About PancakeSwap
It was founded in September 2020 by a group of anonymous hackers. In the same period, the Ethereum Network was overloaded, therefore the DEX were unusable. As a consequence, many people started using PancakeSwap on day 1, as it was based on Binance Smart Chain(BSC). Last month almost 3 million people use PancakeSwap, and every day millions of trades are made. On top of that, there are also 12 billion dollars staked in the platform. A huge success.
QUICK FACT
It’s not the first decentralized exchange ever but it was the first Binance Smart Chain decentralized exchange
How does PancakeSwap work?
While all the centralized exchanges use an order book to establish the current price of a cryptocurrency, PancakeSwap uses an Automated Market Maker(AMM). The users trade against a liquidity pool, who is filled with money that other users have deposited. Why does someone is willing to send money to a liquidity pool? Because by doing so you can earn an amount of CAKE token.
CAKE Token
It is the official cryptocurrency of the platform. It was launched in September 2020 at a price lower than 1$. It’s a BEP 20 token, obviously based on Binance Smart Chain. It has a circulating supply of over 220 million and there isn’t a fixed maximum supply. During the bull run of 2021 it reached its all-time high of 43$ and in September 2021 is valued at more than 20$. It is also among the top 50 cryptocurrencies in the world by market capitalization. You can earn CAKE tokens by sending some funds to a liquidity pool. But what can you do with this CAKE token? Another unusual feature of UNI token is that it will suffer from a 2% inflation per year since 2024. Moreover, they announced that everyone who provides liquidity to ETH/USDT, ETH/USDC, ETH/DAi, and ETH/WBTC will receive an extra reward of UNI tokens. Therefore millions of dollars were added by users to these liquidity pools to earn this extra compensation just in September 2020.
Staking
You can stake your CAKE and earn more CAKE tokens or even other cryptocurrencies. You can check the list of tokens that you can earn by staking CAKE here: https://pancakeswap.finance/pools .
Lottery
One of the most popular features of PancakeSwap is the lottery. You can buy the tickets to participate with your CAKE tokens, and each ticket costs you around 0.22 CAKE (5 USD). There are two draws every day and if your ticket gets randomly selected as a winner, you can win from 38k to $76k. The prizes are elevated, however, it’s very difficult to win.
IFO
IFO stands for Initial Farm Offering, a process that gives you anticipate access to a new cryptocurrency that hasn’t been released yet. And to have this access you have to stake some of your CAKE tokens in a liquidity pool.
How to use PancakeSwap?
Using PancakeSwap is very simple, it has a great interface and it’s user-friendly. Nevertheless, for those of you who aren’t into crypto a brief tutorial on how to use it and especially how to trade in it can be very useful. Go to www.pancakeswap.finance and click on “Connect Wallet”. There are 8 wallets compatible with PanckeSwap, such as Metamask, Binance, and Trust Wallet. Select the one you prefer and then log in to it. After some screens where you have to allow PancakeSwap to access your wallet, it is finally connected. Now you can start trading. To do so, go to the “trade” section of the menu at the top of the page. Then you can select the pair of tokens you want to swap. Now you are ready to trade your favorite cryptocurrencies.
PancakeSwap Features
Farms
On the farm section, you can add two LP tokens(Liquidity Pool Token) to a pool that gives you an interest. Moreover, you will receive CAKE tokens for your contribution to the pool. It’s quite different from the process of staking in the pool explained before. In fact, farms are riskier but offer also a higher reward, and differently from pools in farms, you can stake many different tokens not just CAKE.
NFT
Shortly, PancakSwap will create an NFT marketplace, where you will be able to buy and sell NFTs. They have already created the PancakeSwap NFTs and in the next weeks, they will be offered for sale. So at first, you will be able just to trade the platform’s official NFTs but then the marketplace will be opened to all the other Non Fungible Tokens.
Differences with Uniswap
Uniswap is the biggest DEX and PancakeSwap is its main competitor. They have some similarities but also some big differences. Both have all the features that characterize Decentralized Exchanges such as decentralization, anonymity, and security. But there is a huge difference between them: the blockchain they are based on. In fact, PancakeSwap is based on Binance Smart Chain, while Uniswap on the Ethereum Blockchain. As a consequence, they have a different list of supported tokens. So which one should you use? In my opinion, there aren’t wrong choices here, they are both two outstanding platforms. I think that you should use both of them. When you want to buy a token based on Ethereum you can use Uniswap, while when you want to buy a Binance Smart Chain token use PancakeSwap.
Conclusion
PancakeSwap is a great decentralized exchange. It’s user-friendly and has a simple UI. However, if you are a beginner, I don’t suggest it to you as it’s full of fantastic features for an expert but quite dangerous for a newbie. If you are knowledgeable of the crypto world and you are looking for a Binance Smart Chain DEX, PancakeSwap is probably the best choice for you.