PancakeSwap is a Decentralized Cryptocurrency Exchange (DEX) that was developed by anonymous developers and officially launched on September 20, 2020. The DEX nature of PancakeSwap means that the middleman broker-dealer or market-maker that is present in traditional stock trading markets is absent.
But is PancakeSwap worth it? And what are the important features? In this review, we'll break down the important features of PancakeSwap such as fees, trading pairs, liquidity and security. We'll also give our verdict on whether or not we think PancakeSwap is worth it.
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PancakeSwap is a leading crypto DEX that provides a secure environment for exchanging one BEP-20 token for another through automated liquidity pools. The platform allows users to swap BSC tokens, participate in a lottery, bet on BNB price fluctuations, receive prizes from the liquidity pool and stake, and participate in trading competitions. It is fast, low-fee, and operates under the BSC instead of using the slow and expensive Ethereum cryptocurrency network. This platform enables traders to swap between 500+ trading pairs. Other notable features on PancakeSwap include BSC token swaps, Syrup Pools, Liquidity Farms, Perpetual Trading, NFT Collections Marketplace, Team trading competitions, Predictions Betting and a CAKE Lottery.
What Is PancakeSwap?
PancakeSwap is a decentralized exchange that operators on the Binance Smart Chain (BSC). The platform has over 2.2 million users that can trade Binance tokens (BNB) as well as other tokens that were produced on the Binance Smart Chain. It is a non-custodial platform that never holds or controls its customer's funds, unlike centralized exchanges such as Binance and FTX. Using PancakeSwap will feel natural for those who are already familiar with popular Ethereum-based DEXs, such as UniSwap or SushiSwap because it is similarly driven by community governance and the ability to farm liquidity yields. For more information on these alternative DEXs, click the links above to read our reviews.
PancakeSwap is powered by CAKE, which is the native BEP-20 token for the platform that resides on the BSC DeFi ecosystem. Users can put their CAKE into a number of different liquidity pools to get rewards, or they can put their CAKE into a daily lottery to try to win a much bigger prize.
PancakeSwap Pros & Cons
Pancake Swap is loaded with features for traders and liquidity farmers to swap BSC tokens and earn yield. However, there are some setbacks to consider. These include no option for fiat deposits or a mobile trading app and customer support team. The pros and cons are summarized below:
- High daily transaction volume resulting in low slippage
- Relatively low transaction costs when compared to Uniswap
- Decentralized liquidity aggregation without a middle-man
- Offers perpetual trading contracts with leverage
- Web3 wallets and the majority of hardware wallets are supported
- No official customer support desk
- Does not allow fiat deposits to buy crypto
- There is currently no official mobile app
- When playing predictions, the order history comes from the subgraph, and therefore, pricing information might be delayed by a couple of minutes
Is Pancakeswap Safe?
PancakeSwap's security has never been compromised, which makes it a very safe place for people to trade. For maximum transparency, the PancakeSwap platform and all of its Smart Contracts are built on open-source software and can be seen by anyone. Because BscScan is used to validate contracts, traders are provided with full transparency of their trading activity.
All smart contracts on PancakeSwap are protected by multi-sig cryptography, which gives an extra layer of defense against attacks from inside the company. Moreover, PancakeSwap has been audited by several reputable blockchain security companies.
What Is PancakeSwap’s CAKE Token?
PancakeSwap's native token, CAKE, is analogous to Uniswap's UNI. In order to exchange BEP-20 tokens, cast votes, and engage with the DEX's other features, PancakeSwap's native deflationary currency, CAKE, was created. Being a liquidity provider or staking CAKE tokens on PancakeSwap are two ways to acquire CAKE tokens. At the time of writing, the current cake supply of CAKE is $290 million.
Top Features on PancakeSwap
Token swaps on PancakeSwap provide a straightforward and simple method for swapping BEP-20 tokens through automated liquidity pools. Traders can use limit orders to get swaps at the prices they want by leaving instructions to fill buy or sell orders at certain levels. Limit orders are also known as stop-limit orders. Only in the event that the price on PancakeSwap reaches the selected limit price will the transaction be carried out (or better).
PancakeSwap gives its users the option to trade between several digital currencies by implementing a decentralized liquidity aggregation method known as an Automated Market Maker, or AMM. Rather than depending on a centralized broker or custodian service, the protocol provides DeFi farming benefits for liquidity providers, in addition to capabilities for bespoke liquidity pools. In the following parts, we will go over these and other particulars of the best features that PancakeSwap has to offer.
PancakeSwap Exchange's equivalent of staking is called Syrup Pools, and it allows users to stake CAKE for up to 52 weeks to collect additional CAKE tokens. CAKE Syrup Pools allows users to stake CAKE holdings to provide liquidity for another BSC token. The biggest syrup pool is simply for CAKE, where they can stake and earn even more CAKE tokens. Each pool has a set date for expiration, and the list is updated regularly.
Related: What are the best staking platforms?
Traders can stake CAKE in PancakeSwap’s Syrup Pools, which offer both flexible and fixed staking options. They will need to connect a wallet to the pool via the Pools page. The Enable button should now be replaced by Flexible and Fixed staking options. Flexible staking allows users to un-stake CAKE tokens from a syrup pool at any time. However, there is a fee for un-staking within 72 hours. After 3 days, they will be able to unstake with no fee. The 3-day timer resets every time additional CAKE is added to the pool. This fee only applies to manual unstaking; it does not apply to automatic compounding.
Rather than unstaking from the liquidity pool, users can choose to simply harvest profits. There is a 2% fee is subtracted automatically each time they harvest from a syrup pool. Every week, a portion of the cake that was acquired through the unstaking fee and the performance fee is burned as a part of the regular cake token burn. As a result of this process, the total number of CAKE tokens in circulation will be reduced, which will help reduce token inflation effects. There is also the choice to automatically re-stake earnings from a flexible pool into a fixed-term pool instead, but not vice versa.
Another way to stake CAKE or other BSC tokens and earn CAKE rewards is through Fixed-Term Staking. Once CAKE is locked in fixed-term staking, the user can add more cake to prolong the duration of the lock. 52 weeks is the longest amount of time that may be locked. Longer lock-up times result in larger yield rewards. However, users will not be able to shorten the duration of the locking period. Moreover, they can't change CAKE from fixed to flexible staking, get tokens out of the account, or harvest rewards until the fixed lock period is over.
The PancakeSwap platform uses an automated market maker (AMM) system, which involves sending pairs of tokens to the pool and giving the liquidity providers the platform's income from transaction fees. The initial setup on the yield farming platform requires a little bit more effort than with syrup pools. Readers should be cautious that there is a possibility of impermanent loss associated with yield farming, but it may offer greater APR earnings than syrup pools.
Calculations of Yield Farm APR take into account both LP and farm incentives. The Farm Base APR is the amount of CAKE that is given to the liquidity providers. This rate is computed based on the farm multiplier and the total amount of liquidity that is present on the farm. It is not quite as risky as it may sound, but it is important to understand the impermanent loss before trading on any AMM-based exchanges.
On decentralized exchanges like UniSwap and dYdX, as well as others, high expectations for staking represent a significant challenge because of the possibility of impermanent loss. The fact that there is just one token added to the pool means that any fluctuation in the price of CAKE will not result in any impermanent loss. This is because there is no requirement to keep the price of CAKE in balance with any of the other tokens in the pool.
Perpetual Token Trading
Users of futures trading platforms are granted the ability to enter trades on margin (also known as leverage), which involves using borrowed funds to maximize capital. A user who makes use of leverage on the crypto margin exchange is able to enter a position with a size that is greater than the amount of their account balance.
In addition to providing leverage, futures markets permit trading in both directions, including buying (known as "going long") and selling (known as "going short") of perpetual. Furthermore, it enables PancakeSwap to provide more assets for trade, including assets not currently available on the BNB Smart Chain (BSC). Perpetual contracts do not expire and allow the holder to profit from the underlying asset's trading price action without owning it.
In addition to this, it enables PancakeSwap to provide other assets for trading, including assets that are not yet available on BNB Smart Chain. Even if the contract never ends, the person who owns a perpetual contract does not need to own the underlying asset in order to take part in price changes.
Participate in the PancakeSwap Lottery
PancakeSwap has a lottery system that offers customers the chance to win substantial rewards with draws that occur every 12 hours. Tickets are purchased in CAKE and cost about $5 USD. There is no maximum entry restriction for the lottery as a whole, but are restricted to purchasing no more than 100 tickets at a time. The lottery uses Chainlink's Verifiable Random Function (VRF) to make sure that the randomness it generates is real and safe. This helps stop anyone from changing the results.
PancakeSwap offers a feature that allows users to win rewards by predicting the movement of the BNB/USDT trading pair. Every 5 minutes, the algorithm posts whether the price moved up or down from the previous round. If they guess wrong, then they lose the bet, which is distributed to the winners.
PancakeSwap Initial Farm Offering (IFO)
Initial farm offerings, or IFOs, are a brand-new ICO idea created by PancakeSwap. Users must create a PancakeSwap "profile" in order to take part in an IFO. After that, users can buy the token by depositing CAKE tokens into the IFO pool. The number of iCAKE that a person has collected determines how much CAKE they are capable of committing. The word "iCAKE" refers to a numerical measure that is used to figure out how many Cakes have been staked in the fixed-term CAKE staking pool and how long the current fixed-term staking position has been staked for.
PancakeSwap also holds team trade events on a regular basis. The better the awards, the higher the team rating. At the end of the tournament, each competitor will receive at least one award. The total cumulative volume of the top 500 members of each team is used to compute team standings. If there is a dispute over the final winning team or rank, PancakeSwap will have the last word.
PancakeSwap maintains its own NFT Marketplace. NFT collection producers can receive creator royalties on PancakeSwap trades, as well as get attention for their project on BNB Smart Chain's most renowned NFT marketplace.
Funding & Limits
Pancakeswap does not accept fiat currency payments using a debit, credit, bank, or any other type of deposits. A compatible wallet with BNB (BEP-20) tokens is required to pay the gas cost for investing, trading, and otherwise interacting with PancakeSwap’s exchange and other services. To transfer ERC-20 tokens from Ethereum or other networks to PancakeSwap, there are several ERC20 to BEP20 bridge services to choose from. However, the most common ways to move assets are through Binance, Binance.us, Anyswap, and 03 Hub.
PancakeSwap does not provide any kind of customer assistance. This can be an issue for first-time users or beginners using the DEX. There is a Troubleshooting page, which has a list of the most frequent mistakes that occur on the exchange as well as solutions to those faults. Moreover, Pancakeswap has a great community that is always willing to help new users. This can be seen in the large number of users who actively use the platform to trade and engage in other activities. Otherwise, the only other way to get support is using Telegram or Reddit.
Not only is PancakeSwap fast, but it also offers exceptionally lower fees than most other DEX. Most of this credit goes to the Binance and BNB blockchains’ capped gas fees, which is limited to a maximum of $15 per transaction. The fee per transaction on PancakeSwap is 0.25%, which is a bit cheaper than what is charged by the majority of other digital asset exchanges (DEXs).
The transaction fee is split up and used for different purposes:
- 0.17% is paid to liquidity providers
- 0.03% is given to the PancakeSwap Treasury
- 0.05% is sent towards CAKE repurchase and burn initiatives.
According to the official documentation, treasury funds are used to cover the expenses involved in running PancakeSwap. These expenses include salaries, audits, prizes, hosting, upkeep, bounties, etc. In addition, PancakeSwap's default slippage tolerance is between 0,5% and 1%. To adjust slippage tolerance, you can click on the Settings icon located at the top right-hand corner of the PancakeSwap browser.
Security of Assets
Customers do not need to deposit or withdraw funds from the PancakeSwap exchange. PancakeSwap is a non-custodial DEX, meaning all deals on the platform are transmitted directly from peer-to-peer or from peer-to-contract. Users connecting wallets will never need to worry about trusting any of PancakeSwap’s personnel, software, or services since they never gain access to spend or use them.
Frequently Asked Questions
No, users do not need an account or have to pass an ID verification process. A compatible web3 or hardware cryptocurrency wallet is only required to begin trading BSC tokens.
The Binance Wallet browser extension is the most straightforward and secure way to connect to PancakeSwap. Token Pocket, Coinbase Wallet, and Trust Wallet are presently available as alternatives. All of these wallet dapps are programs that let traders access their funds directly from the blockchain.
PancakeSwap does not have a mobile app. PancakeSwap can only be used on a phone by visiting the website using a mobile browser.
Overall, PancakeSwap appears to be the most entertaining, innovative, and safe to use DEX on the market. For those searching for an alternative to Ethereum-based DEXs, then Pancakeswap is worth a try. It’s the largest AMM project being developed by Binance Smart Chain, and it possesses a number of distinctive features to generate passive revenue. These include participating in liquidity pools and token farming activities.