PancakeSwap

PancakeSwap is a popular decentralized finance (DeFi) platform on the Binance Smart Chain, offering users token swapping, staking, and yield farming with low fees and high-speed transactions. This is your ultimate Pancakeswap guide.

Decentralized exchanges (DEXs) significantly shift from the conventional setup of popular centralized cryptocurrency exchanges. These platforms operate without intermediaries, offering a more direct and autonomous trading experience. Many DEXs find their foundation in the Ethereum blockchain, widely recognized as the epicenter of decentralized finance (DeFi) activities. However, not all DEXs follow this Ethereum-based norm. A prime example is PancakeSwap, which diverges by being built on the Binance Smart Chain. This strategic choice differentiates it from its Ethereum-based counterparts and brings a notable benefit: considerably lower trading fees. By opting for the Binance Smart Chain, PancakeSwap caters to users who seek the autonomy of DeFi without the higher costs typically associated with Ethereum’s network, thus offering an efficient and cost-effective alternative in the dynamic world of decentralized finance.

PancakeSwap Overview

At its core, PancakeSwap is a decentralized exchange (DEX), standing apart from centralized counterparts like Binance and Coinbase. Unlike these conventional platforms operated by single entities, PancakeSwap eliminates the need for an intermediary in trading, empowering users with direct control over their transactions. Set against the Ethereum-dominated decentralized finance (DeFi) landscape backdrop, PancakeSwap takes a different route by being built on the Binance Smart Chain. This strategic choice distinguishes it from the plethora of Ethereum-based DEXs, resulting in significantly lower trading fees.

PancakeSwap differentiates itself by focusing on BEP-20 tokens, leveraging Binance’s robust technology. It’s not controlled by Binance but was developed by anonymous creators, bringing a layer of decentralization true to the blockchain ethos. Utilizing an automated market maker (AMM) model allows for seamless trading against liquidity pools instead of traditional order books.

Moreover, PancakeSwap extends beyond just trading. It offers features like Syrup Pools for staking coins, allowing users to earn rewards by staking its native token, CAKE. This is complemented by game-like experiences, including wagering on Binance Coin (BNB) price movements and a lottery system where users can win CAKE. Additionally, PancakeSwap presents a realm of bunny-themed collectible non-fungible tokens (NFTs) and Initial Farm Offerings (IFOs), allowing users to purchase new coins from emerging projects.

Pancakeswap: History

PancakeSwap’s origins are intriguingly anonymous. Created by unknown developers, this decentralized platform was launched in September 2020. Despite its anonymity, PancakeSwap quickly rose to prominence in the DeFi space, largely due to its innovative features and user-centric design. This choice was significant due to BSC’s faster and more cost-effective transaction capabilities, especially when compared to Ethereum’s slower and pricier transactions during the 2020 DeFi boom. Ethereum, hosting most DeFi applications then, struggled with high demand and consequent transactional delays and costs.

PancakeSwap further set itself apart with a competitive swap fee of just 0.2%, undercutting the industry norm of 0.3%. This low-fee strategy contributed to its swift growth in trading volume and total value locked (TVL), propelling it to become one of the top decentralized exchanges by February 2021.

Registration: PancakeSwap KYC Process Step-by-Step Tutorial

What is specific about this crypto exchange is the fact that there is no classic registration. To be able to trade, you only need to connect your wallet and select your preferred network. We’re honestly not sure how good this is for inexperienced users. We recommend that people just entering the world of cryptocurrencies use some exchanges that require classic registration and KYC procedures.

Pancakeswap: Offerings

PancakeSwap operates on the Binance Smart Chain (BSC), distinguishing itself from many DEXs that are based on Ethereum. The choice of BSC is strategic, offering users faster transaction speeds and considerably lower fees. This decision underpins much of PancakeSwap’s appeal, as it addresses two critical pain points in the crypto trading world: cost and efficiency.

PancakeSwap utilizes an Automated Market Maker (AMM) model, which departs from the traditional exchange setup. Instead of using an order book where buy and sell orders are matched, the AMM model employs liquidity pools. These pools are essentially collections of funds locked in a smart contract. Users, or liquidity providers, deposit their funds into these pools and, in return, receive liquidity tokens. These tokens can later be redeemed for a portion of the trading fees or used in other yield-generating activities on the platform.

PancakeSwap also provides an array of playful and interactive features. Users can engage in prediction games, betting on whether the BNB price will increase or decrease within a specified timeframe. Additionally, there’s a lottery element where participants can purchase tickets for a chance to win a substantial amount of CAKE, the platform’s native token.

1. Providing liquidity

Providing liquidity on PancakeSwap, a process integral to its Automated Market Maker (AMM) system, is a straightforward yet significant activity. Here’s how you can engage in this essential DeFi function:

2. Staking on PancakeSwap

In crypto, staking involves locking up a certain amount of a digital asset to support a blockchain network’s operations, typically in proof-of-stake (PoS) systems. Users who stake their coins participate in transaction validation and network governance. As a reward for their contribution, stakers receive additional coins, often proportional to the amount staked. This process can be lucrative as it generates a passive income stream, akin to earning interest, while contributing to the network’s security and efficiency.

You can effectively compound your earnings by staking your CAKE tokens in Syrup pools on PancakeSwap. Begin by navigating the ‘Pools’ section under the ‘Earn’ menu. Here, you’ll find a list of available pools, each with its annual percentage yield (APY) and the total staked amount. Choose a pool, then enable CAKE staking in your wallet by clicking »Enable.« After this, specify the amount of CAKE to stake and confirm the action. In some pools, your earnings might be automatically reinvested, enhancing your yield farming strategy on the BNB Chain.

3. Yield farming

As mentioned before, the first step in yield farming is adding liquidity. Users connect their wallet to PancakeSwap and deposit token pairs into liquidity pools at a predetermined ratio. This action generates liquidity provider (LP) tokens, symbolizing the user’s share in the liquidity pool. With LP tokens, users can engage in yield farming by depositing them into “farms” to earn CAKE tokens, the native cryptocurrency of PancakeSwap. The process involves:

You Might Ask Yourself – What’s the Difference Between Staking and Yield Farming

Yield farming and staking are two methods of earning rewards with cryptocurrency, but they differ in their approach and risk:

4. PancakeSwap Lottery

The lottery operates on a randomized draw principle, where participants buy tickets using the CAKE token. Each ticket has a unique set of numbers; if these numbers match the winning set drawn by the system, the ticket holder wins a prize. The draw system is powered by Chainlink’s implementation of Verifiable Random Function (VRF), ensuring fairness and security in the drawing process​. Lottery tickets can be purchased directly on the PancakeSwap Lottery page. Each ticket is priced at 5 USD in CAKE.

After purchasing tickets, participants can view and manage their tickets on the PancakeSwap website. They can check their tickets against the winning numbers drawn to see if they have won. The winning criteria are based on correctly matching the ticket digits in the proper order. Different prize brackets exist depending on how many numbers a participant matches. Still, these brackets do not stack – meaning if you match three digits in a row, you only win prizes from the “Match 3” bracket, not from the lower brackets.

The prize pool for each lottery round is generated from ticket purchases, rollover prizes, and CAKE injections from the PancakeSwap treasury. Every CAKE token used to purchase tickets contributes entirely to the prize pool. Unclaimed CAKE in certain prize brackets rolls over to the next round, continually growing the prize pool. Additionally, an average of 35,000 CAKE tokens are injected into the lottery rounds each week from the treasury, enhancing the potential winnings.

In summary, the PancakeSwap Lottery is an exciting platform aspect, offering users a unique way to engage with the DeFi space, potentially winning rewards while contributing to the ecosystem’s vibrancy and appeal.

5. Trade NFT on PancakeSwap

PancakeSwap has recently introduced its NFT Marketplace, enabling the purchase and sale of non-fungible tokens (NFTs) on the BNB Smart Chain. This platform stands out for its user-friendly interface and clear, straightforward procedures, contributing to the growing array of NFT marketplaces available today. Here’s a detailed walkthrough on how to get started:

• Connect Your Wallet: If you’re using a wallet like MetaMask, which typically operates on a different network, ensure you switch it to the BSC network. This is crucial as all transactions on PancakeSwap, including NFT trades, occur on the BSC network​​.
• Fund Your Account: The primary currencies used are BNB (Binance Coin) and CAKE, PancakeSwap’s native token​​.
• Create Your Profile: PancakeSwap’s NFT marketplace features an interesting profile setup aspect. After connecting your wallet, you can create a profile on the platform.
• Join a Team: A unique aspect of PancakeSwap’s NFT marketplace is the team mechanic. Although the full mechanics of this feature are yet to be released, users can sign up for a team and participate in team events to earn CAKE, NFTs, and other rewards.
• Buy an NFT: To buy an NFT, navigate to the NFT section on PancakeSwap and browse through the verified collections. Once you’ve decided on a collection and a specific NFT, purchase it by clicking the buy button and signing the transaction. Ensure you have sufficient BNB for the transaction. After the purchase, you can view your new NFT in your wallet, similar to on platforms like OpenSea. You can manage, sell, or transfer your NFTs from this interface​​.

6. Gaming Marketplace

Pancakeswap recently launched the Gaming Marketplace – a hub where developers can directly build, publish, and update games on the platform. At its launch, the marketplace featured two games: “Pancake Protectors,” developed in collaboration with Mobox in May 2023, and a new entry, “Pancake Mayor,” a casual city-building game. Impressively, “Pancake Protectors” managed to attract over 25,000 players in a single day at its peak, showcasing the high engagement potential of these games. The PancakeSwap Gaming Marketplace facilitates interaction among gamers, developers, and the broader PancakeSwap community, encouraging them to play, build, and connect.

Now PancakeSwap operates across nine popular blockchains, including BNB Chain, Ethereum, Aptos, Polygon zkEVM, zkSync Era, Arbitrum One, Linea, Base, and opBNB. This wide range of blockchain compatibility allows developers from these networks to contribute their gaming creations to the PancakeSwap ecosystem.

The team envisions this marketplace as a medium for game developers to tap into its substantial user base, claiming a potential reach of 1.5 million monthly players. The platform is tailored to ease the integration of CAKE and PancakeSwap’s own NFTs, offering developers various monetization and earnings options. This new venture into GameFi underscores PancakeSwap’s commitment to diversifying its offerings and enriching the user experience within its ecosystem.

How to Trade on PancakeSwap?

PancakeSwap’s interface is designed for simplicity and ease of use. This includes popular cryptocurrencies and numerous unique tokens native to the Binance Smart Chain (BSC). Liquidity pools power the swapping mechanism. These pools contain pairs of different tokens, and users swap their tokens against this pool. This is a departure from traditional exchanges where trades are matched with another user’s opposite trade. Let’s break down the process of token swap into simple steps:

Step 1: Connect Your Wallet to PancakeSwap

Visit the official PancakeSwap website and connect your wallet. This usually involves confirming the connection on your wallet app. Once connected, your wallet’s balance and available tokens for swapping will be displayed. Ensure your wallet is funded with BNB, which is used for transaction fees on BSC. The easiest way to do this is by sending BNB tokens from a centralized exchange (like Binance) to your wallet address.

Step 2: Choose the Tokens You Want to Swap

In the swapping interface, select the token you want to swap from and the token you want to swap to. PancakeSwap supports a wide range of BEP-20 tokens.

Step 3: Specify the Amount and Adjust Slippage Tolerance

Enter the amount of the token you wish to swap. PancakeSwap will automatically display the estimated amount of the new token you will receive. Slippage tolerance in DEX trading is a user-set percentage indicating the acceptable price variation between trade initiation and execution to mitigate risks of price fluctuations in volatile markets. Therefore, it is vital to prevent significant price changes during your transaction. Adjust it according to market conditions and your preference.

Step 4: Review and Confirm Transaction

Before finalizing, review the transaction details, including the amount of tokens to be swapped, the estimated received amount, slippage tolerance, and transaction fees. If everything looks good, confirm the swap on PancakeSwap and then confirm the transaction in your wallet. The tokens will be swapped through the liquidity pools on PancakeSwap.

Step 5: Post-Swap Considerations

Remember to monitor your wallet balance and manage your new tokens as you see fit. You can participate in staking, farming, or holding your new tokens.

PancakeSwap (CAKE) and Its Benefits

As we can see from above, CAKE is not just a cryptocurrency. It’s a central cog in the PancakeSwap machine, facilitating various activities on the platform and driving community involvement. As PancakeSwap continues to evolve in the DeFi space, the role and utility of CAKE will likely expand, reflecting this dynamic ecosystem’s innovative spirit.

Is PancakeSwap (CAKE) a Good Investment?

This is a very tricky question. We don’t think CAKE is a good investment if you plan to get rich from cryptocurrencies. This token can be traded in exchange. With that action, you get the opportunity to earn this token. However, bearing in mind that the token is not holding too well, there are better positions that you can take.

Fees

Most users are probably wondering about trading fees. Pancakeswap offers very competitive fees and is rightfully considered one of the best exchanges with low fees. Let’s take a look at what it has to offer.

PancakeSwap charges a 0.25% trading fee, which is broken down as follows:

PancakeSwap and KYC

Anyone who has used crypto exchanges knows that user safety comes first. Just like with a large number of online bookmakers and casinos, the KYC procedure is mostly mandatory.

Although PancakeSwap is such an exchange that is not controlled by any legal entity. All trades are executed on-chain via smart contracts. The good news for those who do not like the KYC procedure is that PancakeSwap does not require its users to verify their accounts. The only important thing is that you have a personal crypto wallet so that you can pay network fees. Knowing that PancakeSwap is a low-fee crypto exchange, it is clear that trading on it is very desirable.

PancakeSwap Mobile App

Customer Support

We were honestly surprised that this crypto exchange has no customer support. That is, there are no official channels through which you can contact the company in case of a problem. However, not to be all black, there is a troubleshooting page on the website, but you won’t find too many answers to some general questions on it. This page deals more with issues such as bugs and how to fix them. Therefore, if you are wondering how to trade on PancakeSwap securely, the answer is that you have to be extra careful.

On the other hand, in addition to the lack of official channels for customer support, there are various support groups via Telegram and Discord. In our experience, Telegram is a better option, but be extra careful when asking for help. Namely, a large number of scammers will contact you, who will try to deceive you. Overall, we feel that PancakeSwap should have done a better job in this segment.

Security

Quite understandably, most users wonder what the level of security is on the Pancakeswap exchange. This open-source platform uses multiple security audits by SlowMist, Peckshield, and Certik. This clearly shows that the management has thought about this segment in detail.

Additionally, this exchange employs different security protocols. Every user can use 2FA, as well as additional features that increase security. Finally, we must mention that all contracts are verified by BscScan, which further increases the transparency of this exchange.

Final Verdict

PancakeSwap stands out in decentralized finance (DeFi) primarily due to its strategic use of the Binance Smart Chain, which offers lower fees and faster transactions than Ethereum-based platforms, such as Uniswap. Its innovative features, like Automated Market Maker, staking, yield farming, and integrating NFTs, cater to a wide range of users. The CAKE token, pivotal in its ecosystem, adds to its appeal by enabling governance and staking. With recent expansions and a robust community, PancakeSwap is evolving rapidly, positioning itself as a top altcoin trading platform in the DeFi sector. Its blend of user-centric design, innovation, and strategic market presence make it a strong contender in the cryptocurrency trading landscape.

Undoubtedly, Pancakeswap is one of the best decentralized exchanges on Binance Smart Chain 2025. Register today and start making online profits without much trouble.

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