Numerous Decentralized Finance (DeFi) protocols have evolved over the last few years, with PancakeSwap (CAKE), coming off as one of the platforms allowing users to stake their assets in exchange for protocol tokens.
PancakeSwap, one of the most prominent DeFi-based protocols, is a Decentralized Exchange (DEX) and Automated Market Maker (AMM) powered by the Binance Smart Chain. It allows anyone to rapidly and securely swap BEP-20 tokens.
While Ethereum has a sizable user and developer community, as well as capabilities for constructing high-performance DeFi solutions, in an unusual twist, Binance is essentially vying for market share and Pancakeswap is one of the avenues it is hoping to achieve this.
The curiosity intensifies further, as PancakeSwap has the potential to outperform Binance itself if exchange traffic is high enough. Regardless of coin tales, PancakeSwap is one of the largest DeFi technologies in existence today, with its token known as CAKE. The platform went live in September 2020 and was developed by a group of unknown developers known as a team of “chefs”, which include two co-leads (named Hops and Thumper) and engineers.
How it works
Using an Automated Market Maker (AMM) approach, consumers can swap digital assets on PancakeSwap at any time, even if their order book is full. Similar to the well-known Uniswap (UNI) which operates on the Ethereum blockchain, PancakeSwap allows users to trade cryptocurrency assets by employing user-generated liquidity pools.
The trading platform differs from previous DeFi protocols in that it has a number of additional features. Some of Ethereum’s most attractive features and services were abandoned while it was pioneering the DeFi ecosystem; since PancakeSwap offers better overall performance, especially in terms of lower gas fees, customers have now begun switching.
The following are some of the features that draw users to the PancakeSwap platform;
PancakeSwap is a decentralized exchange system developed exclusively for the purpose of trading BEP-20 tokens. On the Binance Smart Chain-based exchange, anyone can utilize this platform to trade their own BEP-20 tokens.
Using PancakeSwap, you can grow your own CAKE token. It’s possible to deposit and lock liquidity pool (LP) tokens in the PancakeSwap farming function and then trade them for CAKE tokens.
LP tokens must be staked in order to earn CAKE tokens after they have been acquired. You can use your CAKE token to stake in SYRUP pools once you’ve obtained it.
Non-Fungible Tokens (NFTs)
As an incentive, Pancakeswap offers the option to earn Non-Fungible Tokens (NFTs). The winner of NFTs can exchange their prize for CAKE’s price value, and the entire package becomes a collector’s piece for the “cutie” in your wallet.
Initial Farm Offerings, or IFOs, are a mechanism for anyone to obtain a freshly issued token by farming it. Anyone can contribute LP tokens from a pool to PancakeSwap in order to participate in new token sales.
Pros of PancakeSwap
Many people utilize PancakeSwap to buy new coins that have not yet emerged on centralized exchanges, as well as to vent their frustration with the lackluster service provided by former decentralized exchanges.
Here are a few advantages:
- High functionality and ease of use.
- High level of security as all transactions are completed directly through the wallet.
- There are no procedures in place for registering, verifying, or creating accounts.
- Fees are as little as 0.2% per trade.
- Operational efficiency.
- The exchange’s capacity for connecting a huge number of wallets.
- Numerous revenue streams are available, including farming, staking, lottery, and profiting from the CAKE token’s rate rise.
- The exchange is continually evolving as new opportunities are being added all the time. Margin trading, binary options, and lending are all scheduled to be introduced.
- Users can vote on new paths for the site’s development, accept or reject specific updates, and also choose which tokens to list.
Cons Of PancakeSwap
To be fair, this decentralized exchange does not appear to have any substantial drawbacks, but there are certain difficulties inherent with decentralized exchanges as a whole including smart contract weaknesses and the irreversibility of transactions. As a general rule, the PancakeSwap exchange is competitive with other Ethereum-based decentralized crypto exchanges.
The Cake Token
In September 2020, the BEP-20-based CAKE token was established. The basic objective of CAKE is to compensate liquidity providers for providing liquidity to the PancakeSwap platform. CAKE is also a deflationary token due to the lack of a maximum quantity and the regular burning of tokens to diminish the supply.
To farm the PancakeSwap token, a user will need to boost the PancakeSwap exchange pool’s liquidity. After selecting a token pair to deposit, you can immediately start mining CAKE tokens. Withdrawals of BEP-20 tokens from the Metamask wallet, similar to withdrawals of ERC-20 tokens from the Metamask wallet, must be allowed before PancakeSwap can act on your behalf.
A pop-up window will appear, indicating the transaction’s total value as well as any associated fees. To cover future transaction fees, you’ll need to stake CAKE by transferring some Binance Coin (BNB) to your BEP-20 Binance Smart Chain (BSC) address.
Many cryptocurrency ventures are building on alternative blockchains in order to profit from lower transaction fees and a lower saturation of the market. One of these blockchains is Binance Smart Chain (BSC), and because BSC’s transaction fees are far lower than Ethereum’s, it’s easier to get started building decentralized applications on BSC.
It is easy to see why PancakeSwap is so popular when you consider all of its features and benefits, and for as long as Ethereum’s price and congestion rise, it is only logical that PancakeSwap becomes more popular.
Although every DeFi protocol has some inherent dangers, PancakeSwap is no exception. However, Binance Smart Chain (BSC) is winning over users on CeFi and DeFi because of its high level of protection, and having all of Uniswap’s functionalities, but without the fees.
Together with Binance, PancakeSwap is exceeding users’ expectations in the DeFi space by delivering a larger ecosystem with unique features, enticing rewards, and overall enhanced performance.