PancakeSwap is a decentralized exchange (DEX) cryptocurrency exchange built on the BINANCE Smart Chain (BSC) and supports its functional BEP-20 CAKE token.
The CAKE token is one of several tokens used in the PancakeSwap protocol and is available for exchanging cryptocurrencies. Similar to Unicap, PancakeSwap is an automated market maker (AMM) and a decentralized application (dApp) that has liquidity pools where users can make a profit through sticking, lending and yield farming. In this article, we are going to introduce the PancakeSwap platform in full. We also want to examine the role of the CAKE token in this operating system.
?What is pancakeSwap?
PancakeSwap is a decentralized cryptocurrency exchange used to exchange BEP-20 tokens. If you are familiar with Uniswap or SushiSwap, then how to work with PancakeSwap will be easy for you because they have almost the same working model. PancakeSwap does not use orderbook as traditional exchanges. Instead, it uses an automated market-making (AMM) model that matches buy and sell orders directly with others in a liquidity pool.
User deposits enter the liquidity pool. By providing liquidity to such pools, users can earn transaction fees and liquidity tokens (LPs). They can use these tokens to pay part of the transaction fees. So to summarize, you can trade BEP-20 tokens in Pancake Swap, or add liquidity and get rewards. Of course, there are other things that can be done with this decentralized exchange, which we will discuss below. For example, if you add BUSD and BNB to the pool, you will receive BUSD-BNB LP tokens in return.
?What can you do at PancakeSwap?
Before we move on to PancakeSwap, we will explain how to connect to this exchange. If you go to pancakeswap.finance you will notice that many features are unavailable as long as you click Unlock Wallet. When you click on it, you will see several options: Metamusk, Trust Volt, WalletConnect, Binance Chain Wallet and more. But Metamsk is an ethereum wallet, so how do you connect it to the BEP-20 chain?
The Binance Smart Chain Architecture (BSC) is such that you can use METAMASK to interact with BSC-based decentralized applications. After opening your wallet, you can now use the features of Pancake Swap. As we said, Pancake Swap is a decentralized exchange for exchanging BEP-20 tokens, but this is not the only application. In the following, we will discuss other applications of this decentralized protocol.
?Farming and stacking
PancakeSwap allows you to form a CAKE sovereign token. In Farming, you can deposit your LP tokens and lock in a process, for which you will be rewarded with a CAKE token. But which LP tokens can you lock? The list of these tokens is very long, but we bring you a list of the most popular currency pairs used.
- CAKE – BNB LP
- BUSD – BNB LP
- BETH – ETH LP
- USDT – BUSD LP
- USDC – BUSD LP
- DAI – BUSD LP
- LINK – BUSD LP
- TWT – BNB LP
Of course, you still have more ways to make money on pancake swaps. You can earn even more money by placing your Cake token in SYRUP pools. So you deposited some of your funds to receive LP tokens and used them to generate CAKE tokens. And then, you can stick your token and get other tokens through special staking pools.
The largest SYRUP pool is just for the Cake token, where you can stick it to get more Cakes! But there are more tokens that you can get by sticking CAKE, for more information you can see the SYRUP pool page.
?Add liquidity
If you have used an automated market maker before, you know that you have to invest cash to get the protocol token.
To do this in PancakeSwap go to the Trade tab in the left sidebar and then click on Liquidity, click Add Liquidity and select the pair of tokens you want to deposit.
?Lottery section
Another decentralized part of PancakeSwap is its lottery. The duration of each lottery is 6 hours and the price of one ticket is equivalent to 10 Cake tokens, which gives you a random four-digit combination of numbers between 1 and 14, for example 11-8-10-3. To win the main prize (50% of all tokens in the lottery), your ticket numbers must match all four numbers in the winning ticket position.
Of course, if 2 or more of your numbers match the original number, you will also benefit from other prizes.
?NFT section
In the NFT tab of this exchange you can win a special token. If you are selected as an NFT winner, you can trade it for the Cake Token value it shows or keep it in your wallet as a special item that may be more valuable in the future.
But how can you win? All you have to do to get a chance to win is sign up and then the winners will be chosen at random.
?IFO
Initial Farming (IFO) is a way for users to obtain new tokens using yield farming power. In Pancake Swap, you can do this by placing LP tokens in a backed-up pool to access newly launched token sales.
You can check the currently active IFOs in PancakeSwap on the IFO page.
?Fee rate on pancake swap
Like other decentralized exchanges such as Uniswap, 1INCH and SushiSwap, those who provide PancakeSwap liquidity receive LP tokens and part of the platform fees. Trading fee in Pancake Swap is 0.2%. 0.17% is given to the liquidity providers and the rest, ie 0.03% to the platform fund for use in the token burning process.
Is Pancake Swap Safe?
Swap pancakes are audited by CertiK. But does that mean it is completely safe to use? No. Depositing funds in a smart contract is always risky, even for highly audited and reputable projects. And there is always the possibility of bugs and problems in it. So make sure you never enter the project more than you can the risk.
What is a Cake Token?
In September 2020, the Pancake Swake token was launched in the Bainance smart chain. CAKE is a BEP-20 token native to the Bainance smart chain. The CAKE token has performed very well in 2021. The main use of CAKE is to motivate PancakeSwap to provide liquidity.
There is no set number for the CAKE token, meaning that the Cake is an inflatable token and is burned regularly to reduce supply. The CAKE token is currently traded on Bainance and PancakeSwap.
How to distribute Cake tokens
You can earn CAKE tokens by providing cash or sticking to your CAKE tokens. The distribution mechanism of CAKE is as follows:
The reward per block is 25 CAKE tokens (previously 40 CAKE and reduced to 25 CAKE.) Based on the daily amount, which is about 30 blocks, 750,000 CAKE tokens are generated daily. Of this amount, 60% is allocated to farmers and 40% to its holders.
These rates may change again!
How to stake a CAKE token?
To stake CAKE tokens, you must first transfer CAKE and some BNB to a wallet supported by PancakeSwap. To pay transaction fees, you must transfer some BNB to your BEP20 (Bainance Smart Chain) address. To stake CAKE, click the "staking" tab in PancakeSwap and then click the "unlock" button to open your wallet. (If you have not yet connected your wallet to this app)
Then you enter your tokens in the exchange and then you can use them for staking. Transaction fees are also much lower compared to ethereum.
Current status of the CAKE token
The CAKE token is priced at $24.40 at the time of writing and has a $ 24 million 24-hour trading volume. The cryptocurrency is currently ranked 48th in the crypto market in terms of volume, with a market volume of nearly $ 2 billion. And there are currently about 120 million CAKE tokens in circulation.
The highest price recorded for CAKE on February 19, 2021 was $ 21.41 and the lowest was $ 0.19 on November 3, 2020.
Conclusion
Like any other defi protocol, PancakeSwap comes with inherent risks. However, the security provided by Binance Smart Chain calms the hearts and minds of CeFi and DeFi users. Pancake Swap delivers full Uniswap performance at no extra charge in the Bainance smart chain. Transaction fees are paid using BNB tokens, but these fees are very low compared to ethereum-based Defi protocols.
PancakeSwap is one of the successful projects in BSC. As the industry progresses, we expect to see more crossover between DeFi and CeFi and higher quality projects. But always try to be careful in new projects and invest less in it. If you have ever used a decentralized exchange PancakeSwap you can share your thoughts with us and other users.
I hope this article is useful and helps you????
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