of $944,910,070. Although this is smaller than Uniswap ($2,852,303,427) and dYdX ($1,978,182,884), the total volume traded on PancakeSwap is steadily growing, while Uniswap and dYdX are declining.
Final Thoughts: Is PancakeSwap the DEX of the Future?
PancakeSwap allows investors to trade with lower fees and faster transaction times, while providing them with several innovative features not available elsewhere in the market.
Investors can be liquidity providers, CAKE farmers or NFT traders. Or they can fully develop and participate in the lottery function of the project.
With so many features, it is no surprise that PancakeSwap has become one of the most popular DEXs in less than two years and is currently the third most popular option.
Although the team behind the project remains anonymous, their governance system allows Pancake Swap Exchange users to determine the future of the platform. This allows them to customize the platform based on what users say, rather than dictating what is best for the project.
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