In September 2020, unknown developers launched PancakeSwap, an automated market maker (AMM) that features pools where users can earn fees from staking, lending, and yield farming. It is a decentralized exchange (secure peer-to-peer cryptocurrency transactions without the need of an intermediary like banks or brokerages) for swapping BEP20 tokens on the Binance Smart Chain and is the third largest exchange by volume in the DeFi sector.
The pools are filled with the users’ funds, which users deposit in exchange for liquidity provider (LP) tokens in return. These tokens can be used to reclaim a portion of the trading fees or reclaim their share.
In PancakeSwap, CAKE and SYRUP tokens are available (aside from the other LP tokens). Here are a few features unique to PancakeSwap.
PancakeSwap’s governance token is called CAKE. Users can deposit LP tokens, lock them up, and start farming (extracting all that can be extracted from tokens or crypto), which in turn rewards them with CAKE.
Here are the most popular LPs you can farm to get rewards:
- CAKE – BNB LP
- BUSD – BNB LP
- BETH – ETH LP
- USDT – BUSD LP
- USDC – BUSD LP
- DAI – BUSD LP
- LINK – BUSD LP
- TWT – BNB LP
Users can stake their CAKE rewards in the SYRUP Pools. You can stake your CAKE tokens in exchange for tokens in upcoming projects on the Binance Smart Chain.
PancakeSwap’s first unique exclusive feature is its lottery system, and the jackpot is 50% of the entire pool. Each lottery ticket costs 10 CAKE tokens, and it gives participants a set of four random numbers ranging from 1 to 14. To win the jackpot, all numbers must match in the exact order. If only two or three numbers match, you’ll be rewarded as well.
Initial Farm Offering
This is where users support new developers’ projects by participating in sales of tokens of the projects unlisted on the market, and since they’re not yet listed, investors pay a lower rate. This is also where you can launch your own projects in the Binance Smart Chain community.
Users can buy IFO tokens by committing supported LP tokens from one of the pools. After the sale, they claim the purchased tokens as well as any unspent funds.
Users have the opportunity to bridge the gap between different platforms via Binance’s native cross chain tool, the Binance Bridge. For example, if you wish to use an Ethereum token on PancakeSwap, you can wrap assets on the Binance Bridge and turn them into BEP20 assets (which can be used on PancakeSwap). This tool allows Ethereum fans to enjoy Binance’s optimized smart contracts without selling their assets.
Aside from staking CAKE, you can also earn non-fungible tokens (NFTs) in PancakeSwap. NFTs are digital assets that have unique identification codes, and no two digital assets are the same.
To provide a better analogy of NFTs—a 10 dollar bill when exchanged with another 10 dollar bill costs 10 dollars still. However, da Vinci’s Mona Lisa, although having plenty of replicas, won’t have the same value as the original painting by the artist. NFTs best describe the latter.
If you’re chosen as a winner, you can exchange that NFT for the subsequent CAKE token value. You may also opt to just keep the NFT in your wallet. Winners are chosen at random.
In today’s digital era, DeFi is definitely growing, and PancakeSwap is just one of the platforms in this bubble. It’s often referred to as Uniswap’s equivalent, which is currently reigning supreme in Binance’s decentralized market.
Although the developers are yet to be known, PancakeSwap has gotten plenty of great user reviews as being user friendly with cheaper and faster transactions all thanks to Binance’s smart contracts.