How To Use PancakeSwap: An Easy Guide For You
Did you join the PancakeSwap airdrop that gave away some NFTs?
No? Well, we believe they will do a few more promotions in the future, so keep an eye on our website to make sure you don’t miss the next airdrops. Now let’s explain a bit more about the platform.
Decentralized Finance (DeFi) is scaling new heights every day and PancakeSwap has made its mark in this booming ecosystem. In 2020, an anonymous developer with a penchant for pancakes and other breakfast items created this food-themed Decentralized Application (dApp).
While most existing DeFi protocols leverage the Ethereum blockchain, PancakeSwap is built on the Binance Smart Chain. So, in this guide for beginners, we discuss the major aspects of PancakeSwap.
What Is PancakeSwap?
PancakeSwap is a Binance-powered Decentralized Exchange (DEX), with BEP-20 token swaps as its primary functionality. Further, you can also provide liquidity and engage in yield farming on this platform.
By leveraging an Automated Market Maker (AMM), PancakeSwap does away with the Order Book used in centralized exchanges. This simplifies the experience of end-users, who now interact with, so-called, liquidity pools. Each pool represents a tradeable market for a particular pair of assets, say, BTC-ETH.
As compared to its Ethereum-based counterparts, transactions on PancakeSwap are much cheaper. Further, out of the 0.20% transaction fee, 0.17% goes to the liquidity provider as a reward, while 0.03% is allocated to PancakeSwap’s treasury.
How To Use PancakeSwap?
You can start swapping tokens on PancakeSwap by following these 5 easy steps:
- Open PancakeSwap
- Connect your wallet such as Metamask, TrustWallet, MathWallet, WalletConnect, Binance Chain Wallet, etc. Make sure you have some BNB in your wallet to pay for the transaction fees.
- Click the dropdown menus to choose the tokens that you want to swap and enter the amount. By default, the base token is BNB.
- Click on ‘Swap’ to initiate the transaction.
- Preview and validate the transaction from your wallet.
Additional Uses of PancakeSwap
PancakeSwap has diverse functionalities, apart from swap-based trading. Because the protocol is open-source, anyone can participate. You can become a liquidity provider, by adding liquidity—in equal proportions—to an asset pair. In return, you’ll get FLIP tokens which represent your stake in the pool. Plus, for every successful transaction in the pool, you get the aforementioned reward.
Further, you can farm yield by staking your FLIP tokens, thereby earning rewards in CAKE tokens. You can withdraw your staked FLIP tokens at any time, by clicking on ‘Harvest’ and then confirming the transaction. Again, you can stake your CAKE tokens in ‘Syrup Pools’ to earn more CAKE or other enlisted tokens. Through these Syrup Pools, PancakeSwap is enabling a new method for projects on the Binance Smart Chain to bootstrap liquidity. The method is called Initial Farm Offerings (IFO), in which only CAKE token holders can participate.
You can also participate in the PancakeSwap Lottery. The duration of each lottery is 6 hours and the ticket costs 10 CAKE. Upon participating, you get a random combination of four numbers, each within the range of 1 to 14—for instance, 12-9-1-10. If all your positions match with the result, you get 50% of the lottery’s total pool as the Jackpot Prize. There are additional rewards as well, for those who have two or three matching numbers.
There’s more! You can win special NFTs on PancakeSwap, simply by registering your name. Winners are randomly chosen and you can either trade your NFTs for CAKE or display them as Collector’s Items. Moreover, you can participate in fun games by creating teams under ‘Teams & Profile’. By creating a public profile, you can compare statistics and compete with other teams.
Usage Of The CAKE Token
In the previous section, we’ve referred to the CAKE token several times. This is PancakeSwap’s native token, which serves the purpose of rewarding and incentivizing users. However, its primary function in the network is as a governance token.
To eliminate the need for relying upon centralized authority, PancakeSwap adopts the model of community governance. To gain voting rights under this approach, you need to own CAKE tokens. In general, this relates to protocol upgrades, changes in fee structure, and so on.
At the time of writing, CAKE is priced at $17.06, with a market capitalization of over $2 billion. In terms of its market cap, CAKE ranks 45th among more than 2000 cryptocurrencies listed on CoinMarketCap. Lastly, the token has deep liquidity in the secondary markets. You can buy CAKE from Binance, VCC Exchange, BKEX, KuCoin, and MXC, among several others.
Ethereum has long been the hub of innovations in DeFi. Now, with the emergence of protocols like PancakeSwap, we’re experiencing a whole new dimension in this domain. There’s a strong inflow of investment, high outflow of returns. The liquidity of wide-ranging assets is becoming deeper by the day, steadily propelling their value upwards.
As we prepare ourselves for the digital future, such diversification is a truly positive and encouraging sign. Apart from making good use of technology, platforms like PancakeSwap make the crypto-experience fun and engaging for users. If not anything else, this definitely contributes towards strengthening adoptions.