A beginner’s guide to PancakeSwap. It is more than just another food-themed DeFi protocol.
PancakeSwap is a well-known DEX on the Binance Smart Chain. The protocol is a part of the DeFi ecosystem that has enabled crypto users to conduct transactions without an intermediary. It does not require fund deposits and a KYC process.
Since its launch, PancakeSwap has shown dramatic growth. It regularly clocks over $100 million in trading volumes.
What is PancakeSwap?
PancakeSwap is a decentralized exchange (DEX) powered by Binance Smart Chain. It allows users to trade cryptocurrencies, stake coins, play the lottery, predictions, and more. PancakeSwap offers various features has massive liquidity.
The DEX was launched in September 2020 by a completely anonymous team of developers. It has been audited by several blockchain security firms including, Certik and Slowmist.
The trades on PancakeSwap are executed automatically via smart contracts. Smart contracts are self-executing codes that reside on the blockchain. These codes can activate automatically when the defined terms are met. PancakeSwap allows secure trade of BEP-20 tokens — the token standard for Binance Smart Chain.
PancakeSwap is not just a DEX. It is an entire ecosystem of DeFi tools that users can access through its utility token ($CAKE).
What is $CAKE?
$CAKE serves as the currency of the platform. It is the coin for yield farming, staking, and other features offered by PancakeSwap.
It also serves as a voting and governance token for PancakeSwap’s community governance portal.
How does PancakeSwap work?
Just like Uniswap, PancakeSwap uses an automated market maker (AMM) mathematical model to facilitate trading on its platform. Since it is a DEX, it does not maintain a book to manage orders.
Read more about CEX & DEX in this article.
Trading on the platform is through liquidity pools. The users who contribute to the pool are called ‘Liquidity providers.’ These users earn rewards for contributing. They receive LP tokens representing their share in the pool.
PancakeSwap uses these liquidity pools and smart contracts to facilitate trades. The availability of the tokens in the liquidity pool determines the price of a particular cryptocurrency.
How to use PancakeSwap?
To start trading on PancakeSwap, connect a BEP-20 supported web3 wallet. Examples are MetaMask and Trustwallet.
Although MetaMask is Ethereum-based, users can configure it to work with Binance Smart Chain.
To use PancakeSwap, purchase Binance Coin (BNB) from Binance or another exchange.
Then, transfer the BNB to the PancakeSwap-supported crypto wallet.
Go to https://pancakeswap.finance/ and click on ‘Connect Wallet.’
Select the wallet, then follow the prompt.
Users can access all PancakeSwap features from the dropdown on the left side of the page.
Features of PancakeSwap
PancakeSwap offers low transaction fees and a fast process, ensuring a quick and efficient trading experience. Apart from this, PancakeSwap has an extensive range of unique features that users can access through $CAKE. Here are some of them:
- Yield Farming
PancakeSwap has numerous yield farms. Users can earn additional yields by staking tokens on any of these. Users can also earn $CAKE from the staked tokens generated through the transaction fees.
- Syrup Pools
Syrup pools are PancakeSwap’s staking feature. Users can stake a variety of BEP-20 tokens. Stakers receive incentives in the form of $CAKE or other tokens.
PancakeSwap also offers a lottery. Users buy tickets for a chance to win a large amount of $CAKE. Players who match all six numbers on their lottery ticket earns the prize.
- Prediction Markets
With prediction markets, PancakeSwap offers a game-like experience where users predict whether the price of $BNB will increase or decrease in a 5-minute timeframe. Users pool their funds, and the rewards are shared by those who predict the course correctly.
- Initial Farm Offering (IFO)
Through IFO, PancakeSwap allows users to purchase the tokens of early-stage blockchain projects before their public launch.
What’s unique about PancakeSwap?
Ethereum may have started the DeFi trend, but other blockchain networks are slowly catching up. Initiatives like PancakeSwap are prime examples of this.
PancakeSwap is reaching the same level of popularity as Uniswap or SushiSwap. It may not have the same average daily volumes, but it is less expensive and faster than both platforms.
PancakeSwap also supports TeraBlock. Users can use the DEX to buy $TBC tokens. Read the full instructions in this article.
Whether you have a question about our products, features, or anything else, our team is ready to answer all your questions. Please feel free to get in touch with us on our Telegram Community Chat.
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