Briefly
- PancakeSwap is a decentralized exchange that is similar to Ethereum's Uniswap, but instead runs on the Binance Smart Chain.
- DEX allows you to exchange tokens without intermediaries, as well as earn a liquidity pool and staking rewards, participate in lotteries and other passive income options.
Unlike popular centralized cryptocurrency exchanges such as Binance and Coinbase, which are operated by a single legal entity, decentralized exchanges (DEXs) allow trading without intermediaries.
Many such DEXs are based on Ethereum, where the bulk of decentralized finance (DeFi) occurs. READ
Best DeFi Wallets for Decentralized Finance
However, as competing smart contract blockchains take root, comparable DEXs are popping up elsewhere, sometimes with unique features.
In the case of PancakeSwap, it is built on the Binance Smart Chain rather than Ethereum and offers much lower trading fees as a result. Binance Smart Chain is newer and less established than Ethereum, but PancakeSwap is already causing a lot of excitement among DEXs.
READ
What is Binance Smart Chain? Difference from Ethereum
In this article, we'll cover what you need to know about PancakeSwap on Binance Smart Chain, including a quick guide on how to get started.
PancakeSwap - how does it work?
First of all, let's understand what a Pancake swap is. This is a DEX exchange on the fairly popular Binance Smart Chain, providing users with tools for earning money and easily exchanging BEP-20 tokens. The platform acts as an AMM or automatic market maker. In other words, when trading virtual assets on the PancakeSwap or SushiSwap exchange, there is no order book that matches you with other trading participants. Instead, trading occurs through a liquidity pool.
Each liquidity pool is filled with user funds. People pour their assets into the pool and in return receive liquidity provider (LP) tokens. With the help of LP tokens, you can return your share of the invested funds and receive part of the trading commissions.
In other words, users gain access to BEP-20 token trading and liquidity supply for a fee. In addition, there are a number of additional ways to make money on the site – we will talk about them in more detail below.
It is also worth noting that liquidity tokens on the Pancake exchange are different. For example, if you added BUSD and ADA to the pool, you will be given BUSD-ADA LP tokens. And if you added BETH and ETH, then BETH-ETH LP will appear on your account instead.
What's special about the project?
PancakeSwap disintermediates centralized exchanges, allowing other users to earn rewards. If you are willing to lock up your tokens for a while, the rewards can be very large, especially with some liquidity pools and staking options.
Of course, as with other DEXs, those new to the crypto industry will likely have a difficult time navigating PancakeSwap and understanding its myriad features. Although it may be worth taking the time to understand how it works.
How to use PancakeSwap?
The main features on the platform are farming, staking, swaps and liquidity pools. Users also have access to lotteries and IFO (initial farm offering) from Pancake Swap. We will briefly discuss how to use these tools below.
Farming on PancakeSwap
Pharming will require LP tokens, which were issued to the user as a reward for supplying liquidity. To start the farming process, go to the “Farms” section and select the pair of tokens that were deposited when supplying liquidity. Next, click on the “Approve Contract” button. Each pair's card contains the annual interest rate (APR) and a calculator for calculating pancake farming income for a certain period (day/week/month/year). If you have already accumulated a certain amount of CAKE tokens, then you can pick them up at any time by clicking on the “Harvest” button.
Staking on PancakeSwap
This procedure requires two basic conditions: you need to have CAKE tokens in a crypto wallet approved by the platform, as well as some supply of BNB. To see all the available Pancake Swap liquidity pools, you just need to go to the “Pools” section. Any of the pools is suitable for staking and earning CAKE tokens. However, you are not limited to only them - you can earn tokens from other projects, for example, BOR, SFP, LIT, etc. To initiate the CAKE staking procedure, click on the “Approve CAKE” button. If you have not yet connected your wallet to the site, then you need to fix this before starting pancake staking. To do this, click on the “Connect” button (top right) or on “Unlock Wallet” in one of the pools.
Swaps and liquidity pools
VER-20 token swaps are a core function of PancakeSwap, as well as providing liquidity. If you click on “Trade” in the left panel, you will find these options there (“Exchange” and “Liquidity”, respectively). The first will allow us to move on to the exchange of tokens, and the second will allow us to supply liquidity to the site.
The swap procedure is very simple: you select one asset from your wallet, then indicate what it will be exchanged for, and then simply click “Swap”. To provide liquidity, you need to go to the “Liquidity” tab and click on “Add Liquidity”. Next, a pair of tokens is selected for deposit in a similar manner to supply liquidity. After confirming your choice, you will start earning LP tokens.
!RISKS!
The most important risk in this area is the change in the price of your tokens relative to each other. The more the price at which you deposited cryptocurrency into the pool differs from the current one (you can always monitor it in the “Farms” section), the more you lose your cryptocurrencies. This process is called impermanent loss.
And a side risk is the danger that the exchanger’s protocol will simply be hacked and some of the funds will be withdrawn, but the chance that this will happen is very small, since PanCakeSwap is the safest and most secure of all those on the market.
PancakeSwap Lottery
It works based on a hash code, so the organizers won’t be able to cheat – everything is fair and transparent. Lottery tickets are purchased with CAKE tokens. You can buy as much as you like. Each ticket purchased comes with four random numbers. To get a prize, you need 2/3/4 numbers to match in order. The reward is distributed proportionally to the matching numbers:
- 4 numbers in order: 60% of the amount is divided among all the lucky winners.
- 3 numbers in order: 20% of the amount is divided among all lucky winners.
- 2 numbers in order: 10% of the amount is divided among all lucky winners.
- Nothing is guessed: up to 10% of the harvest is burned.
If there is only one winner in the drawing, then the entire prize amount goes to him. Well, if no one is lucky enough to guess the sequence, then a percentage of the amount is simply burned.
Cake token: rate forecast and prospects for Cake
To assess the possible prospects for CAKE, you should go back in time a few months to assess the dynamics of the exchange rate. Back in mid-January, the coin cost $0.6, but from the beginning of February wild growth began, which allowed CAKE to reach the level of $17.5 per unit at its peak. This was largely facilitated by the listing of the token on the Gate.io platform.
The rate correction dropped the price to $10 in a matter of days, but in early March the token was already trading at $11-12. At the time of writing this review, the price of CAKE was $11.6 (according to CoinMarketCap).
Pancake Swap chart for March (CoinMarketCap)
Pancake Swap chart for March (CoinMarketCap)
As for the future prospects of the token, according to analysts, the future for PancakeSwap (and the DEX industry as a whole) is bright and bright. The daily trading volume on the exchange exceeded $500 million. For comparison: the total trading volume on another popular DEX platform Uniswap is generally in the billions. Even despite the wild commissions on the Ethereum network, new users willingly come to these exchanges. Of course, not all decentralized exchanges will survive in the long term, but there is no need to worry about PancakeSwap, since the platform is firmly established among the industry leaders.
Staking
An alternative to pharming on decentralized exchanges is staking into the pool https://pancakeswap.finance/pools. In this case, CAKE holders transfer their tokens to the developers of new projects presented in the BSC ecosystem.
Cake staking
In return, they undertake to return the CAKE provided to them.
One solution is to “stake” CAKEs earned from farms. You can choose the solution that suits you in the Pools section of the main page.
What's better? It is believed that on average farming gives the best results over short distances - days or weeks. Over long distances—months—thanks to staking, staking brings great profits.
Where to buy and store Cake?
Today, the Cake token can be found on both decentralized and centralized exchanges, including Binance. To buy/sell a token on Binance, you must have one of the following assets: BTC, USDT, BUSD, BNB. Unfortunately, the exchange is still limited to these areas, but nothing prevents you from exchanging other cryptocurrencies for one of the above-mentioned ones for the subsequent purchase of CAKE. The required order in the trading section is created in a few clicks.
How to buy CAKE tokens on Pancake Swap
How to buy CAKE tokens on Pancake Swap
The easiest way to store BEP-20 tokens is in the Binance Smart Chain wallet, as it is available as a browser extension (similar to another well-known MetaMask wallet). The wallet is very convenient and easy to use, it allows you not only to store coins and track information on them, but also to connect to various dApps (decentralized applications) based on the Binance Smart Chain blockchain. By default, CAKE is not in the list of available wallet assets, so you will need to add it manually by clicking on the plus icon at the bottom of the screen. As analogues for storing CAKE, we can recommend the wallets Trust Wallet, Mathwallet, MetaMask and others.
We withdraw cryptocurrency to the TrustWallet wallet
Now we need to withdraw our BNB to our TrustWallet wallet.
1) Go to TrustWallet and click settings:
2) Enter “bnb” and opposite !Smart Chain BNB! put a blue check mark (this is how we will add a token to display in the wallet):
3) Next, return to the main page and look for the added token in the list and click on it:
4) Check that we have selected Smart Chain. It is very important! Next, click “Get”
5) In the tab that opens, click “Copy”
6) Return to the exchange and opposite BNB click “Withdraw”:
7) Select BEP20 (BSC) in the “Network” tab, paste the copied address from TrustWallet in the “Address” line, enter the BNB and click “Withdraw”:
In 1-5 minutes (depending on the network load), our BNB will arrive TrustWallet .
Farming and staking of the Cake token
Of all the listed ways to earn money, staking and farming are in greatest demand among users, so it makes sense to dwell on these points in more detail.
Earning money from farming
So, how do CAKE farmers make money? On commissions inside the exchanger, on the swap of coins in which liquidity was invested, as well as for providing this very liquidity in exchange pairs. Simply put, in order for the exchange rate to remain within the normal range and the Pancake Swap commission not to skyrocket, there must be a reserve of money on the site. This is exactly what farmers do when they receive a reward. To join their number, you must:
- Have a supply of coins to send to the liquidity pool. This will allow you to receive a reward for your services. If you don’t have cryptocurrency on Pancake, then it makes no sense to purchase it at high prices for the sake of farming.
- Have BNB BEP-20 available.
- Create a wallet supported by PancakeSwap, for example, Trust Wallet (there is a lot on the Internet about how to connect a trust wallet to pancake, so we won’t dwell on this issue now).
- Register on Binance and go through the verification procedure to be able to top up your account balance and withdraw funds from the exchange.
- Have free assets that can be put to work.
- Determine the object and conditions of farming (what coins will be required for this). Details can be found in the corresponding section on the official PancakeSwap website.
Staking coins in Launch Pool
CAKE tokens earned on the site can be pledged at interest for additional profit. To do this, you need to go to the “Staking” section and confirm the contract under which your tokens will be sold at interest. For example, if your percentage is 300, then you will receive 0.8% per day (300/365=0.8), or 24% of the amount per month.
The percentage is dynamic, it depends on how much money is invested in the pool. More assets - less interest. If the value of the invested coins increases, your CAKE-equivalent income will increase and the annual percentage will decrease. Under diametrically opposite conditions the situation will be the opposite.
When working with this instrument, it is recommended to invest only amounts that you can afford to lose. There is always the possibility of hacking, fraud and technical errors, from which no one is immune. Plus, never invest completely in pools - send only a portion of your funds to them.
Purchase algorithm
1) After registration, go to the “Account” -> “Verification” tab and go through full identity verification (due to government policies, this has become necessary to purchase cryptocurrency). The verification process can take from 30 minutes to 2 days :
A complete guide on how to get verified on Binance.
2) After passing verification, then click on the “Buy Cryptocurrency” tab -> “P2P Trading”:
3) Click “Buy” and select the BNB cryptocurrency, payment RUB/USD (as convenient for you) , then select a convenient payment method :
4) From the drop-down list, select the account with which we will work. After linking your payment details, you will be able to purchase cryptocurrency. To purchase cryptocurrency, read the guide to working with P2P trading, it's not difficult!
5) After purchasing, your BNB will appear in your wallet:
All! We bought cryptocurrency.
conclusions
Today, PancakeSwap can be classified as one of the leading automated market makers. Thanks to the BSC blockchain, which ensures fast operation and low cost of operations, the service looks more attractive than its closest analogues on Ethereum. This largely explains the popularity of Pancake. Reviews about the site from users on the Internet are mostly positive.
The project roadmap involves many innovations such as lending and borrowing assets, connecting margin trading, binary options and much more. In other words, the project has a great future, but success largely depends on the timing of the implementation of the plan and the quality of new services. Time will tell how it will turn out.
PancakeSwap Announces New Marketplace and NFT Collection
With year-long success in the crypto space, PancakeSwap has turned its attention to the NFT space with a new collection and marketplace.
Clearly, PancakeSwap intends to expand its role in the market. In 2021, Non-Fungible Tokens are the hottest trend.
“We heard your screams. We saw the tweets,” exchange officials said in August. “We even saw you bursting with rage.” Well, we're happy to announce that we're working on it."
The team shared on Medium:
“As always, we won't share a timeline, but we are working to release as simple a version as possible as soon as possible, which we will then refine and improve.”
This announcement comes in response to a call from users for an OpenSea equivalent for BSC. PancakeSwap is one of the largest DEXs in the entire DeFi space, the weight of its market share and the strength of the CAKE token influence the community's confidence in the successful launch of the site.
The marketplace will start as a “minimum viable product (MVP),” meaning there will be an early version of the product with exactly the minimum set of features required to quickly launch and familiarize users.
At first, users will only be able to trade PancakeSwap NFTs. Once the MVP is established, the team will expand the market to include a wider range of NFT items. Interestingly, NFTs cannot be purchased through CAKE.
The first version will include:
- the ability to buy and sell NFTs;
- trading in BNB/WBNB;
- the ability to use commissions earned on the trading platform to buy back and burn CAKE;
- PancakeSwap tradable NFTs (will be part of the first-ever collection);
- first collection.
The team stated that the total number of collections will be limited. They also explained that each NFT will be unique according to a set of characteristics that determine its rarity.
“Chef Ceci has been making these bunnies for a long time and we are so excited to have them.”
