Last updated on March 22nd, 2023 at 07:52 am
Introduction
With the advent of Bitcoin and its phenomenal success, today cryptocurrencies are not limited to just sending and receiving payments. In this article, we talk about a highly sophisticated platform that can help you lend, borrow, earn, swap, and trade cryptocurrencies using precise and innovative algorithms. Let’s talk about it.
1. What is Pancakeswap?
Pancakeswap is a decentralized exchange on Binance Smart Chain (BSC) that allows users to swap assets using automated market makers. It puts out liquidity pools, which are groups of assets that you can use to swap other assets.
This means that it doesn’t rely on a third party to hold user funds or information about users. Instead, everything is stored in the blockchain and managed by the users themselves.
PancakeSwap is non-custodial. This means that there are no centralized servers for anyone to hack into or shut down; instead, all of the trading happens directly between two people without any middlemen involved at all.
Finally, PancakeSwap has higher trading volume than Uniswap (the only other non-custodial cryptocurrency exchange out there). That means that if you want to buy or sell bitcoin with dollars quickly and easily—no matter what kind of volume you need—PancakeSwap will give you exactly what you’re looking for.
You can also see the price of pancakes in USD/BTC/ETH. You can Trade other currencies, as well as your own balance of pancakes and ERC20 tokens.
The Pancakeswap feature is built into Binance’s existing API. It uses BSC as its underlying protocol. Traders can swap any ERC20 token they have for pancakes at any time without needing to register or pay fees.
The exchange will automatically calculate the equivalent amount of PancakePEDs based on current exchange rates. It means traders don’t need to worry about missing out on value when they go shopping.
2. How is PancakeSwap different from Uniswap?
With this basic information, let’s see how different is Pancakeswap and Uniswap. PancakeSwap and Uniswap are both peer-to-peer marketplaces for the trading of cryptocurrencies. Both have their own unique features and advantages over the other. PancakeSwap is more focused on security, while Uniswap is more focused on ease.
PancakeSwap offers users the option to provide proof of identity to ensure that all transactions are secure. However, Uniswap does not require anything like this.
It also offers users the ability to create multiple wallets. Which can be useful for those who want to separate their funds into different accounts. In contrast, Uniswap does not allow users to create multiple wallets—instead, they must all be stored in one place.
PancakeSwap does not require users to have any knowledge of blockchain technology or cryptography. This makes it possible for people who don’t have much experience with crypto to use the platform easily and safely.
In contrast, Uniswap requires users to have some familiarity with the concept of smart contracts before they can use it effectively.
3. How Does PancakeSwap Make Money?
After a brief about, what is Pancakeswap, let’s take a look at, How Pancakeswap makes Money?
As mentioned earlier, PancakeSwap is a decentralized exchange for cryptocurrencies that makes money through liquidity pools.
Liquidity pools are used by traders to facilitate trading on the PancakeSwap platform. Traders using liquidity from these pools pay a fee of 0.20%. From this amount, 0.17% goes to its treasury. Maintenance and upgrades of the platform are funded with this money.
Since Liquidity Pools are not our topic for discussion here, I will not go into depth about it. However, you can read out article on Liquidity Pools here to know more about them.
4. How To Swap Tokens On Pancakeswap?
To start swapping tokens on PancakeSwap, your account must be connected to a BEP-20–compatible wallet. If you want to trade tokens, you must first own some. To get LP tokens on PancakeSwap, you need to invest digital assets in their liquidity pools.
To add liquidity to the marketplace. First, select the Liquidity option in the Trade tab and click the Add Liquidity button. Once you have done that, you will get some LP tokens in exchange for the assets you have invested.
To check how much LP you have earned, go back to the Trade tab and click on “Liquidity” under the “My Balances” section of your profile.
In addition to seeing how much LP you have earned over time, it will also show how many days it has taken for your asset or coin investments (in USD terms) to reach certain levels of earning potential as compared with others who are doing similar things with their accounts on PancakeSwap at any given time period.
5. What are the Features of Pancakeswap?
PancakeSwap has become one of the biggest decentralized exchanges on the Binance Chain and among the largest decentralized exchanges overall by taking advantage of several strengths. After getting an answer to our question on What is Pancakeswap? Let us now move on to see what are its features.
5.1 Interconnectivity
PancakeSwap is a Binance Smart Chain-based decentralized exchange network focused on pancakes, but it also supports other exchanges for users to make trades. The PancakeSwap developers also designed the program with an eye toward interconnectivity, knowing that Ethereum dominates the DeFi space.
They made the decision to make sure the PancakeSwap protocol was compatible with Ethereum, supporting both BEP-20 and ERC-20 standards.
MetaMask, which stores and manages both tokens, is a popular wallet that PancakeSwap has listed on its exchange. The company also provides easy migration for people switching back and forth between the two blockchains.
5.2 Retail Focus
The Binance Chain platform is a close second to Ethereum in popularity, with over $8 billion locked in its ecosystem.
5.3 Constant Innovation
PancakeSwap has consistently shipped new products in order to keep pace with the evolving needs of its users.
In April 2021, for example, the platform upgraded to a V2 exchange, and in May 2022 introduced a V2 MasterChef that included fixed-term staking and the ability to implement new CAKE use cases.
A further example is the company’s launch of Lottery V2, its prediction market, and perpetual trading. PancakeSwap has also released a roadmap, which details upcoming upgrades to both the lottery and prediction markets as well as additional fixed-term staking benefits.
In addition to its constant innovation, PancakeSwap also has a dedicated team working on community engagement and education initiatives.
5.4 Yield Farming
Yield-farming is a unique feature of the PancakeSwap platform that allows users to collect large returns. Users can collect their previously earned LP tokens and use them on the PancakeSwap platform, which provides a way to collect CAKE tokens (the governance token of the platform.).
CAKE rewards are analogous to an investment, as you lock in your money for a promised return. The naming convention used here obviously resembles farming terminology. While “farming” refers to the investment of your money in CAKE, “harvesting” refers to receiving the promised reward after a certain amount of time has elapsed.
5.5 Staking
Staking is one of the most popular ways to earn rewards as a crypto trader. It’s also one of the best ways for newcomers to the field to get started earning rewards. With PancakeSwap, you can stake CAKE coins in SYRUP pools to earn even more rewards. Rewards are paid in CAKE as well as other BEP tokens.
When you cash out the rewards, you have to harvest the crop. In cryptocurrency staking, you lock up your investment for a fixed period of time. Once you stake your CAKE, you can earn a passive income.
5.6 NFTs
PancakeSwap has many unique features, but one of the most important is its use of NFTs. Non-fungible tokens, or NFTs, are digital collectibles that can be used on the blockchain platform PancakeSwap. Users can win special NFTs and then use them for trading and staking. However, some people choose to collect NFTs rather than participate in the game.
6. How Pancakeswap Works?
Pancakeswap allows users to trade cryptocurrencies without having to go through a centralized order book. In a traditional exchange, there is an intermediary who matches buyers and sellers.
The intermediary takes a fee for facilitating the transaction, which can lead to higher prices for traders. Decentralized exchanges operate without these intermediaries. Instead of using an order book like most traditional exchanges, they use a special system called an automated market maker (AMM).
The AMM handles trades directly between buyers and sellers by matching them in real-time. Trades are facilitated by a decentralized liquidity pool. Which is an automated market maker that matches orders without the involvement of intermediaries.
Instead of matching individual buyers with sellers. Traders can place buy and sell orders. into the pool and withdraw any tokens at any time. This allows for instant trades and ensures that users are always able to trade one token for another without the need to wait for a match.
7. Why Invest In PancakeSwap?
Investing in it allows users to earn a constant revenue stream from the trading fee. It provides a higher yield when compared to other DeFi yield farming platforms. It also has a higher level of security because it is backed by Binance.
In addition to this, PancakeSwap offers stalking through Auto-Compound which allows users to stake their assets automatically without having to make any manual deposits or withdrawals. Lastly, PancakeSwap is a highly secure platform because it offers users complete privacy with regards to their information and funds.
8. What Is The Purpose Of the CAKE Token?
The BEP-20 standard PancakeSwap token is the native token of the PancakeSwap platform. It is also known as a governance token or utility token because it rewards users for contributing to liquidity pools on the platform. The PancakeSwap platform enables users to create liquidity pools.
Which can be used by other members of the platform to buy and sell cryptocurrencies. The PancakeSwap token (CAKE) can be used in these liquidity pools to pay fees. Which are then distributed among all participants in proportion to their share of the total pool size.
8.1 vCAKE
CAKE tokens are used as voting rights for the community. vCAKE is a number that represents the voting power of tokens released from a fixed-term staking pool. As time passes, vCAKE decreases proportionally to the amount of CAKE tokens released from the staking pool. The total voting power of your account is increased by vCAKE.
8.2 bCAKE
bCAKE is a yield booster that automatically generates boost multipliers based on the metrics of your selected PancakeSwap farms.
bCAKE’s multipliers take into account metrics like the total amount of CAKE locked and average lock duration, as well as how much CAKE each farm has generated.
In other words, if you run a farm and you have a lot of CAKE that’s been locked up for a long time, bCAKE will boost your yield. If you’ve just started out and don’t have much CAKE yet, bCAKE won’t do much to help you out.
8.3 iCAKE
The CAKE token is a utility token used to participate in public sales on the PancakeSwap platform.
iCAKE is a new form of the CAKE token that allows users to participate in IFOs on their platform. The iCAKE will replace the IFO Credit that was previously used for participating in public sales.
It determines the maximum CAKE limit you can stake for participating in PancakeSwap IFOs.
Conclusion
Pancake Swaps is a decentralized online market that allows the exchange of digital assets using smart contracts.
Pancake Swaps can facilitate the exchange of cryptocurrency between users in a decentralized network, which makes PANCX tokens an excellent choice for investors who are interested in the blockchain space and believe its future is promising.
