PancakeSwap (CAKE)is a decentralized exchange with no order book, bid/ask system, or limit/market orders.
Exchange, Uniswap (UNI) and SushiSwap (SUSHI) with similar properties. But unlike other platforms running on Ethereum (ETH), PancakeSwap uses Binance Smart Chain (BSC), a complementary network to Binance Chain (BC).
The platform automatically draws liquidity from one or more liquidity pools after buyers and sellers trade. These liquidity pools are rebalanced after the transaction is complete. In other words, it applies an automatic market maker model.
Who is the Founder of PancakeSwap?
The identity of the main developers behind PancakeSwap is unknown. All that is known is that the protocol uses BCS technology and is controlled by Certik.
How Does PancakeSwap Work?
Koinfinans.com As we reported, the protocol allows several advanced features that make it different from other DeFi protocols. While Ethereum is the pioneer of the DeFi ecosystem, some of the best features and functions are not included in the platform.
Once that happened, users started switching to PancakeSwap as it provided better overall performance. Its features include trading BEP-20 tokens, interaction of Ethereum-based dApps with BSC-based dApps, farming, staking and raffle, as well as community management network.
Blockchain manages transactions by providing transparent, publicly verifiable transactions between users. This blockchain provides decentralized accounting to help resolve disputes and allows anonymity among merchants while ensuring that no user has full control over the CAKE currency.
Wallet Usage
To use PancakeSwap, you must first set up your wallet. You can choose to have a Binance Smart Chain wallet or use Metamask, the most popular Ethereum and ERC20 standard wallet.
Although Metamask is an Ethereum wallet, you can use it for BSC based applications.
PancakeSwap Liquidity
Users can add liquidity to the protocol by adding their tokens to permissionless liquidity pools (LPs). In return, they receive FLIP, PancakeSwap’s liquidity provider tokens. These tokens increase in value as the overall value of the pool increases. Permissionless liquidity pools allow users to earn their assets without the need for direct trading. On average, users’ returns range from 23.52% to 378.19%. Specifically, these awards are part of the platform’s local CAKE paid in tokens.
Staking
- CAKE can be obtained through LP staking.
- It is possible to stake CAKE to earn even more CAKE.
- Staking CAKE to earn tokens from other projects.
- Farming: PancakeSwap also allows users to collect CAKE tokens. Farming means getting the most out of a token or crypto. There are several popular options to choose from with PancakeSwap:
- CAKE – BNB LP
BUSD – BNB LP
BETH – ETH LP
USDT – BUSD LP
USDC – BUSD LP
DAI – BUSD LP
LINK – BUSD LP
TWT – BNB LP
PancakeSwap Swap System
The protocol uses the automatic market maker (AMM) model to provide liquidity for traders. Unlike the traditional order book used by centralized exchanges (CEXs), an AMM relies on a specific algorithm to price assets.
This algorithm adds liquidity from various digital assets in smart contracts (these are called liquidity pools). In the typical order book, you need to have a buyer and a seller, which often results in a lack of liquidity. With AMM, you can trade in the liquidity pool.
Transaction fee on PancakeSwap is 0.2% in total. 0.17% goes to liquidity providers and 0.03% goes to the PancakeSwap Treasury, which is burned.
How to Buy CAKE?
You can choose centralized exchanges such as Binance, Huobi, KuCoin, Gate.io, Binance TR, ByBit and LBank to purchase CAKE.
You can follow the current price action here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.