Crypto DeFi

A Comprehensive Guide to PancakeSwap

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PancakeSwap is a Binance Smart Chain-powered DEX and AMM that enables anyone to quickly and securely swap BEP-20 tokens. In the same way, as Uniswap does, the platform offers a shared trading experience with liquidity pools. It is the most popular Dapp on the Binance Smart Chain, and many consider it to be a project with limitless potential. As a result, the platform is very popular among many crypto enthusiasts. In this review, we will go into more detail about everything you need to know about the PancakeSwap exchange. So, without much further ado, let’s get started with the topic.

What is PancakeSwap?

PancakeSwap is a decentralized cryptocurrency exchange built on the Binance Smart Chain. It was unveiled on September 20, 2020. Ever since then, it has drawn a large number of new users from the crypto community due to its unique product offerings, which include strong APYs, yield farms, lotteries, and many others. It has also established itself as a viable alternative to other DEXes due to its incredibly low transaction costs, which are normally pennies for a single transaction.

The creators and developers have remained anonymous, and concerns about their identities have persisted. Binance has heavily supported the exchange, indicating that it has a strong relationship with the exchange. The token owned by PancakeSwap is CAKE, and it can be used for staking, trading, and performing all sorts of transactions. It is only surpassed by MDEX and Uniswap on the list of the world’s decentralized exchanges with the highest 24-hour trading volumes. The former has a 24-hour trading volume of USD 3.2 billion while the latter has a 24-hour trading volume of USD 1.02 billion. 

If you have used UniSwap, you will have no trouble recognizing and using PancakeSwap, because they both work in a similar pattern. The key difference is that you will be connecting to the Binance Smart Chain rather than the Ethereum network. As a result, you will be exchanging BEP20 tokens rather than Ethereum or ERC20 tokens.

How PancakeSwap Works

PancakeSwap works by making use of an automated market maker (AMM) model. With this, there is no order book where you can be paired with anyone, but you can exchange digital assets on the platform. However, when doing this, you trade against a liquidity pool instead. These pools are normally stocked with money from other users. Just so you know, PancakeSwap is more than just a trade. You can also make money by being a liquidity supplier and contributing your tokens to liquidity pools. You can also farm your LP tokens and stake your cake for prizes, as well as participate in lotteries and NFTs.

Benefits of Using PancakeSwap 

PancakeSwap offers a significant number of benefits to users. Below are some of them;

Easy to Use

The layout of PancakeSwap is similar to that of other common DEXs. It’s very easy to use, and you don’t need any background experience to get started with the basic trading features. The platform is set up in such a way that everyone can increase their profits. You can lend your digital assets to liquidity pools in exchange for liquidity tokens, which you can then stake to make even more money.

Low Fees and Fast Transactions

The high fees and slow transactions from the Ethereum network are one of the most common complaints regarding projects built on the platform. PancakeSwap, on the other hand, uses the Binance Smart Chain network and BEP-20 tokens rather than the Ethereum network. Because of that, fees are much lower, ranging from $0.04 to $0.20 on average, and transactions usually take less than 5 seconds. In comparison, Ethereum’s fees have recently surpassed $20, and transactions can take up to five minutes to validate.

No KYC Requirement

Every centralized exchange we are aware of adheres to Know Your Customer and Anti-Money Laundering (KYC/AML) regulations, which strip users of their privacy by forcing them to have detailed documentation to prove their identity. However, PancakeSwap allows users to interact anonymously because it is a decentralized exchange with no regulatory authority. 

Audited and Well-secured

PancakeSwap is well secured, even though it is still undergoing significant development and upgrades. PancakeSwap was audited by CertiK, a leading cybersecurity company, in October 2020, and it was revealed that it was ready to be deployed on the Binance Smart Chain. It is currently ranked number 1 in terms of security by CertiK, instilling even more confidence and trust in the exchange. It has acquired the Security Oracle, CertiK Shield, DeepSEA, and the CertiK Virtual Machine protections ever since it was integrated with CertiK.

Opportunity to Earn Rewards

PancakeSwap implements innovative methods for generating new revenue sources. The DEX allows users to secure income while paying lower fees. They can also easily win prizes by staking and farming their tokens. Non-fungible tokens (NFTs) may also be traded and issued on the network. These collectable tokens are currently one of the fastest-growing segments of the blockchain industry. They are rapidly increasing in value, with some recent NFTs fetching millions of dollars to users.

How to Use PancakeSwap Exchange

Since PancakeSwap is decentralized, there is no need to sign up or verify your identity. To get started, all you need is a Binance Smart Chain wallet. To get started, go to Binance’s website to get the necessary details to enter into MetaMask or another BEP-20 wallet. If you have ERC-20 tokens in your Ether wallet, you will need to convert them to BEP-20 tokens using the Binance Smart Chain bridge before you start using PancakeSwap. When you are ready to start using the platform, go to the exchange’s home page and begin connecting with it. It’s easy to use, and best of all, it’s cost-effective.

Trading on PancakeSwap

When you understand what’s going on in each section of the platform, using PancakeSwap won’t be difficult to use. It may be difficult to figure out what’s going on when you first visit the platform, but that’s because many of the features were locked before you add a wallet and unlock it.

If you have done so, you will be able to see a lot of stuff that was previously unavailable because you didn’t have an open wallet linked to the platform. Also, you will be able to see all of the different returns available in the various farms and pools, as well as add liquidity and stake tokens yourself.

As you would expect, PancakeSwap is where the majority of CAKE tokens are exchanged. Just so you know, CAKE tokens have a reasonable trading volume on Binance, and you can even buy them there and then move them to a wallet that supports CAKE and BEP-20 assets to stake your CAKE tokens at PancakeSwap.

PancakeSwap Trading Fees

Trading fees for Pancake Swap are usually within the range of 0.2%. This fee is usually shared between the Liquidity providers, having a 0.17% of the fee, and the PancakeSwap Treasury receiving 0.03% of the fee. In PancakeSwap, there are no deposit or withdrawal fees because there are no order books available, but you will have to pay transaction fees to connect with the Binance Smart Chain. When compared to other crypto exchanges based on the fee level for crypto withdrawals, these transaction fees are relatively low.

Final Note

To sum it up, PancakeSwap has established itself as a viable competitor to Uniswap, SushiSwap, and other similar exchanges. It is by far the most relevant project on the Binance Smart Chain. PancakeSwap is a project worth using for yield farming, and it’s worth keeping an eye on in the coming years to see how things progress. Within its short existence, the team has done an excellent job of both launching and developing the decentralized exchange, and I expect them to continue to innovate the platform as time goes on.