Pancake Swap, Uniswap or Liquid Swap: How it works

Since 2017, countless crypto-asset exchange platforms have sprung up. Most have simply followed the same pattern as every other website we've seen until recently. Many have chosen to refer to their exchange as “ decentralized ". Among these, we have for example Pancake Swap, Uniswap, Liquid Swap.

You are probably wondering how these three decentralized exchangers work? You are in the right place. In this article, you will learn the peculiarities of each of these decentralized exchanges. Let's go!!

???? What is Pancake Swap?

Let's start with the word SWAP in himself. You should know that the swap makes it easy to exchange one crypto-asset for another, either in whole or in small amounts, without the need for fiat currencies.

It can also be compared to a financial contract that seals the exchange of one asset or financial flow for another. Thus, the swap is therefore a derivative financial product, since its value depends on that of one or more other financial products called " underlying ».

PancakeSwap is a decentralized exchange native to BNB Chain. In other words, it shares some similarities with established platforms like UniSwap in that users can exchange their coins for other coins without the intervention of intermediary services.

The only difference is that PancakeSwap focuses on BEP20 tokens – a specific token standard developed by Binance.

The BEP20 standard is essentially a checklist of functions that new tokens must be able to perform in order to be compatible with the broader Binance ecosystem, wallets, and other services. If you want to learn more about PancakeSwap, click here.

🌿 What is the Uniswap exchanger?

Uniswap (UNI) is a decentralized exchange (DEX) operating on the Ethereum blockchain. Created in 2018 by Hayden Adams, Uniswap quickly received financial support from the Ethereum Foundation and Vitalik Buterin to grow.

Prior to Uniswap, cryptocurrency trading was dominated solely by centralized exchanges (CEX) such as Binance or Coinbase.

In a few years, Uniswap has managed to establish itself as a benchmark in the DEX world by generating more than a billion dollars in transaction volume daily and by having more than 5 billion dollars locked on its protocol.

Unlike CEXs, DEXs make it possible to exchange cryptocurrencies in a completely decentralized way, without having to resort to an intermediary. These are in practice – censorship-resistant exchanges, but since version 3, Uniswap is no longer open source: the protocol is copyrighted.

Uniswap was the first protocol to take DEXs to the next level with an automatic market maker (AMM) that gathers liquidity deposited by users and makes it available to traders via an algorithm.

Uniswap operating on the Ethereum blockchain, it is possible to exchange only ERC-20 tokens and ETH there. It is also the largest DEX on the Ethereum blockchain and an essential decentralized finance (DeFi) platform in the cryptocurrency landscape.

Uniswap is, at the time of writing, in its third version. Uniswap V1 was the first version of 2018 and only allowed swaps between Ether and ERC-20 tokens.

🌿 What is the Liquid Swap exchanger?

It's the biggest AMM (Automated Market Maker = Automated Market Maker) on Aptos and the most secure and scalable L1 blockchain. It also includes the Dex which runs on the Aptos mainnet.

You should know that Liquid Swap supports both regular uncorrelated swaps (like Uniswap) and stable swaps (like Curve), and is based solely on a pool of liquidity.

🌿 How do these exchangers work?

🎯 How Pancake Swap works:

The easiest way to start using Pancake Swap is to first download a BNB-compatible wallet. You can download Dappradar or Trust Wallet. Here's how to create an account Trust wallet.

After that, you will have to seek to have the BNB BEP 20 tokens (necessary for all your transactions) and transfer them to your wallet. Also, you can add your tokens to a liquidity pool to receive liquidity provider tokens (LP tokens).

Thereafter, you must via the Pancake Swap connection guide, connect your wallet. At this level, it is up to you to choose the tokens you wish to exchange and confirm your exchange.

Once you are there, you have several options available to you. Here are a few:

• An exchange
• Yield Farming
• Fundraising (IFO)
• A prediction market
• An NTF marketplace
• An NFT profile system
• Syrup Pools for staking CAKEs
• A 2.0 version of their lottery
• And perpetual exchanges...

In summary, with Pancake Swap, you have the ability to engage in perpetual trades and trade NFTs. You can also stake CAKE in Syrup Pools, lend and provide liquidity for AMM; participate in fundraising (IFO)…

🎯 How Uniswap works

Uniswap is the very source of decentralized exchanges. Thanks to UNI, the other DEXs were able to establish themselves among the most used exchanges.

Unlike other exchanges that require huge fees, UNI on the other hand operates independently, as a public good. The exchange of tokens is done without using an intermediary.

Additionally, it uses a simple math equation, token pools, and Ethereum (ETH) to determine prices when trading, unlike some CEXs.

Uniswap works with two types of smart contracts: a contract Exchange and a contract Factory exchange.  The first allows to add new tokens to the platform and the second facilitates token exchanges or trades.

However, to exchange one token for another, you simply need to connect your wallet to the platform, then select the tokens to trade and validate the order transactions on the wallet. In the process :

1. Just make sure you already have a wallet Metamask, WalletConnect, Coinbase wallet, Portis or Fortmatic.

2. When it's done, you'll have to add ether to your wallet, this makes it possible to pay the exchange fees necessary for the token swap (we also refer to its fees as “essence” or “fuel” in English.)
3. Then connect your wallet to the Uniswap app.
4. Select the tokens you wish to trade along with the amount on the “swap".
5. And finally validate the transaction on the platform of your Wallet then wait for it to be completed.
6. It's over for you because you just made a swap!

🎯 How Liquid Swap works

Liquid Swap is based on a liquidity pool. In each pool are two Tokens, and the relative amount of tokens determines the price between them. These can be " traded » in case there are matching tokens remaining in the pool.

Note also that Liquid swap aggregates the liquidity of pools on several chains allowing users to trade anonymously.

🎯 Why use Liquid Swap?

Liquid Swap due to its simplicity makes it very accessible and easy to use. Thanks to it, users have the possibility to trade without resorting to the normal exchange dashboard which seems to be quite complex in its use.

 Also, it can also facilitate the trading of two assets that are not matched on Liquid. So, you can swap any supported crypto with any fiat, or any crypto with any other crypto using Liquid Swap.

However, you cannot exchange fiat for fiat.

Its operation is very simple, all you have to do is:

1. Access the site or Liquid Swap app
2. Select the currency with which you wish to pay
3. Select the currency you want to receive
4. Enter the amount
5. When the details are filled in, click on quick exchange!
6. Once the trade is made, your wallet balance will be optimized.

🎯 What transaction fees on Liquid Swap?

The Liquid Swap is not based on fixed fees. In fact, these users tend to pay a premium on the spread between the two currencies, to account for volatility and price movement.

🌿Bonuses

When you start in cryptocurrency, it is very important to know and especially to master a lot of concepts to avoid many pitfalls. So, to finish, I recommend some of the best crypto platforms like:

• eToro : Here's how to create an account on eToro
• Bitpanda
• Coinhous to
• Binance : Here is how to create an account on Binance

• Coinbase : Here is how to create an account on coinbase
• Kraken:  Here is how to create an account on kraken

🌿 Conclusion

We went around the 3 different exchangers which nowadays are almost essential in the world of digital currency. Thanks to them, it is now possible to carry out various exchanges using digital technology anywhere in the world.

They are part of the new digital era that has come to facilitate our various operations. It is therefore very important to know how they work.

I hope this article was very useful to you and that you were able to have the answers to your questions. Do not hesitate to consult our site to discover many other interesting subjects.

Good luck !!