PancakeSwap is a Binance Smart Chain based DEX (Decentralized Exchange) launched by anonymous developers with a penchant for pancakes and rabbits. PancakeSwap is a bit like Ethereum’s SushiSwap, but also has its own reward system.
- 1 What is PancakeSwap
- 2 What is DeFi
- 3 Binance Smart Chain
- 4 Why PancakeSwap?
- 5 Which wallets can you use?
- 6 $CAKE Token
- 7 Battle of the DeFi
- 8 Safety
- 9 The Roadmap
- 10 Pancake Swap (CAKE) Chart
- 11 Conclusion
What is PancakeSwap
PancakeSwap is a fairly new decentralized exchange created on the Binance Smart Chain (BSC). The automated market maker provides users with a number of innovative ways to generate revenue streams from their cryptocurrencies.
Launched on September 20, 2020, PancakeSwap is a DEX on the Binance Smart Chain (BSC) that uses liquidity pools that are automated and managed by algorithms. This use of algorithms to perform the pools makes PancakeSwap an automated market maker . PancakeSwap also has its own lottery and NFTs. Below a small explanation of how PancakeSwap works.
What is DeFi
DeFi stands for Decentralized Finance. It is a new term used for the emergence of decentralized applications, platforms and protocols for the provision of financial services. They are decentralized financial applications that run on blockchain and smart contractstechnologies are built. The objective is that these applications work as open source, without permission and transparently as possible without the interference of a central party, whereby anyone can also use them without permission. It is an explosive sector with many different innovative projects in which more and more players are becoming active. Even traditional exchanges are taking steps to facilitate the DeFi movement. An important addition to the Binance platform is the Binance Liquid Swap option that competes with the hugely popular Uniswap ‘s DeFi platform. DeFi is currently most successful in developing decentralized money markets in the form of a variety of credit marketplaces, decentralized trading exchanges and liquidity protocols.
Explosive rise of DeFi
This new financial ecosystem will also lead to an explosive growth of new different tokens from all kinds of DeFi projects. These DeFi tokens are freely tradable peer-to-peer on the internet on the decentralized and regular crypto exchanges such as Bitvavoand Binance. Binance’s trading exchange is where most of the DeFi tokens and speculators can be found. Investors need to be careful. It is important for investors in this industry to realize that most DeFi tokens are unregulated, not yet properly distributed and mostly concentrated in the hands of the development team or company. This fact is based on research by Simone Conti, the head of CryptoLab’s Digital Assets Investments. Furthermore, this data can be found on the site of a DeFi project, in the white paper about the token distribution plan. DeFi tokens are not regulated security tokens .
Another problem is that the new liquidity protocols for decentralized exchanges, such as Uniswap, that use an Automated Market Maker algorithm are often still experimental. The AMM systems will certainly be improved over time, however the use of an AMM-DEX can lead to significant losses due to impermanent loss for the strikers. If you plan to put tokens into a decentralized liquidity fund on an AAM-DEX, such as Uniswap, you will first need to figure out how the platform addresses the impermanent loss problem. Bancor is one of the few classic decentralized exchanges with an AAM system that has properly identified and mitigated the problem in its second DEX version.
Binance Smart Chain
PancakeSwap lives on the Binance Smart Chain. The Binance Smart Chain was launched on September 1, 2020. This fourth-generation blockchain is designed to run in parallel with Binance Chain. It’s impressive that BSC is much more advanced than their previous chain. Thus, the platform is capable of faster and cheaper transactions. The network offers ultra-high performance and can produce a block every 3 seconds.
One of the main goals behind the BSC was to enable the creation of smart contracts and the staking mechanism for Binance Coin ( BNB ). This is the native coin used in the platform. To accomplish this task, Binance’s development team has developed the BEP-20 token standard. You can think of BEP-20 as the Binance version of the hugely popular ERC-20 token standard. However, because BEP-20 tokens are on the BSC, they can be traded for much less and offer users some unique opportunities not available on their Ethereum counterparts.
PancakeSwap’s interface resembles that of other popular Decentralized Exchanges (DEXs). It’s very easy to use and you don’t need any prior experience to navigate the basic trading features. Perhaps the biggest appeal of PancakeSwap is its low cost structure. The network is not dependent on expensive gas prices because of the improved technical possibilities. The Ethereum network is more often under fire because these transaction costs and gas prices can be very high. The Binance Smart Chain (BSC) also provides users with a more responsive trading experience. PancakeSwap users’ transactions are completed in less than five seconds in most scenarios. Faster trade times allow investors to earn more because they offer more arbitrage trading opportunities.
Which wallets can you use?
To use PancakeSwap, you need a supported wallet connected to the Binance Smart Chain. Unlike various central exchanges that are also used as software wallets (Bitvavo, Binance), it is not possible to leave your tokens. You have to send your tokens back to your own wallet.
You need a software or hardware wallet before you can trade crypto. A well-known wallet is, for example, MetaMask. This is an Ethereum-based software wallet that allows you to trade. Some other examples of Software wallets are: TrustWallet, TokenPocket and WalletConnect. If you choose the Metamask, you will have to manually connect the wallet to the Binance Smart Chain as long as it is based on the Ethereum blockchain.
MetaMask has a number of standard coins displayable in the wallet, these are ERC20 tokens based on the Ethereum blockchain. You can also choose to manually add your own network, so that you can also keep tokens on the BSC in your MetaMask wallet. In your personal settings you can choose to add a network, fill in the correct configuration and you can get started with your MetaMask wallet in a BSC network.
CAKE is the exchange token for the PancakeSwap ecosystem. There are so many features that CAKE holders can access. You can wager your CAKE tokens and earn even more CAKE. The token is also how you access PancakeSwap’s SYRUP pools. Notably, CAKE is a BEP-20 token that lives in the Binance Smart Chain. Best of all, CAKE is available on other platforms as well.
The CAKE token came out of the oven at a price close to $1.37 just after PancakeSwap launched in September and after some initial volatility, it declined and settled around the USD 0.25 level. However, after spending about two months there, it started to climb when the altcoin rally started in 2021. After hitting its all-time high of $21.41 on Feb. 19, 2021, it fell as fast as it rose, and a week later it reached nearly half of its all-time high of $11.72. The rapid decline was part of a larger sell-off in the cryptocurrency market. That said, there’s no telling where the price will settle a week, a month, or a year from now. Given the growing popularity of DeFi platforms and yield farming, we would think it will be higher.
PancakeSwap Yield Farm
PancakeSwap supports Yield Farming Pools. Yield farming is similar to staking in that you lend your crypto to various projects via smart contracts and receive rewards in return. There is a big difference between Staking and Yield Farming Pools. With Staking, your tokens are locked in for a certain period of time. Yield Farming can be stopped at any time.
PancakeSwap Syrup Polish
PancakeSwap users can easily earn more CAKE tokens by putting their CAKE tokens in the PancakeSwap Syrup Pools for a period of time. This is an easy way to earn more crypto without having any knowledge of trading or trading strategies. You don’t have to do anything yourself. All you have to do is lock your crypto into a stakeout pool for a predetermined amount of time and the rest is handled by the platform. Your rewards are based on the amount you wager and the length of time you set.
Pancake Collectibles (NFTs)
PancakeSwap trades gain access to the growing world of non-fungible tokens (NFTs). The PancakeSwap platform supports the buying and trading of the NFTs. The Pancake Collectibles are based on rabbits. The developer of the Collectibles at PancakeSwap has even gone so far as to develop special Collectibles for the PancakeSwap lottery. The network also recently launched its BEP-721 protocol to simplify the creation and launch of NFTs and FNFTs (fractional non-replaceable tokens).
PancakeSwap organizes a raffle four times a day. Anyone with 10 or more CAKE tokens is welcome to participate. The rewards range from Pancake Collectibles to CAKE Tokens. To win the lottery jackpot (50% of the entire lottery pool), users must match all 4 numbers on their tickets in the same position as the 4 winning numbers. If they don’t match, don’t worry. As long as you match 2 or more numbers in the correct position, you are guaranteed to win a reward.
Battle of the DeFi
According to data from DeFi Llama, about $5 billion in cryptocurrencies is tied up in Uniswap, while now $6 billion is in PancakeSwap. This total value locked on PancakeSwap has increased by almost 35% over the past period. Other websites, such as DappRadar, show similar numbers.
Also in daily trading volume, Pancakeswap now equals Uniswap at approximately $550 million. The main reason for this seems to be the infamously high transaction costs on Ethereum. Ethereum has been struggling with huge gas fees in recent months due to the explosion of the DeFi market, causing users to look for alternatives.
PancakeSwap has proven to be very safe. First, it is a non-custodial DEX, meaning the platform never holds your assets directly in major hot wallets. DEXs are much more secure than centralized exchanges for this reason. In addition, the platform has taken some steps to promote its secure image. For example, PancakeSwap had an external audit carried out by the well-known cybersecurity company CertiK.
Inspection by CertiK
PancakeSwap is completely in order in terms of security. All DeFi protocols suffer from some degree of code risk, which can be significantly reduced through a smart contract audit. On October 16, blockchain security experts, CertiK, announced that they have completed a security audit in the kitchen of PancakeSwap recommending that it can be safely deployed on Binance Smart Chain. The smart contract audit is the final piece in PancakeSwap’s puzzle to potentially grow from a multi-million to a multi-billion dollar liquidity provider and attract more DeFi users to Binance’s newly launched blockchain.
Each project has a roadmap in which they determine objectives for the future. PancakeSwap itself does not refer to this as a roadmap, but as a ‘to do’ list. This is because they do not want to determine which improvements they implement when, in what order. Saying yourself: “This is how we work: as fast as we can, on the things we can. Pivoting is a way of life.”
One of the items on the agenda is the expansion of the NFTs and the NFTs Gamification. They want to establish themselves even more in a fast-growing decentralized market.
Pancake Swap (CAKE) Chart
PancakeSwap is very attractive for users who want to invest small amounts without losing, for example, 25% of the fee. At PancakeSwap you can also participate in farms that pay a very high “interest”. Example: if you participate in the liquidity pool for ZEE/BNB, you will receive 13 times your investment per year. Pancakeswap now trades 176 cryptocurrencies with BNB, Binance’s native cryptocurrency. PanecakeSwap is making rapid progress and we are curious to see what position he will have in a few months!
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com