‹ Back

What Is Pancakeswap? - Introduction To Pancakeswap DeFi On Binance Smart Chain(BSC)

 

By Damian David, edited by Nerly Shammah Feb 21, 2023

 

 

What Is Pancakeswap?

 

Pancakeswap is a decentralized exchange (DEX) on the Binance Smart Chain that allows the trading of BSC standard tokens typically referred to as BEP20. Just like Uniswap, the most popular Decentralized Exchanges (DEXs) on the Ethereum blockchain, pancakeswap facilitates smart contract trades and swaps with Automated Market Makers (AMM). That said, the most important distinctive feature of Pancakeswap is its low gas fees which entail cheaper and faster transactions.

 

 

How Does Pancakeswap Exchange Work?

 

Due to its cheap transactional design, the Pancakeswap exchange particularly empathizes with the vast majority of users of the cryptocurrency market that are nicknamed the "bears". Swapping tokens costs in the Pancakeswap exchange most often don't exceed the 0.25% margin in respect to the total proportionality of the assets to be swapped. Approving a contract in the Pancakeswap exchange costs about 10 cents, while to successfully execute a token swap costs on an average 60 cents. 

 

Transactional fees in the Pancakeswap exchange are distinctively divided into two types; gas fees and slippage fees. The gas fees are mostly paid with BNB, just like you need ETH to carry out a transaction on the Ethereum Blockchain, you must have some amount of BNB in your wallet to carry out a transaction on the Binance Smart Chain. BNB is in two types, the BNB Smart Chain and the BNB Beacon Chain. 

 

Most swaps on the Pancakeswap exchange require the BNB Beacon Chain. The BNB goes to the validators and miners who keep BSC Safe and functional by verifying transactions. The slippage fees are a percentage of the token that is being swapped which stays in the liquidity pool and is subsequently distributed amongst the liquidity providers. The percentage charged is usually 0.17% in respect to the total proportionality of the assets that are being swapped. 

 

Can You Use Ethereum On Pancakeswap Exchange?

 

It is important to note that one of the recent updates to the Pancakeswap exchange has made it possible for it to now support the Ethereum Chain and also the Aptos Chain. This means you can conveniently swap your Ethereum Coin to a Ethereum standard tokens (ERC20) and vice versa. This also applies to the Aptos Chain. 

 

Interestingly, it is also possible to swap your BEP20 tokens to ERC20 tokens using a feature of the Binance Exchange called the "Binance bridge". The Binance bridge is a cross chain feature that allows the seamless swapping and bridging of tokens from one Blockchain to another.

 

How Can You Earn on Pancakeswap Exchange?

 

You Can Earn With Liquidity Pools: In Decentralized Exchanges, one of the most popular ways to leverage it for profitable purposes is using the LPs feature. Liquidity pools are provided by users of the cryptocurrency market which can be anyone, and in the Pancakeswap exchange you can earn by adding liquidity to a pool or pair of your choice and in return get a percentage of the transactional fee used to execute each trade in that pool. 017% of all transactional fees in Pancakeswap is distributed amongst the liquidity providers.

 

You Can Earn With Yield Farming: The Pancakeswap exchange provides the Yield farming option for you to leverage on. Farming in cryptocurrency is a process of growing your cryptocurrency by locking or better still "staking" it for long periods. The staked cryptocurrencies are used by the exchange or Blockchain for whatever reason and in return you get rewarded. To use this feature you'll need "LP Tokens". LP Tokens are tokens that are gotten from providing liquidity to a particular pair or pool in an exchange or blockchain. These tokens are necessary because you can only farm in the Pancakeswap exchange by staking your tokens in a "pair" and you can only stake with "LP Tokens" gotten from providing liquidity for the exact same pair you want to farm in.

 

You Can Earn By Staking In Syrup Pools: Just in case the Yield farming feature was too complex or intimidating for you, you can also try out the Pancakeswap exchange syrup pools if you want to earn. There are three major types of Syrup Pools in the Pancakeswap exchange namely; IFO Cake, Auto Cake And Manual Cake syrup pools respectively. All you're needed to stake in the Syrup Pools is just the $CAKE coin and it'll grow your $CAKE overtime and re-invest the profit back in the pool until you're ready to claim your rewards.

 

You Can Earn Via The Lottery Feature (Lottery V2): The Lottery V2 of the Pancakeswap exchange is an updated version of it's Lottery feature that gives it's users more leverage and increases their chances of winning. You can participate in a lottery round by purchasing a ticket for $5 in $CAKE coin. The more tickets you buy the more discount you get on the prices and potentially, the more you're lucky. There are two types of tickets in the Pancakeswap exchange lottery you can buy which are; The Randomized Tickets and The Manual Tickets.

 

You Can Earn With The Predictions market: Another easy way to potentially earn in the Pancakeswap exchange is to predict correctly what the price of BNB and $CAKE will be in the subsequent timeline. The Prediction feature allows participation from users using only the BNB or $CAKE coin.

 

You Can Earn With IFO (Initial Farm Offerings): IFO (Initial Farm Offering) was pioneered by the Pancakeswap exchange itself and has been a method used by new cryptocurrency projects to raise capital and provide liquidity as well. Using this limited feature, you earn by making sure you purchase a new token on Pancakeswap exchange at it's pre-sale, your profits depends on the growth or rise in value of that token overtime. Most new cryptocurrencies or tokens reach various all time highs (ATH) by thousands of margins from it's initial price, so your chance of earning bountifully using this feature is potentially high but also risky. To participate in an IFO (Initial Farm Offering) in the Pancakeswap exchange you'll need to create a Pancakeswap profile and also have some  $CAKE coins.

 

What Is $CAKE?

 

The $CAKE coin is the official utility token of the Pancakeswap decentralized Exchange. To access a lot of features in the Pancakeswap exchange and to maximize your trading experience as well, you'll need the $CAKE coin. 

 

There are primarily two ways to get the $CAKE coin and they're; By buying it from the exchange and by Winning it from one of the various incentivizing features in the Pancakeswap decentralized exchange.

 

The $CAKE coin on the other hand can also be used to earn rewards in the Pancakeswap exchange from it's Syrup Pools, Yield farms, Lottery, etc. 

 

As of February 2023 it sold at $4.17  and have a market cap of over $780 Million while ranking #68 on CoinMarketCap. A Max supply of 750 Million $CAKE coins, and a circulating supply of approximately 187,301,298 $CAKE coins.

 

How To Swap With The Pancakeswap Exchange 

 

-First log onto pancakeswap.finance in your preferred wallet.

 

-Click on the "Connect Wallet" button and give permission.

 

-At the top right after the "settings" icon, click and select the network of your choice(BNB Smart Chain, Ethereum or Aptos).

 

-After that, scroll to where you are provided with the option to Swap your available tokens to another token of your choice.

 

-Enter the amount of token you wish to swap and click on the "swap" button and proceed to "confirm swap".

 

Is Pancakeswap Safe?

 

The Pancakeswap exchange is audited by various security audits that are as follows; Certik, Slowmist, Peckshield, Blocksec and Ottersec. It is additionally open source which makes it reportedly transparent. Earlier in this article it was stated that there are at least up to two dozen anonymous developers responsible for Pancakeswap architecture, a more accurate source confirms that the two dozen developers are tagged "Chefs" in the Pancakeswap exchange and they're chiefly responsible for added maximal security to the Pancakeswap decentralized Exchange as a whole.

 

Is Pancakeswap Binance?

 

The Binance Exchange is not to be confused with the Pancakeswap exchange. The Binance Exchange is a centralized exchange built to serve as a custodian that facilitates trades with fiats, cryptocurrencies and various crypto assets. The Pancakeswap exchange on the other hand, though an extension of the Binance Exchange is a Decentralized Exchange built with smart contracts to facilitate trades strictly with BSC standard tokens and assets without the need for intermediaries.

 

Why Should You Choose Pancakeswap?

 

As a consistent user of the Binance Smart Chain, the Pancakeswap is an inevitable tool if you're looking to maximize your experience. And even as a non-user of the Binance Smart Chain, migrating to the Pancakeswap exchange assures you more lenient transactional fees, faster transactions, lighter processing, more earning options, more flexibility, more interoperability and so much more.