Table of content:
- PancakeSwap Overview – what is PancakeSwap?
- PancakeSwap Alternatives
- Key Features of PancakeSwap
- PancakeSwap NFTs
- PancakeSwap Pros and Cons
- Cryptocurrencies on PancakeSwap
- PancakeSwap Fees & Commissions
- Conclusion about PancakeSwap
- FAQ about PancakeSwap
A team of builders set out to launch a unique decentralized exchange (DEX) in 2020. These builders were very much alike because they believed in complete decentralization. The team also wanted to remain anonymous. Hence, they like to call themselves the chefs.
At the time, most decentralized exchanges run on the Ethereum Virtual Machine. Hence, when the anonymous builders discovered BSC, a new, low-cost, and affordable blockchain, they didn’t hesitate to use Uniswap’s open-source template. This open-source template enabled them to create a Binance Smart Chain DEX alternative to EVM-run Uniswap.
However, the team made a few adjustments to increase cross-compatibility with BSC. These adjustments would ensure PancakeSwap operated on automated market makers (AMM) rather than traditional market markers and order books. Hence, offering a reliable system for depositing tokens into PancakeSwap liquidity pools and determining the best token prices.
This guide walks you through PancakeSwap, the DEX’s features, Pros and Cons, alternatives and frequently asked questions. The guide will also provide a breakdown of PancakeSwap trading fees and commissions.
PancakeSwap Exchange Overview – What is PancakeSwap?
PancakeSwap is a Binance Smart Chain DEX that offers convenient trading fees and relatively faster transaction speeds. Running on BSC means PancakeSwap only supports BEP20 standard tokens. Notable PancakeSwap features include:
- Stacking mechanism
- Lottery program
- Yield Farming
- Perpetual Contracts
- Initial Farm Offerings
The headquarters of PancakeSwap is in Fukuoka, Japan. As per the DEX’s Linkedin Business Page, PanCakeSwap has approximately 500 employees working smart to deliver an incredible PancakeSwap decentralized finance (DEFI) experience.
Despite starting on BSC, PancakeSwap has been strategizing towards a multi-chain model. The latest version, v3 promised to launch PancakeSwap’s native token on several layer1 and layer2 blockchains. Since the release of v3 in April 2023, the exchange recorded a remarkable increase in monthly trading volumes and market share.
Uniswap is the largest decentralized exchange by market and trading volume. It is uncommon for a DEX to beat a centralized exchange in spot volumes yet in 2023, Uniswap surpassed Coinbase’s spot trading volumes. As a DEX protocol that runs on the Ethereum blockchain, Uniswap only supports ERC-20 tokens.
Read More: Uniswap Expands to Polkadot Ecosystem
Some Uniswap features include Liquidity Providers (LPs) earn fees, censorship resistance, great customer support, and NFT aggregation.
1inch is a decentralized exchange aggregator that scores different chains for liquidity in order to provide the best rates. Unlike a DEX like Uniswap or PancakeSwap, 1inch sources the best trading route for a transaction. I.e, if PancakeSwap has a cheaper way to swap ETH to ADA compared to Uniswap, 1inch will process your transaction through PancakeSwap.
Read More: TOP 15 Decentralized Exchanges on Polygon
The goal of 1inch is to offer the best prices, eliminating/reducing slippage and providing an overall better trading experience on DEXs. Features of 1inch include gas optimization, transaction splitting, efficient routing, and fusion mode.
DexGuru is a decentralized on-chain analytics platform and trading terminal that aims to simplify the trading experience. Through its unique features, DexGuru has strived to provide an intuitive user interface that consists of on-chain research, real-time data across multiple DEX markets, reliable data analytics, and a token swap execution mechanism.
According to DexGuru, their goal is to simplify trading for all levels of traders through an easy-to-use UI, simple-to-interpret onchain data analytics, and real-time statistics.
Key PancakeSwap Features
Spot trading refers to buying and selling digital assets on the spot at a specified market price. Through the PancakeSwap spot trading feature, users can swap between BEP20 tokens with ease. Getting started requires connecting an existing crypto wallet that supports PancakeSwap’s Binance Smart Chain protocol.
PancakeSwap Yield farming involves earning interest on cryptocurrency holdings via a liquidity pool. Crypto holders usually stake their assets in the pool, and the pool distributes rewards proportionately depending on the stake.
PancakeSwap’s Yielf Farming feature provides access to multiple pools or ‘farms. Each farm has a different interest rate of upto 10%. Investors may opt to stake their funds for a fixed period or go for a flexible option. Fixed-period PancakeSwap staking offers relatively higher rewards compared to flexible staking offers. Learn smart PancakeSwap farming strategies to be on the winning side when yield farming on the DEX.
Syrup Pool is a staking mechanism on PancakeSwap that provides both a flexible and fixed option for redeeming crypto asset rewards.
Price prediction gurus can bet on the price direction of a token pair and earn when the prediction is right. For example, you can predict which between CAKE and ETH will have a higher or lower price at a specified time in the future. If the prediction is right, the tokens you added to the prize pools get multiplied several times.
Lottery on PancakeSwap are frequent lottery programs that offer users the chance to win large amounts of CAKE tokens. Each lottery ticket costs approximately $5 worth of CAKE. Users have the option of picking a random ticket or manually picking a ticketing number. If a user picks the right ticket, they can win hundreds of thousands of dollars in CAKE tokens.
Perpetual Futures Trading
Perpetual futures trading, also known as perp swaps, refers to a derivative contract in which traders can speculate the future price of a digital asset without the limitation of an expiry date. Unlike traditional futures contracts which have an expiry date, one can hold a perpetual swap for an indefinite period.
Initial Farm Offering
Initial Farm Offering (IFOs) provides users with early access to new token listings on PancakeSwap. Participating in an Initial Farm Offering requires one to swap their CAKE token for iCAKE. On PancakeSwap, iCAKE is the exclusive native currency for acquiring new tokens during a farm offering.
Non-fungible Tokens (NFTs)
Non-fungible Tokens are available on PancakeSwap through an open marketplace. Users can take part in buying and selling NFTs on the Binance Smart Chain via the PancakeSwap marketplace. The interplay of demand and supply also influences the pricing of NFTs. As such, you can buy at a lower price and sell at a higher future price.
PancakeSwap Pros and Cons
|1. Intuitive interface
2. You control the private keys to your tokens
3. Supports staking
4. PancakeSwap community support and governance
|1. No mobile app
2. You can’t trade BTC and other non-BEP-20 tokens
3. No native crypto wallet
- Intuitive interface – PancakeSwap User Experience
PancakeSwap has a smooth and enjoyable user interface that favors all levels of cryptocurrency users. Traders with minimal blockchain knowledge can still find the UI simple and friendly.
- You control the private keys to your tokens
Pancakeswap follows a noncustodial model where users have complete control over their private keys and their funds.
- Supports staking
PancakeSwap allows users to earn rewards through its staking mechanism. This means user funds will not necessarily lay idle throughout the hodling process.
- No mobile app
PancakeSwap lacks a mobile app. However, traders who want to ‘DEX on the go’ can create a mobile wallet that supports BSC and connect to the PancakeSwap protocol.
- Can’t trade BTC and other non-BEP-20 tokens
The decentralized exchange does not support non-BEP20 tokens. This means users cannot trade BTC or Ethereum without relying on a token bridge.
- No native crypto wallet
The PancakeSwap trading exchange lacks a native crypto wallet.
PancakeSwap Supported Tokens
Users enjoy an extensive list of tokens on the DEX. PancakeSwap-supported tokens include approximately 2,000 cryptocurrencies. USDT/WBNB ranks among the most popular trading pairs on the exchange.
PancakeSwap Fees and Commissions
For any exchange to sustain its business, fees are mandatory. PancakeSwap charges users a fee whenever they conduct transactions via the exchange. PancakeSwap has Various levels of fees consisting of spot, futures, commissions, and trading fees.
PancakeSwap charges as low as 0.25% transaction fee on token swaps. Below is a breakdown of the fees:
|Users pay this fee to liquidity pools as a reward to liquidity providers.
|Preserved for CAKE buyback and burn
Like most other decentralized exchanges, PancakeSwap does not charge withdrawal fees. However, there are costs for withdrawing the tokens from your wallet to the bank.
Conclusion about PancakeSwap
In the last 4 years, PancakeSwap has grown to become one of the largest decentralized exchanges. The DEX already commands over $4 billion of crypto funds. Users love it for its simplicity, intuitive user interface, and beginner-friendly experience. PancakeSwap is a good DEX for interacting with tokens on the Binance Smart Chain. Signing up on the platform takes only a few steps.
Supported features include token swaps, staking, lending, lottery programs, and gamefi products. CAKE, which is the DEX’s native token, distributes regulator rewards to staked funds. The primary role of CAKE is increasing liquidity on the PancakeSwap DEX by inviting holders to stake or lend. As per pancakeSwap tokenomics, The maximum supply of CAKE tokens is capped at 750 million, while those in circulation are 146 million.
Nevertheless, PancakeSwap only supports BEP20 standard tokens but one can still trade other crypto tokens through the help of a token bridge. The initial goal of PancakeSwap was to provide a convenient and affordable alternative to Uniswap, which runs on Ethereum.
Furthermore, PancakeSwap runs via a decentralized autonomous organization (DAO) model. The model ensures network participants can take part in key decision-making, and vote in crucial PancakeSwap updates. In 2022, the PanCakeSwap community DAO voted in to cap the maximum supply of CAKE tokens at 750 million.
Frequently Asked Questions (FAQ) about PancakeSwap
How Much Does PancakeSwap Cost?
As of the writing of this PancakeSwap guide, a CAKE token is trading at $3.002.
Is PancakeSwap Trustworthy?
Yes, PancakeSwap is a legit decentralized exchange platform controlling upto $4 billion in crypto users’ funds. At the moment, PancakeSwap is counting over 1.7 million users.
How to Farm on PancakeSwap?
PancakeSwap offers several yield farms to choose from. Hence, the first step is choosing a suitable farm.
Attempt sorting and filtering through different APR to find a farm with the highest rewards. Go on and click the “Add Liquidity’ navigation button and add the appropriate liquidity for the tokens you intend to farm.
The final step is confirming the transaction through your wallet.
What is the Minimum Amount you can Trade on PancakeSwap?
Is There Staking On PancakeSwap?
Yes, PancakeSwap supports staking.
What is PancakeSwap’s Slippage Tolerance?
Slippage tolerance on PancakeSwap is between 0.5% to 1%.
Does PancakeSwap Charge Withdrawal Fees?
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