Pancakeswap Review has become necessary because aside from the fact that gas prices are growing, the Ethereum network is currently overburdened. As a result of this predicament, several traders have felt compelled to switch to networks that not only ensure efficient trading but also charge relatively low fees.
Decentralized apps built on the BSC (Binance Smart Chain) are gaining popularity as viable alternatives to Ethereum-based exchanges. PancakeSwap, a BSC-based decentralized exchange with low fees and quick transactions, appears to be a credible contender to replace Ethereum-based decentralized exchanges.
There are a few compelling reasons why PancakeSwap could be your ticket out of UniSwap’s and other Ethereum-based decentralized exchanges’ limitations. The advantages of PancakeSwap are numerous, ranging from the opportunity to earn CAKE tokens to the assurance of lower trading fees and being rewarded for liquidity providing.
This is a comprehensive review of PancakeSwap, and as such, it will cover almost everything you need to know about the BSC-based exchange. If you’re on the fence about using PancakeSwap (most likely because you’re worried it’ll be a scam), rest assured that you’ll find out whether the exchange is legitimate at the end of this post.
What is PancakeSwap?
PancakeSwap is a decentralized exchange (DEX) on the BSC that uses permissionless liquidity pools that are totally automated and operated by algorithms.
PancakeSwap, by far the most popular decentralized exchange (DEX) on Binance Smart Chain (BSC), has become something of a blockchain phenomenon in recent months, given its tremendous liquidity, diverse feature set, and large user base.
Users can securely trade Binance Coin (BNB) and a wide range of BEP-20 tokens without relying on centralized services or losing control of their private keys on the platform. All trades on PancakeSwap are automatically completed using smart contracts as a decentralized exchange, entirely eliminating counterparty risks.
The PancakeSwap website and smart contract code are both open to public examination, making the platform totally open-source.
Since its inception in September 2020, the platform has experienced a significant increase in both the number of users and the liquidity of supported assets, as well as the number of functions it offers.
PancakeSwap has evolved into a full ecosystem of Defi products, all of which are based on the platform’s native utility currency, CAKE.
Why the name PancakeSwap?
It’s just following the decentralized finance trend of using food tokens. SushiSwap came first, followed by BakerySwap, and now PancakeSwap. In the Defi ecosystem, there is a slew of other food-related businesses and tokens.
The PancakeSwap exchange has faster transactions and lower fees than Ethereum-based Defi solutions. PancakeSwap, as the most popular AMM platform on the BSC, can be compared to ERC-20-based AMMs like SushiSwap and Uniswap.
If you haven’t heard of an AMM, it’s a type of exchange that allows users to trade digital assets against liquidity pools and earn returns.
In the AMM, users lend their digital assets to liquidity pools in exchange for liquidity tokens, which they can use to earn more digital assets by staking.
How PancakeSwap works
PancakeSwap is an automated market maker, which is a form of DEX (AMM). There are no order books, bid/ask systems or limit/market orders in this system.
Instead, participants trading on the platform automatically draws liquidity from one or more liquidity pools, which rebalance after each trade.
Trades executed on an AMM, such as PancakeSwap, remove liquidity from one side of the pool and supply liquidity to the other, affecting the weights and relative prices of the assets in that pool.
Users are given LP tokens, which represent their share of the pool. In order to recover their share of the pool, these tokens must be returned. LPs receive a part of the transaction fees generated by any pools they provide in exchange for providing liquidity. Makers and takers pay a flat 0.25 per cent transaction charge, with the majority of the fee split among the liquidity providers.
PancakeSwap is a decentralized application (DApp) that may be used with any supported wallet, such as MetaMask, Bekonta, or WalletConnect.
The PancakeSwap treasury, which now receives 15% of all trading fees generated, funds the platform. The treasury funds can be utilized for a variety of activities relating to the platform’s upkeep and maintenance, according to the official documentation. Salaries, audits, rewards, bounties, hosting, and so on are examples of these.
What can you do on PancakeSwap?
PancakeSwap allows users to trade BEP-20 tokens, as you could have guessed from the explanation above. They can also utilize their cryptocurrencies to offer liquidity for the exchange pools, earning more tokens in the process. It is also possible to stake tokens on PancakeSwap in order to gain extra tokens.
PancakeSwap allows for all the following:
- Trade BEP20 tokens
- Stake your LP (liquidity provider) tokens to earn CAKE token
- Provide liquidity to the exchange and earn fees
- Stake CAKE to earn more CAKE
- Stake CAKE to earn tokens of other projects
Trading on PancakeSwap
As you may expect, PancakeSwap is where the majority of CAKE tokens are traded. CAKE tokens, on the other hand, have a healthy trading volume on Binance. You can even acquire them there and then move them to a wallet that supports CAKE and BEP-20 assets.
If you don’t have a Binance account you can easily open one by signing up on Bekonta.
How to trade on PancakeSwap Simplified
Trading on the PancakeSwap DEX requires a digital wallet like Bekonta.
Wallets are digital asset storage and transfer platforms that integrate with numerous blockchains.
Bekonta is a browser extension or software that allows users to connect with Ethereum-based apps such as decentralized exchanges.
When it comes to centralized exchanges, many of them levy taker fees and maker fees from the takers and makers, respectively. Takers remove liquidity from the order book by accepting previously placed orders, while makers are the ones who create those orders. The most common method is to just charge “flat” costs.
The taker and the manufacturer are both charged the same flat price by the exchange.
Many decentralized exchanges do not charge any trading fees at all. One of the main arguments used by DEX supporters to explain why centralized exchanges are on their way out is this.
PancakeSwap isn’t one of the “no fee” exchanges; instead, it charges 0.20 per cent per transaction, whether you’re a maker or a taker. These costs are higher than the industry norm when compared to DEXs in general.
CAKE Token Distribution
Being a liquidity provider or staking your CAKE tokens on PancakeSwap are also ways to earn CAKE tokens.
The following is CAKE’s current effective emission rate and distribution mechanism:
Reward per block — 15 CAKE (It was 40 CAKE before and has been decreased to 25>22>20>19 and lastly 15 CAKE)
Daily emission (Based on 30k blocks per day) — 450,000 CAKE per day
- Farmers (LP staking) — 33.33% of the rewards per block (5 CAKE)
- CAKE holders (CAKE staking) — 66.66% of the rewards per block (10 CAKE)
- Farmers daily (LP staking) — 150,000 CAKE (based on 30k blocks per day)
- CAKE holders daily (CAKE staking) — 300,000 CAKE (based on 30k blocks per day)
With new governance suggestions, these rates may change again. You can also contribute to PancakeSwap’s governance by submitting recommendations and voting on those that have already been submitted.
Because PancakeSwap is built on the Binance Smart Chain (BSC), there’s no need to emphasize that PancakeSwap only accepts BEP20 tokens. BEP20 tokens are the standard coins on the Binance Smart Chain, similar to how ERC20 tokens serve as the standard coins on Ethereum.
With your BEP20 tokens and a good understanding of how PancakeSwap works, you have a good chance of trading cryptocurrencies successfully on PancakeSwap.
An automated market maker (AMM) model is used by PancakeSwap. While you can trade digital assets on the platform, there isn’t an order book where you’ll be matched with someone else. You trade against a liquidity pool instead.
Those pools are stocked with money from other users. They put them into the pool in exchange for liquidity provider (or LP) tokens.
They can recoup their share, as well as a portion of the trading fees, with those tokens.
In a nutshell, you can trade BEP-20 tokens or increase liquidity while earning rewards. We’ll go through some of the other features later.
These LP tokens come in a variety of varieties; for example, if you add BUSD and BNB to the pool, you’ll get BUSD-BNB LP tokens in return. What’s the difference between BETH and ETH? BETH-ETH LP tokens will be sent to you.
With a trading turnover of more than $600 million, PancakeSwap has been dubbed the largest BSC-based exchange. Even if PancakeSwap’s advantages aren’t enough to convince you, the platform’s standing as the largest BSC-based project is impressive.
PancakeSwap could be the greatest option on your list if you’re serious about switching to BSC-based exchanges that are considered worthy alternatives to SushiSwap or comparable Ethereum-based exchanges.
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