Key data (August 18, 2022)
Circulating Provide — 146,045,553 CAKETotal provide — 319,812,724 CAKESector — DeFi, good contracts platformToken Kind — NativeToken Utilization — Governance, voting, yield farming, stakingLaunch date: September 2020All-time excessive — $44.18ATH Date — April 30, 2022 Market Cap — $624,020,404
What’s PancakeSwap?
Contemplating the meals reference, one may suppose that the individual behind this crypto time period is a world-famous TV chef, like Gordon Ramsay. However no, PancakeSwap (CAKE) just isn’t a joke, regardless of its considerably comical identify. Quite the opposite, it is among the hottest dApps of all time, due to recurrently clocking in additional than $100 million in 24-hour buying and selling quantity.
PancakeSwap skilled unprecedented adoption following its meteoric development in lower than a yr. Consequently, because it eclipsed even Binance’s personal Binance DEX, it has change into by far probably the most dominant DEX on BNB Chain.
Technically talking, PancakeSwap is a decentralized finance (DeFi) software functioning as an AMM (automated market maker). It allows customers to trade tokens and earn charges in return, thereby offering liquidity through farming (the method of staking or lending cryptocurrency in trade for curiosity or different rewards).
Due to its sizeable person base, wide-ranging function set, and large liquidity, PancakeSwap has change into a phenomenon within the cryptocurrency world in current months. Its main function is to guard customers from shedding management over their non-public keys by eliminating the necessity to depend on centralized providers. Concurrently, PancakeSwap allows customers to securely commerce Binance Coin (BNB) and quite a few different BEP-20 tokens on its community.
Since PancakeSwap is a decentralized trade, all trades are executed mechanically by good contracts, eliminating counterparty dangers completely.
A short historical past of PancakeSwap
The PancakeSwap good contract code and web site are open to public scrutiny, though the workforce behind this DeFi is totally nameless. Regardless, a number of outstanding blockchain safety companies like Slowmist and Certik have audited the platform. The scarce data that’s accessible on the founders reveals that the workforce contains quite a few “cooks” (as its members are known as), numerous engineers, and two co-leads, Thumper and Hops.
United by their obvious ardour for pancakes, the workforce launched PancakeSwap in September 2020. Throughout its rise to crypto stardom, the platform has considerably elevated its number of options, attracting numerous customers and spectacular liquidity of supported property. Consequently, it’s not an overstatement to say that this platform exists as a whole ecosystem of DeFi instruments designed across the native utility token of this platform, known as CAKE.
Understanding how PancakeSwap works
As talked about above, PancakeSwap is an automatic market maker, which is a sort of DEX. If you happen to’re new to the crypto world, you’ll be able to consider PancakeSwap as having no restrict/market orders, bid/ask system, or order books.
So, how does this DEX work if that’s the case? Nicely, in case you are a person buying and selling on this platform, you draw liquidity mechanically from one or a number of liquidity swimming pools. As soon as the commerce is full, these swimming pools rebalance (additionally mechanically).
Subsequently, trades that happen on an automatic market maker, equivalent to PancakeSwap, draw liquidity from one aspect of the pool and add it to the opposite. Customers often known as liquidity suppliers, or LPS, contribute this liquidity in equal values to each side of a pool.
Their contributions develop the general quantity of liquidity accessible within the pool, and in return, customers obtain LP tokens proportional to their share. Conversely, retrieving a person’s fraction of the pool requires returning these tokens.
Picture supply: cryptorobin.com
Regardless, the motivation for offering liquidity is that LPs declare a share of the transaction charges from the swimming pools to which they contribute. Each makers and takers pay a flat 0.25% transaction charge, and liquidity suppliers share most of that quantity amongst themselves.
Lastly, the PancakeSwap treasury funds its namesake platform, which is at the moment receiving 15% of all generated buying and selling charges.
Core use instances of PancakeSwap
PancakeSwap supplies the final word buying and selling expertise to end-users by leveraging a number of of its distinctive properties. As an example, it ensures fast execution of trades, due to fast affirmation instances and low transaction charges. Concurrently, PancakeSWAP boasts greater safety than different AMMs on blockchains with slower block instances. That is bolstered by the community not often affected by displacement assaults, equivalent to front-running.
Moreover, a variety of secondary options awaits PancakeSwap customers, a few of which working to additional increase the utility of CAKE tokens. Some examples embrace:
IFOs (Preliminary Farm Choices)Yield FarmsSyrup PoolsLottery V2Prediction MarketsNFT Collectibles
Preliminary farm choices
PancakeSwap makes it attainable for customers to amass new early-stage mission tokens earlier than their official public launch, which has similarities to an IDO (Preliminary DEX Providing). The distinction is that, within the case of an IFO, customers purchase new mission tokens in trade for his or her CAKE-BNB liquidity supplier (LP) tokens.
This process additionally provides a deflationary mechanism for the token as a result of half of the entire funds (on the CAKE aspect of the equation) are burned as a part of the method. Examples of tasks that have been launched by this methodology are Scorching Cross, Soteria, and Ditto.
Yield farms
Through the use of certainly one of its quite a few yield farms to encourage the staking of staking-supported liquidity supplier (LP) tokens, PancakeSwap allows customers to earn a further yield. In different phrases, customers earn a CAKE yield on their liquidity supplier tokens by collaborating in a yield farm. Observe that this yield is obtainable on high of the yields customers earn through transaction charges.
Though the APY can go as excessive as a number of hundred p.c, the precise quantity normally varies from one farm to a different. Nevertheless, when participating on this exercise and making an attempt to calculate their general yield, customers also needs to think about potential impermanent losses.
Syrup swimming pools
Customers can stake numerous BEP-20 tokens and earn a yield by utilizing the platform’s Syrup swimming pools — the equal of PancakeSwap’s easy staking performance. The ensuing yield is normally accessible within the type of reward tokens, usually CAKE, though others can be found as nicely.
The APY per pool can fluctuate, identical to with the platform’s yield farms. Subsequently, this exercise additionally warrants the identical warning: when calculating your true yield, it may be helpful to think about the altering worth of your staked property.
Lottery V2
The lottery function accessible on this decentralized trade is one more facet that makes it stand out. It allows customers to probably take down a big pot of CAKE by shopping for lottery tickets.
At present charges, the value of a single ticket is roughly $5. Nevertheless, buying 100 tickets concurrently might permit customers to assert as much as a 4.95% low cost. Consequently, customers who efficiently match all six numbers on their lottery tickets will obtain a complete of 40% of the prize pool. Winners will then share the prize equally amongst themselves.
Prediction markets
PancakeSwap additionally contains a distinctive prediction market device, which allows customers to watch a five-minute timeframe and try and predict whether or not Binance Coin’s (BNB) worth will rise or fall. On the one hand, unsuccessful predictors forfeit their wager quantity, however on the opposite, winners share the prize pool funded by all members.
NFT collectibles
PancakeSwap added NFT Profiles in February 2021 – a novelty function permitting customers to buy one of many accessible Bunny NFTs and even select an NFT profile image. These with an entire profile will change into a part of a particular workforce to earn rewards by collaborating in community occasions.
PancakeSwap token CAKE
PancakeSwap’s native utility token is named CAKE, and it serves numerous functions inside the DEX’s repeatedly rising panorama. Its main features embrace:
Yield farmingStakingParticipating within the PancakeSwap LotteryEnabling voting on governance proposals through the platform’s neighborhood governance portal
Governance
The neighborhood partially governs PancakeSwap, which means that people who personal CAKE tokens can vote on governance proposals by the community’s native voting portal. A number of the proposals are tabled instantly by the neighborhood, and others are proposed instantly by the PancakeSwap core workforce.
At CEX.IO, you’ll be able to purchase CAKE and trade it for USD (and, often, see us use pop-culture references like Gordon Ramsay…however that’s a narrative for an additional time). Along with benefitting from the options that PancakeSwap affords, you too can commerce CAKE to reap the benefits of its widespread adoption potential.
