In today’s review, I will walk you through one of the hottest food-themed Defi projects – PancakeSwap.

PancakeSwap is one of the Dapps built on the Binance Smart Chain.

It allows users to trade and access a wide range of liquidity pools and earn a high APR on them.

As I walk you through this review, you will get to learn how to use PancakeSwap and all you need to know about the CAKE token.

Let’s get started!

Post Summary

I will cover the following;

1. Overview of PancakeSwap
2. How PancakeSwap Works
3. Services on PancakeSwap
4. CAKE Token Explained
5. How To Use PancakeSwap
6. PancakeSwap Vs Uniswap
7. FAQs
8. Conclusion

Are you ready? Let’s dive in!

Overview of PancakeSwap

PancakeSwap is a decentralized exchange that runs on the Binance Smart Chain network.

A set of anonymous developers launched it in September 2020.

Pancakeswap was created to allow traders to swap BEP-20 tokens without difficulties.

It also offers a range of liquidity pools that allow liquidity providers to earn rewards in CAKE and LP tokens.

PancakeSwap is the first Dapp on the Binance Smart chain to hit a billion dollars in TVL and transaction volume.

The data on Coinmarketcap shows that PancakeSwap has $8,174,624,645 in TVL (April 22, 2021).

Total Value Locked (TVL) is the aggregate amount of funds locked into a DeFi protocol. You could think of TVL as all the liquidity in the liquidity pools of a given money marketplace.

https://academy.binance.com/en/articles/7-indicators-every-defi-investor-should-know

PancakeSwap offers a swift transaction and low fees for token swaps.

And despite being relatively new, it has an enviable potential for outperforming older DeFi projects like Uniswap.

Do you care about how PancakeSwap works? I will tell you how in the next section!

How PancakeSwap Works

PancakeSwap follows the Automatic Market Maker (AMM) protocol to execute trades.

This means traders’ orders are not matched to an order book but traded against a liquidity pool.

Anyone can provide liquidity to PancakeSwap’s Liquidity pool and earn a reward.

Also, coins are traded in pairs, but traders do not come together to swap their coin pairs.

Let’s briefly see how it works;

• Liquidity providers stake their coins to the protocol’s liquidity pool
• A trader makes an order to swap his coin for another (let’s say BNB/CAKE) from the liquidity pool
•  PancakeSwap AMM quotes a price using the mathematical equation (x * y = k).
• The trade is executed if the trader agrees with the AMM’s price.
• Lastly, liquidity providers earn a portion of the trader’s fee

You can also liken this to how a peer-to-contract exchange like the Synthethix DEx works.

However, unlike the Synthetix DEx, the coins traded are not minted and burned, and there is a little slippage, too.

Having discussed how PancakeSwap works, let’s look at what you can do on PancakeSwap’s platform and what you can do.

Services on PancakeSwap

PancakeSwap offers the following services;

• Exchange
• Liquidity
• Farms
• Pools
• Lottery
• Collectible
• Team Battle
• IFO

Exchange

This is the interface that allows you to swap your BEP-20 tokens using the AMM model discussed above.

You can swap over 130 tokens on the exchange’s interface, including these BEP-20 tokens;

• TWT
• ALICE
• DODO
• CAKE
• SUSHI
• DITTO
• DICE
• DFT
• CREAM
• BAKE
• BEER etc.

You can also trade the BEP-20 version of other blockchain token including;

• ETH
• BNB
• XRP
• YFI
• XTZ
• EOS etc.

Liquidity

You can become a market maker/ Liquidity provider by depositing your crypto assets into PancakeSwap.

In return, you will receive liquidity pool ( LP) tokens. The LP tokens represent your share in a pool.

Farms

“Farms” is a feature that allows you to stake your LP tokens and earn rewards in CAKE.

This service is provided to Liquidity providers alone. If you are unwilling to add liquidity to the protocol, do not worry; “Farms” is not for you.

Here are some of the LP tokens that you can stake;

• CAKE-BNB
• TKO-BNB
• APY-BNB
• HOO-BUSD
• ODDZ-BNB
• TWT-BNB
• MIR-UST, etc.

Moreover, the APR you receive on most farm pools is relatively high; for example, TWT-BNB has an APR of 115.71% (April 22, 2021). However, these APRs fluctuate in real-time, too.

You can check out how to farm on PanckeSwap here.

Pools

PancakeSwap pools are called the Syrup Pools.

You can stake your CAKE to about 40 pools to earn CAKE and other new tokens.

The fantastic thing about PancakeSwap is the sky-high APR you can earn by staking your coins in its pools.

For instance, CAKE‘s pool had an APR of 100.55% when writing this post.

This is insanely high! And it shows that you can make 2x your money in a year.

However, you must know that the APR on the Syrup Pools also fluctuates.

When you have staked CAKE and earned your pool’s token reward, you can cash it out by clicking “Harvest.”

Lottery

Regarding CAKE Lottery, you can win a jackpot in a lottery pool by purchasing a lottery ticket with your CAKE token.

How it works? I will tell you…

First, you need to buy a lottery ticket.

One lottery ticket costs 1 Cake, equivalent to $27 (as of 22nd of April, 2021).

You can buy as many tickets as you wish, but only 50 tickets at a time.

Each lottery session is completed every 6 hours, 4 times daily, within a set time.

For instance, when you pay for one ticket, you will get 4 random digit numbers between 1-14, e.g. “1-9-14-2”.

To win this lottery, the 4-digit numbers on your lottery ticket need to match the positions of the 4 winning numbers.

Here is how the winning ratio is calculated;

• Match all 4 numbers in the exact order = win 50% of the pool’s pot (or split the pot if more than 1 winner)
• Match 3 numbers in the exact order = win or split 20% of the pot
• Match 2 digits in the precise order = win or split 10% of the pot
• The remaining 20% of the pool’s pot is burned

Collectibles

PancakeSwap has 15 Binance Smart Chain NFTs for wins!

You can win these NFTs and have them as collectibles by participating in the PancakeSwap Team Battle.

I will show you how to win these NFTs in the next feature.

Team Battle

You can win free NFTs, CAKE tokens, and more prizes by participating in team battles on PancakeSwap.

But to become one of the participants, you need to go to your “Team and Profile” and set up “Your Profile.”

Once “Your Profile” is set up, you can now join the ongoing battle by trading any of these eligible trading pairs;

• BNB/BUSD
• CAKE/BNB
• ETH/BNB 
• BTCB/BNB 

But note that there are about 3 battle teams of 500 team members in this competition, and you must belong to any of the three teams. See the teams below!

• Chaotic Cakers
• Syrup Storm
• Fearsome Flippers

Your rank and your team’s rank in the battle are calculated by the total number of the eligible trade pair volume you and your team members have traded.

Ultimately, the final winning team will be the team with the highest trade volume.

Initial Farm Offering (IFO)

This is another unique product on PancakeSwap!

IFO is a way of farming newly launched DeFi coins on PancakeSwap.

You can think of IFO as an IEO. However, contrary to IEO, coins sold on IFO are not bought but farmed with LP tokens.

You can participate in any IFO on PancakeSwap by following the steps in the screenshot above.

The best part of PancakeSwap’s IFO is its “Overflow Sale Method.”

This means that you can get back your leftover LP tokens if the project conducting the IFO raises more funds than its initial target.

Note: There is no limit to the amount of LP tokens you can commit into an IFO. However, you may not receive the IFO coin if you have saved tiny LP tokens.

I will tell you all you need to know about the CAKE token in the next section. Scroll down!

CAKE Token Explained

CAKE is a Binance Smart Chain token created under the BEP-20 token standard.

It is the native token of PancakeSwap and is used to incentivize liquidity providers on PancakeSwap.

For example, when you stake your LP token on any of the “Farms” pools, you get rewarded with the CAKE token.

CAKE is also the governance token on PancakeSwap; it confers voting power to hodlers and enables them to vote for proposals made on the protocol.

As of the 22nd of April 2021, 157,012,708 CAKE are currently in circulation, but there is no fixed maximum supply of CAKE.

The “no maximum supply of CAKE” enables CAKE to keep up with its use case in incentivizing liquidity providers.

However, the fact that CAKE has no maximum supply virtually makes it an inflationary token.

To counter this Inflation, the team at PancakeSwap came up with 2 mechanisms to control the supply of CAKE and make it deflationary too.

The two mechanisms are;

• Reducing Block Emission: CAKE’s emission rate was reduced from 40 block rewards to 25 and eventually 22 blocks (after a successful governance voting).
• Token burn system: This ensures that the CAKE token is frequently burned to bring about deflation.

Here is how the token burn system is being carried out;

As for CAKE’s distribution, this is how the protocol distributes the CAKE token to liquidity providers;

• Farms – 12 block rewards of CAKE tokens
• Syrup pools – 10 block rewards of CAKE tokens

If you are already considering the exchanges to get some CAKE tokens… I listed the top places here;

• Binance, PancakeSwap, Kucoin, Gate.io, HitBTC.

For CAKE’s wallet, here are some of the wallets where you can store your CAKEs;

• Trust Wallet, Safepal Wallet, Metamask, Ledger

Not financial advice: The best way to profit from your CAKE token is by staking them into PancakeSwap for more yields. This is way better than holding them idly in your wallet.

Back to the central business, let’s look at how to interact with PancakeSwap in the next section.

How To Use PancakeSwap

To use PancakeSwap, you will need to have these two things first;

• Any of the supported wallets
• BEP-20 version of BNB stored in the wallet ( to pay for network fees)

Once these two things are ready, you can now follow this step-by-step guide below;

• Go to PancakeSwap.Finance and click on “Connect.”

• From the supported wallets, connect PancakeSwap to the wallet where your BEP-20 BNB is already stored.

Ensure your wallet address is connected to the Binance Smart Chain network.

• Once your wallet is perfectly connected to Pancakeswap, you can explore and use the services provided on the platform.

I will compare PancakeSwap with Uniswap (another DeFi DEx).

If you wish to know the best, scroll down and read through!

PancakeSwap vs. Uniswap

In this section, I will briefly talk about the similarities and dissimilarities between Uniswap and PancakeSwap.

I will also let you know which one has gotten more traction over the other.

But first off, let’s start with the similarities…

• PancakeSwap and Uniswap are two huge AMM DExs in the DeFi space.
• They both have a governance token
• Both also have a seamless UI

Let’s get the dissimilarities in the table below;

Well, I have given you the similarities and dissimilarities of these two protocols. It is now left for you to decide which you would go for.

Meanwhile, let’s head over to the FAQ section, where I answered some of the questions that you might want to ask.

FAQs

P.S
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Conclusion

PancakeSwap has not even done a year, yet it seems incredible how it has drawn so much attention off older DeFi DExs.

As of Feb. 22, 2021, PancakeSwap is ranked #1 in the list of “Top Cryptocurrency Decentralized Exchanges” by Coinmarketcap.

Splendidly, it has also been the recent price booster of the BNB token – the price of this token gains momentum as more volume is traded on this DEX.

PancakeSwap did not just follow the trend in the DeFi space; it also brought spiced features and new flavors.

Having spoken so much of the PancakeSwap, I will now leave the floor open for your questions and comments.

So, you can tell me here…

What do you think of the potential of PancakeSwap?

Do you see the TVL on PancakeSwap swallowing up that of Uniswap soon?

Considering the various features of Uniswap and PancakeSwap, which would you instead go for? Why?

Let me have your thoughts on the comment section, and remember to hit the share buttons below.

Cheers!

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