What is PancakeSwap?
PancakeSwap is a Decentralised Exchange (DEX) that operates on the Binance Smart Chain (BSC). PancakeSwap was created by some anonymous entities which address themselves as Chefs; the project was launched in September 2020.
PancakeSwap was developed on an Automated Market Maker (AMM) model, which depends on user-fueled liquidity to facilitate crypto trading. The exchange enables the users to exchange and swap tokens, especially BEP-20 tokens, without requiring any intermediary. Because the DEX runs on the BSC, the trading fees are comparatively lower than any other exchange.
It further allows users to transfer tokens from other platforms through the Binance Bridge, wrap them into BEP-20 tokens, and use them in PancakeSwap DEX. Some of the significant currencies on PancakeSwap are BUSD, Wrapped Bitcoin, CAKE, etc.
PancakeSwap offers endless yield farming options. It is much cheaper and faster, provides tons of liquidity locked in pools, and is easier to use via Binance Bridge.
The PancakeSwap Exchange facilitates users with varied services supporting decentralised trading:
- Swapping and Trading: Being a Decentralised Exchange, PancakeSwap eliminates the need for a user to go through a Centralised Exchange, hence, removing the dependency of an intermediary or a third party.
Token Swaps is a simple process to trade one BEP-20 token for another through Automated Liquidity Pools. When users make a Token Swap on the exchange, they earn a 0.25% trading fee. 0.17% is returned to LPs in the form of a fee reward for Liquidity Providers, 0.03% is sent to the PancakeSwap Treasury, and 0.05% is sent to the CAKE Buybacks and burn.
- Liquidity Pools: Swapping tokens on PancakeSwap depends on the given liquidity of those tokens. If no one has added enough liquidity for the tokens you need to swap, it would be a bit difficult and expensive to carry out further steps. The users can deposit their crypto token holdings into liquidity pools and receive Liquidity Provider (LP) tokens called FLIP.
- Syrup Pools: Syrup Pools is another simple way to earn free tokens on PancakeSwap by staking CAKE tokens.
- Initial Farm Offerings (IFO): IFO is an event that facilitates the users to buy into a limited-time offer to purchase new tokens.
- Lottery: CAKE tokens can be used to enter a lottery on the PancakeSwap DEX.
- NFT Marketplace: This PancakeSwap NFT marketplace was launched in October 2021, which features some of the most fascinating collections of NFTs; PancakeSwap’s NFT collections include Pancake Bunnies, Pancake Squad etc.
- Yield Farming: The users who provide liquidity can earn CAKE token rewards by locking their Liquidity Pool tokens into a smart contract. Yield farming focuses on balancing out the risk of impermanent loss that tags along with locking in your liquidity. The yield farming opportunities that the exchange provides are pretty massive. PancakeSwap farms and Syrup Pools feature over 200%+ yields that are paid in the exchange’s native token CAKE.
- Community Farm Auctions- Qualifying projects can bid CAKE with a right to conduct a seven days Farm on PancakeSwap on a weekly basis. The latest auction that happened had three farm pairs which were:
HOTCROSS-BNB providing around 129% of APR with a liquidity of $1,322,332.
FIGHT-BUSD providing the highest APR of approximately 608.8% and liquidity of $279,556
8PAY-BUSD providing an APR of 600% and liquidity of $268,336
(these are the values at the time of writing)
Further, users can also earn Non-Fungible Tokens (NFT) collectables for taking part in trading competitions and more games.
How to Use PancakeSwap?
The steps to start Trading on PancakeSwap are:
- Go to the PancakeSwap Exchange page.
- The first step is to unlock your BNB Smart Chain compatible wallet make sure you connect your wallet to PancakeSwap.
- Select the token you want to trade in and enter the amount.
- Check the details, etc. and click on the Swap button and confirm it.
Roadmap of PancakeSwap for Q1 2022 says its planning for Initial Farm Offerings 3.1, NFT Utility, NFT based gamification, Hackathon, Lottery v3, and much more.
PancakeSwap Vs Uniswap:
PancakeSwap is still an emerging DEX compared to UniSwap, which was founded in 2018; hence the Total Value Locked (TVL) is much higher for UniSwap, which is
$7.53 Billion, whereas that of PancakeSwap, is $4.35 Billion.
UniSwap is built on the Ethereum Blockchain, which automatically increases the transaction fees on UniSwap. Hence, the fees on PancakeSwap are much lower compared to the former.
UniSwap being the older one has more tokens listed on it, whereas PancakeSwap has lesser tokens listed, but it has gained considerable popularity in a short time.
Disclaimer:
The views and opinions stated by the author, or any people named in this article, are for informational ideas only, and they do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/03/27/pancakeswap-an-emerging-dex-with-immense-opportunities/