Introducing PancakeSwap, the platform for seeing life in CAKE

In simple terms, PancakeSwap is a crypto platform, more specifically decentralised exchange or DEX, that was launched in September 2020. Its unique feature is that it was built on the Binance Smart Chain, a massive competitor to Ethereum. More importantly, it should also be noted that Binance Smart Chain’s blockchain network serves as the foundation for Binance.

Supporting the underlying technology in the world’s largest centralised crypto exchange definitely enhances the credibility of the PancakeSwap platform. With this decentralised exchange, Binance provides formidable competition to popular crypto networks such as Uniswap and Ethereum.

The mystery surrounding the PancakeSwap token is strengthened by the possibilities of reversing Binance itself as a cryptographic exchange. On the other hand, the exclusion of cryptographic aspects from PancakeSwap would still make it one of the largest DeFi protocols today. The platform launched in September 2020 and, by February 2021, it was the first billion-dollar project on the Binance Smart Chain. Interestingly, the latest PancakeSwap v2 variant arrived in April 2021, demonstrating the platform’s exceptional growth.

How does PancakeSwap work?

PancakeSwap’s identity as a decentralised platform is pretty clear at the moment. One of the first aspects of how DEX works is the underlying blockchain network, i.e. Binance Smart Chain. Interestingly, Binance Smart Chain offers a faster and more cost-effective alternative to Ethereum.

The PancakeSwap platform follows the AMM system, as do many other DeFi protocols, such as Uniswap. It helps users trade crypto assets by leveraging user-generated liquidity pools. You don’t have to rely on an order book, where you have to wait for matching orders. Instead, you trade with the liquidity pool on the DEX.

Under the AMM or Automated Market Maker system, participants must contribute their assets to the liquidity pools. Users must deposit their funds in the liquidity pools and receive liquidity provider tokens or LP tokens in return. Liquidity providers can then use LP tokens to recover their share of the liquidity pool along with a share of the pool’s trading fees. So you can simply trade BEP-20 tokens while adding liquidity and earning rewards using the PancakeSwap application.

Another important aspect of how PancakeSwap works is the development of liquidity pools. As a result, the PancakeSwap platform also offers an exclusive range of opportunities for DeFi farming. For instance, liquidity capture has been in the platform’s favour, with over $1 billion in total asset value migrated to PancakeSwap since its launch.

Connect to wallet

You need to click on the “Connect to wallet” option to unlock the features. Then you can see the different options for choosing a wallet like WalletConnect, MetaMask, Binance Chain Wallet, Trust Wallet and many more choices. However, you may be wondering about MetaMask’s compatibility with the PancakeSwap platform despite being an Ethereum wallet.

Although MetaMask is an Ethereum wallet, the Binance Smart Chain architecture allows MetaMask to be used to interact with BSC-based dApps (decentralised applications). Once you’ve connected the wallet to PancakeSwap, you’re ready to start exploring the new DeFi protocol and its exciting features.

How to add liquidity to PancakeSwap?

Anyone who has used an AMM-based protocol will know how to add liquidity to the PancakeSwap application. Liquidity is an essential requirement if you wish to farmer CAKE tokens.

To add liquidity to the exchange, you need to start by navigating to the “Trade” option, which you can find in the left sidebar.
Now you can find the “Liquidity” option. Click on the button and then on “Add Liquidity”.
Choose the pair of tokens you wish to deposit in the liquidity pool. Make sure you have a clear idea of the potential temporary loss before adding liquidity to the pools.

Other PancakeSwap applications

Discussions about farming and staking PancakeSwap tokens highlight the promise of the new DeFi protocol. However, the new decentralised exchange is not just another DeFi solution that lets you farm and stake your way to crypto fortunes. PancakeSwap also offers many other interesting applications that you can try out for a better return on investment.

The cryptocurrency version of the lottery

One of the most striking features of PancakeSwap v2 is the lottery function. You can take part in the lottery and try your luck at promising rewards. Note that lottery sessions can last around 6 hours and that you can participate with tickets.

A ticket costs 10 CAKE tokens and includes a random combination of four numbers between 1 and 14. The winning prize or lottery jackpot is 50% of the total lottery pool. The numbers on the ticket must match the four numbers on the winning ticket in the same order. You can also win rewards if two or more numbers on your lottery ticket are in the same position as the winning ticket. Quite an interesting approach to your crypto experience on the PancakeSwap platform, isn’t it?

NFT (non-fungible tokens)

The lottery on PancakeSwap is probably a surprising feature for many of those looking for a decentralised exchange. Interestingly, DEX has plenty more surprises in store for everyone with the chance to win special NFTs. You can also take advantage of the PancakeSwap token to win adorable NFTs on the Binance Smart Chain. NFT winners can exchange them for CAKE tokens or store them as collectibles. All you have to do is register for a chance to win NFTs on the PancakeSwap app. The best thing about the NFT competition is the random selection of winners. Stay up to date with the NFT page on the platform for the latest opportunities.

IFO (Initial Farm Offerings)

PancakeSwap also has many other intriguing features that any beginner should know about in detail. IFOs or Initial Farm Offers are an interesting way to take advantage of yield farming to get closer to user’s newly launched token.

Users can launch IFOs on the platform by committing LP tokens from supported pools to allow access to the sale of newly launched tokens. The PancakeSwap platform also offers team and profile functionality, which can help you display your statistics by creating a public profile.

Is PancakeSwap safe?

Just like other decentralised exchanges, the question of “is PancakeSwap secure” becomes quite unavoidable. To begin with, it has the advantage of being audited by a third-party auditor such as CertiK. However, audit and security features do not necessarily mean that your funds are safe on the platform. You have to deal with the risk of bugs and vulnerabilities in PancakeSwap because it works on smart contracts. As a result, you may run the risk of losing your assets on the platform.

Concluding words

It is certainly a leading competitor to other notable decentralised exchanges such as Uniswap. PancakeSwap’s other distinct features, such as the lottery and NFT rewards, also make a strong case for the platform.

On top of this, Binance Smart Chain’s capabilities also serve as a vital support for the growth of decentralised exchange. However, concerns such as “is PancakeSwap safe” continue to present some setbacks. In the long term, awareness of such an innovative DEX would lead to its adoption.