All about the PancakeSwap exchanger

Decentralized finance is one of the most innovative financial technologies of the last decade. She uses the decentralized applications to serve its users anonymously. Today we are going to explore one of the market leaders in the space that exists on the Binance Smart Chain (BSC) – PancakeSwap.

In fact, PancakeSwap is a decentralized exchange (DEX) on the BSC network that uses an automated market maker mechanism to facilitate token trading. It was launched in September 2020 by a group of anonymous developers.

It is also a permissionless DEX that allows anyone to list their tokens on the exchange as long as they create a liquidity pool for the token. Currently, PancakeSwap is the most great DEX and DeFi app on the BSC network. According to tracking platform Defi Llama, it has around $2,95 billion in assets in 2021.

PancakeSwap also has its own governance token called “ CAKE which allows holders to vote on proposals. CAKE is also issued as a reward for liquidity providers and stakers.

So what should we know about this exchanger? In this article, I will review the different features of PancakeSwap.

Let's go !!

🥀 What is PancakeSwap?

PancakeSwap lives on the BSC. BSC entered the market on September 1, 2020. This fourth generation blockchain was designed to run alongside Binance Chain. Impressively, BSC is much more advanced than their previous channel.

For example, the platform is capable of faster and cheaper transactions. The network offers ultra high performance and is capable of producing a block every 3 seconds.

PancakeSwap currently plays a vital role in the market. It helps rectify various issues currently plaguing the market. With its innovative approach and commitment to security, PancakeSwap has established itself as a viable alternative to the current DeFi and DEX leader, Uniswap.

Spot trading on PancakeSwap is executed through the exchange of assets in a pool of liquidity through an Automated Market Maker (AMM).

Usually, AMM swaps are executed live, with the price determined by the ratio of assets in the pool, users do not have final control over the price at which they buy or sell assets.

🥀 How does PancakeSwap work?

You are in the right section if you are wondering how to use PancakeSwap. PancakeSwap's character as a decentralized exchange is pretty obvious right now.

Very probably, the simplest but most viable part of the DEX is Binance Smart Chain's blockchain channel addiction. Binance Smart Chain offers a faster and more financially savvy option for Ethereum.

The PancakeSwap uses the automated market model or the AMM framework like other DeFi portals such as Uniswap. This implies that users can trade crypto resources through liquidity pools.

Traders do not need to rely on an order book, where they have to hang on for walking orders. As reflected in the AMM framework, investors must add their resources to liquidity pools that contain other users' funds.

Token holders must store their assets in the liquidity pools to claim LP tokens in return. Then they can use these tokens to collect their share and part of the trading fee.

Another important feature of how PancakeSwap works hints at improving liquidity pools.

You can store crypto assets in liquidity pools on the DEX and become a liquidity provider with LP tokens. Currently, you can store LP tokens and cycle them in exchange for rewards with the portal's native coin, the CAKE.

🥀 Transaction Fees on PancakeSwap

In order to better understand the transaction fees on PanCakeSwap, we will analyze two types of exchanges.

Exchange of liquidity pool tokens

Trading in the PancakeSwap spot market is done through the exchange of assets in pools of liquidity. Trading via liquidity pools does not involve the “matching“orders as in trades”order book“, so there are no maker or taker fees.

The only trading fees charged are protocol liquidity pool fees which are paid to liquidity providers in part or in full. PancakeSwap charges 0,25% trading fee, distributed as follows :

• 0,17% - Returned to liquidity pools as a liquidity provider fee reward.
• 0,03%- Sent to Treasure PancakeSwap.
• 0,05% - Sent to redeem and burn CAKE.

Also keep in mind that apart from the fees mentioned above, some tokens may charge a “fee” for transfers or sales of the token. This “tax” could increase the actual fees paid by the user.

Perpetual Futures Market

The PancakeSwap Perpetual Futures Market uses an off-chain order book and an on-chain settlement mechanism. This means that users are subject to “ maker " and of " taker ».

Trading fees are 0,02% of notional value for decision makers and 0,07% for the lessee. CAKE will be the default payment option for trading fees, followed by APX (ApolloX's token) and USDT.

All users who pay trading fees in CAKE will get a 5% trading fee discount. This results in trading fees 0,019% for makers and 0,0665% for takers who pay the fee using the token CAKE.

🥀 Benefits of PancakeSwap

PancakeSwap offers its users several advantages:

The selection of new tokens

Another major benefit gained by PancakeSwap users is access to new tokens. Wisely, PancakeSwap allows users to transfer USDT, BTC, BUSD and ETH from the ETH chain to the BSC chain using the deposit features.

You have access to all the best projects on the market. You can also find an excellent selection of exclusive BEP-20 tokens and other rare and hard to find projects.

interconnectivity

One of the main concerns of PancakeSwap users was maintaining some level of interconnectivity between the two blockchains. The developers of PancakeSwap realized that the majority of their user base would come from the Ethereum ecosystem and they wanted to significantly streamline this process.

As part of this strategy, the platform was designed to integrate popular wallets including Trust Wallet, TokenPocket, WalletConnect, MathWallet, and MetaMask.

User-friendly

PancakeSwap's interface resembles that of other popular DEXs. It's very simple to use and you don't need any prior experience to navigate through the basic trading features.

The platform is designed to allow anyone to maximize profits. You can lend your digital assets to liquidity pools and in return you receive liquidity tokens which can then be staked to earn even more profits.

PancakeSwap transactions are cheaper

Perhaps PancakeSwap's biggest appeal is its low fee structure. The network is not dependent on gas prices due to its improved technical capabilities.

This approach means you can transact on PancakeSwap at a fraction of the cost of Ethereum-based AMMs such as Uniswap and SushiSwap. Impressive, the average transaction does not cost only about $0,08 using PancakeSwap.

PancakeSwap is faster

The BSC also provides a more responsive trading experience for users. PancakeSwap user transactions complete in less than five seconds in most scenarios.

Faster transaction times allow investors to earn more because they open up more arbitrage trading opportunities. They also allow traders to stay ahead of trends and reduce slippage.

Profits

PancakeSwap introduces innovative ways to create new revenue streams. Users can secure profits using the DEX and benefit from lower fees. They can also stake and mine their chips to earn rewards effortlessly.

The network supports the trading and issuance of non-fungible tokens (NFT). These collectible tokens are one of the fastest growing sectors in the blockchain market today. They are quickly gaining value with some recent NFTs selling for millions.

User anonymity

For those looking for a private trading experience, PancakeSwap is a sensible option. The platform does not require any KYC/AML registration. You just need to link your supported wallet and you are ready to start trading.

For the privacy-conscious, this strategy is seen as an extra layer of protection against hackers or others looking to monitor your earnings.

Transaction Security

PancakeSwap turned out very secure. For one thing, it's a non-custodial DEX, which means the platform never holds your assets directly in large hot wallets. DEXs are much more secure than centralized exchanges for this reason.

Additionally, the platform has taken some steps to help promote its secure image. For example, PancakeSwap had a third-party audit carried out by the popular cybersecurity company CertiK.

The audit confirmed the enterprise-grade security of the platform. It also gave PancakeSwap the ability to add even more functionality.

Specifically, the developers have added the features of CertiK Security Oracle, CertiK Shield, DeepSEA and Virtual Machine. Although the platform is still relatively new, it has never been successfully hacked.

Taken into account deflation

PancakeSwap incorporates various deflationary protocols to help maintain the value of its token. These protocols include multiple token burns. For example, 100% of CAKE, the platform's native token, raised in initial agricultural offerings (IFOs) is burned.

Urban artist 10% of all profits of the PancakeSwap lottery and a percentage of the grown CAKE is burned. These systems help developers adapt to rapidly changing market conditions and protect their investors from losses due to oversupply.

🥀 Pancake Swap vs. Uniswap vs. SushiSwap

In the current cryptocurrency landscape, three major decentralized exchanges dominate.

• Uniswap – The original DeFi liquidity protocol based on Ethereum. The current standard to facilitate cryptocurrency trading using ERC-20 tokens and primarily ETH pairs.
• Sushi Swap – A community-driven Uniswap fork that evolved into a DeFi hub offering token trading, farming, and crypto lending/borrowing.
• PancakeSwap — Uniswap clone built on top of BSC to offer fast and inexpensive transactions using BEP-20 tokens and the BSC←→ETH bridge.

While all three enable decentralized exchange, community governance, yield farming, and LP (liquidity provider) opportunities, only Sushi and PancakeSwap reimburse tokenholders who stake their tokens.

There are only two important decentralized exchanges in Ethereum's DeFi ecosystem: Uniswap and SushiSwap. The two compete on an extreme level, so which is better and why?

Revenue Share Token

SUSHI holders who stake their tokens receive xSUSHI, a revenue-sharing token that generates transaction fees through the protocol. Similarly, CAKE holders who stake their tokens receive SYRUP, entitling holders to rewards paid in CAKE.

The fundamental difference between the three DeFi protocols is that the UNI token is only used for governance. This difference explains why large liquidity migrations from Uniswap to Sushi and PancakeSwap occurred as LPs sought more wealth creation.

Farm Liquidity Provider Tokens

Similar to yield farming on SushiSwap, farming LP tokens on PancakeSwap is quite simple. Find a pair of assets you already own or are ready to provide, launch your Metamask wallet, deposit and farm.

The beauty of farming using Pancakeswap versus SushiSwap, however, is that it's cheaper to deposit said assets on the former. Binance Smart Chain is much cheaper to use than Ethereum, but that's because it's also much more centralized.

Cheaper and faster transactions

Additionally, PancakeSwap is cheaper and faster to use only Uniswap and Sushi. The reason is that PancakeSwap is built on Binance Smart Chain, a high-speed blockchain built by Binance to compete with Ethereum.

BSC achieves its scaling prowess in part by being less decentralized than Ethereum. But that doesn't seem to deter users from taking advantage of its barely there transaction fees.

Trading on PancakeSwap is undeniably better for small wallets that can't quite call themselves crypto whales and don't have unlimited funds to deposit on gas fees.

Accessing PancakeSwap is always familiar to Ethereum users since you can connect to the exchange using Metamask, just like you do when using Uniswap and SushiSwap.

Gamified exchange experience

Uniswap is a somewhat serious decentralized exchange aside from its fun unicorn logo. Ditto SushiSwap and its homage to Japanese cuisine and spa culture.

PancakeSwap, on the other hand, takes the fun to a new level with PancakeSwap Lottery. Every day, users deposit a certain number of CAKE tokens into the lottery and then wait for the winning numbers to be announced.

The more deposits, the bigger the pot and the higher the stakes. To increase your chances of winning, you deposit more CAKE. The mechanics of the lottery are simple yet brilliant, which is why it's such a hit with users.

🥀 Conclusion

Calling PancakeSwap a top competitor for the DeFi space will not be an overstatement on our part. Binance Smart Chain integration acts as an imperative aid for the development of the decentralized exchange.

PancakeSwap is likely to enjoy huge popularity in the industry thanks to its unparalleled trading services. We have tried to help you learn more about PancakeSwap DEX and its tools and services dedicated to DeFi expansion and a decentralized economy.

If this article interests you, don't forget to share and leave us your opinion in the comments.