Crypto for breakfast? Many people dream of making money in their sleep. Wouldn’t it be nice to wake up, have your pancakes while earning passive income in crypto?
With PancakeSwap you can! Don’t let this cutesy name fool you, as many people are taking advantage of all it has to offer.
There has been a slew of decentralized finance (DeFi) projects inspired by food lately. SushiSwap, Yam Fiance, and BurgerSwap are some of the PancakeSwap competitors to enter the DeFi cryptospace.
If your mouth isn’t salivating by now, it soon will be. In this guide, we’ll fill you in and fill you up on all things PancakeSwap. Let’s dig in, shall we?
What is PancakeSwap?
So what exactly is PancakeSwap? PancakeSwap is a decentralized exchange (DEX) built on the Binance Smart Chain (BSC) where swapping BEP-20 tokens takes place. Compared to a centralized exchanged (CEX), PancakeSwap takes advantage of an automated market maker (AMM) model.
With traditional trading platforms, there is a buyer, a seller, and an order book. You’ll have a trading pair such as BTC/DOGE. To make a trade, there must be another person on the other end, right?
Trades on decentralized exchanges need trading pairs as well. The difference is that there is no middleman in between. Users trade directly from their wallets in a peer-to-peer (P2P) fashion.
With PancakeSwap you aren’t matched with another person. Instead, a liquidity pool is who you are trading against in this scenario.
This occurs using a peer-to-contract (P2C) with the AMM model we mentioned above. Rather than a person, the price of an asset is determined by a formula or algorithm.
What’s a liquidity pool? Imagine a pool of money. From that pool of money (crypto to be specific), traders will trade against it.
Who is filling these liquidity pools? Users known as liquidity providers (LPs) will deposit their crypto into the liquidity pool.
Depending upon which BEP-20 tokens you added to the pool as a liquidity provider, you will earn rewards for doing so. For example, if you deposit BUSD and BNB, you’ll get BUSD-BNB LP tokens.
To add liquidity to PancakeSwap, follow the steps below:
- Click “Trade”
- From the dropdown click “Liquidity” then “Add Liquidity”
- Input both tokens for the pair
Make sure you understand the risks involved such as impermanent loss. You will also want to keep note that if the token pairing you choose is new, it will set the price of that pool.
Would you like to have your CAKE and eat it too? You certainly can with PancakeSwap! The PancakeSwap token is called CAKE and it is technically a governance token.
Compared to traditional banking systems, PancakeSwap allows users to make passive income in crypto. The yields alone are very attractive and high.
When you deposit your LP tokens you can then lock them up to earn CAKE. This process is farming.
There are many LP tokens you can deposit that will earn you CAKE such as:
- DAI-BUSD LP
- BETH-ETH LP
- CAKE-BNB LP
- LINK-BUSD LP
- USDT-BUSD LP
To keep the theme alive, there are also SYRUP pools where you can earn even more rewards.
Newly launched tokens will come in the form of Initial Farm Offerings (IFOs). Commit your LP tokens to gain access when new tokens are launched.
Are you aware you can stake on CAKE as well? When you head to SYRUP pools you will be able to stake CAKE and earn new tokens as well.
To approve the withdrawal of your tokens, hit approve CAKE. From there you can decide how much CAKE you wish to stake.
Depending on which pool you choose, you will earn that particular reward token. Projects built on the Binance Smart Chain (BSC) are the tokens you can earn such as UST, DODO, or LINA.
Click Harvest if you wish to cash out those rewards. Talk about some delicious stack staking!
There is even a lottery on PancakeSwap, ways to make money in crypto continue!
The way it works is one ticket will run you 10 CAKE. You’ll receive a random four-digit string of numbers between 1 and 14. Lottery sessions take 6 hours. To win your numbers will need to match and be in the same position as the winning ticket.
The jackpot is 50% of the whole pool. Even if you only match two or more numbers, you can receive rewards.
Fees and TXs
People often complain about the high fees and congestion when using the Ethereum blockchain. You’ll be happy to know you won’t have to expect high fees and a slow network on PancakeSwap.
Since PancakeSwap lives on the BSC, the fees you’ll see are often much lower (~.04c-~.20c) and transactions are very speedy (~5 sec). Pretty sweet, right? Pun intended.
Trading fees will be low as well—around 0.2%. Liquidity providers will receive 0.17% and the PancakeSwap Treasury 0.03%. The PancakeSwap Treasury will burn the tokens to keep supply lower.
When you use a centralized exchange, you’ll often have to cough up your identification in some form. Know Your Customer (KYC) and Anti-Money Laundering (AML) are requirements needed to prove someone’s identity. On one hand this a security measure but on the other hand takes away from the purpose of crypto.
You must have heard the NFT buzz by now. You can even earn special NFTs on PancakeSwap!
If you’d like to keep the special cutie you can. Or if you’d like to swap it out for some CAKE, you can do that as well. Register for a chance to win and follow along to stay updated on further NFT developments.
What wallets are compatible with PancakeSwap? MetaMask is the most popular choice as it supports ERC-20 and BEP20 tokens and assets.
Aside from MetaMask, you can use Trust Wallet, WalletConnect, MathWallet, and TokenPocket.
Is PancakeSwap Safe?
You must be wondering “is PancakeSwap safe?”. CertiK audited PancakeSwap.
With crypto, it’s always best to do your research and due diligence. There is always a chance of bugs, a PancakeSwap hack, etc. Use your best judgment and only use the amount of crypto you’re willing to lose.
Flip Some Crypto Flapjacks With PancakeSwap
By now you ought to have a good grasp on PancakeSwap. Why not play with the project today?
Aside from the DeFi space there is so much more to explore. Once you get your feet wet, you’ll want to try your hand at different things.
To stay up to date on crypto and investing, be sure to read our investing blog. Learn what you need to know and expand your money mindest. Stay tuned for much more!