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What is PancakeSwap
What is PancakeSwap_
Defi101
13.12.2021
Updated 20.12.2021
12:31

Decentralized cryptocurrency exchanges (DEX) are an excellent alternative for those striving for functions and opportunities that centralized analogs lack. The cryptocurrency field is constantly developing, and new projects are only appearing. In this article, we will tell you about what the PancakeSwap DEX is and what it offers.

PancakeSwap: description of the exchange in simple words 

PancakeSwap is one of the leading decentralized exchanges in the world, functioning on the basis of the Binance Smart Chain (BSC) blockchain.

The main characteristics of the exchange that a potential user of PancakeSwap should be aware of:

History of PancakeSwap appearance 

The launch of this platform took place in September 2020. The developers of the project agreed with Binance in such a way to receive full support from them but at the same time to remain 100% anonymous.

To date, (December 2021) PancakeSwap holds the second position in the world by the indicator of the daily volume of transactions (in the Coinmarketcap rating).

How to become a PancakeSwap user

To start using the functions and capabilities of the PancakeSwap exchange, you need to connect the Web3 wallet. Doing that is possible via the Connect button in the top right corner of the official project website.

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Users can choose among a wide range of wallets that includes both famous and more exotic ones: MetaMask, Trust, MathWallet, Binance Chain Wallet, SafePal Wallet, Coin98 Wallet.

Main investment capabilities on PancakeSwap 

The PancakeSwap decentralized exchange is in demand due to an extensive list of opportunities for any category of traders and investors. They are based on a separate section, each of them attracting their own category of users:

  1. Exchange (located in the Trade menu section) — a section numbering more than 1000 trading pairs. It is notable for the fact that a trader pays only 0,25% of a commission fee per trading operation, where most of it (0,17%) goes to liquidity suppliers that fill up the pool.
  2. Liquidity (located in the Trade menu section) — a section through which it is possible to become one of the liquidity suppliers who receive useful LP tokens for that.
  3. Farms — a section intended for those who want to use accumulated tokens of liquidity to get passive interest income in the process of farming.
  4. Pools — one more section to implement passive income by investing $CAKE coins into ‘syrup’ pools to make money from staking. The reward will be paid out in the form of a currency of the chosen pool.
  5. Prediction — a section that offers a special version of binary options based on the current decentralized exchange. A user can earn money by predicting the rate movement in a cryptocurrency pair. The round lasts for 5 minutes – that is why to earn like this is too risky due to the high complexity needed to predict the price movement within a short period of time.
  6. Lottery — a section with a regular lottery, which restarts every 6 hours. Having paid approximately 0.42 $CAKE (the price is relevant for December 2021), you can get a ticket with six digits that will allow you to claim to such prizes as 40% of the bank if all digits coincide, 20% of the bank if 5 digits coincide, 10% of the bank if 4 digits coincide, etc. 20% of the bank (in the form of $CAKE token) in each drawing are burnt forever.
  7. Collections — a section with non-fungible tokens (NFT) released by this exchange. Users can get them in drawings and exchange them for $CAKE. There is also a possibility to leave the object in a collection.

PancakeSwap: how safe it is to use the exchange 

PancakeSwap has successfully passed an audit (an independent verification of activity) via the CertiK framework. It means that the blockchain ecosystem and smart contracts of the exchange do not contain any critical bugs, holes, and are reliably protected from hacker attacks.

Currently, the safety of the exchange is ensured by a range of tools, including Security Oracle, CertiKShield DeepSEA, as well as The CertiK Virtual Machine.

General conclusions on the project 

The diversity of available assets and offers, low fees, high speed of transaction processing, and reliability have made PancakeSwap one of the most popular platforms in the DeFi field.

The $CAKE cryptocurrency in which you can invest even without personal involvement in the ecosystem of this DEX looks promising.

Nevertheless, there are some concerns based on the soon release of ETH 2.0. The modification of the Ethereum blockchain may lead to the situation that the projects based on it will receive even lower fees and more high-speed operations than those available on PancakeSwap now.

To date (December 2021), the characteristics of the decentralized exchange, its tariffs, and investing capabilities make it attractive for investors. The users of the project may not only save on deals but also get some pretty good profits as well as a number of DeFi functions that are certainly absent on centralized exchanges.