CEX.IO Highlight: PancakeSwap (CAKE)

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Key info (August 18, 2022)

Circulating Provide — 146,045,553 CAKE
Whole provide — 319,812,724 CAKE
Sector — DeFi, good contracts platform
Token Sort — Native
Token Utilization — Governance, voting, yield farming, staking
Launch date: September 2020
All-time excessive — $44.18
ATH Date — April 30, 2022
Market Cap — $624,020,404

What’s PancakeSwap?

Contemplating the meals reference, one would possibly suppose that the individual behind this crypto time period is a world-famous TV chef, like Gordon Ramsay. However no, PancakeSwap (CAKE) isn’t a joke, regardless of its considerably comical identify. Quite the opposite, it is among the hottest dApps of all time, due to usually clocking in additional than $100 million in 24-hour buying and selling quantity.

PancakeSwap skilled unprecedented adoption following its meteoric progress in lower than a 12 months. Consequently, because it eclipsed even Binance’s personal Binance DEX, it has develop into by far essentially the most dominant DEX on BNB Chain.

Technically talking, PancakeSwap is a decentralized finance (DeFi) utility functioning as an AMM (automated market maker). It permits customers to change tokens and earn charges in return, thereby offering liquidity through farming (the method of staking or lending cryptocurrency in change for curiosity or different rewards).

Because of its sizeable consumer base, wide-ranging characteristic set, and large liquidity, PancakeSwap has develop into a phenomenon within the cryptocurrency world in latest months. Its main objective is to guard customers from dropping management over their non-public keys by eliminating the necessity to depend on centralized providers. Concurrently, PancakeSwap permits customers to securely commerce Binance Coin (BNB) and quite a few different BEP-20 tokens on its community.

Since PancakeSwap is a decentralized change, all trades are executed routinely via good contracts, eliminating counterparty dangers totally.

A short historical past of PancakeSwap

The PancakeSwap good contract code and web site are open to public scrutiny, regardless that the staff behind this DeFi is totally nameless. Regardless, a number of distinguished blockchain safety companies like Slowmist and Certik have audited the platform. The scarce data that is accessible on the founders reveals that the staff consists of quite a few “cooks” (as its members are referred to as), numerous engineers, and two co-leads, Thumper and Hops.

United by their obvious ardour for pancakes, the staff 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 belongings. Consequently, it isn’t an overstatement to say that this platform exists as a whole ecosystem of DeFi instruments designed across the native utility token of this platform, referred to as CAKE.

Understanding how PancakeSwap works

As talked about above, PancakeSwap is an automatic market maker, which is a sort of DEX. When you’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? Effectively, in case you are a consumer buying and selling on this platform, you draw liquidity routinely from one or a number of liquidity swimming pools. As soon as the commerce is full, these swimming pools rebalance (additionally routinely).

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 referred to as liquidity suppliers, or LPS, contribute this liquidity in equal values to either 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 consumer’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 price, and liquidity suppliers share most of that quantity amongst themselves.

Lastly, the PancakeSwap treasury funds its namesake platform, which is at present receiving 15% of all generated buying and selling charges.

Core use circumstances of PancakeSwap

PancakeSwap gives the last word buying and selling expertise to end-users by leveraging a number of of its distinctive properties. For 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 strengthened 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 Farms
Syrup Swimming pools
Lottery V2
Prediction Markets
NFT Collectibles

Preliminary farm choices

PancakeSwap makes it attainable for customers to amass new early-stage undertaking tokens earlier than their official public launch, which is analogous to an IDO (Preliminary DEX Providing). The distinction is that, within the case of an IFO, customers purchase new undertaking tokens in change 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 whole funds (on the CAKE aspect of the equation) are burned as a part of the method. Examples of tasks that have been launched via this methodology are Sizzling Cross, Soteria, and Ditto.

Yield farms

By utilizing certainly one of its quite a few yield farms to encourage the staking of staking-supported liquidity supplier (LP) tokens, PancakeSwap permits customers to earn an extra yield. In different phrases, customers earn a CAKE yield on their liquidity supplier tokens by taking part in a yield farm. Observe that this yield is out there 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 often varies from one farm to a different. Nevertheless, when participating on this exercise and trying to calculate their total yield, customers must also 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 often accessible within the type of reward tokens, usually CAKE, though others can be found as nicely.

The APY per pool can fluctuate, similar 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 contemplate the altering worth of your staked belongings.

Lottery V2

The lottery characteristic accessible on this decentralized change is yet one more facet that makes it stand out. It permits customers to doubtlessly take down a major pot of CAKE by shopping for lottery tickets.

At present charges, the worth of a single ticket is roughly $5. Nevertheless, buying 100 tickets concurrently might enable customers to say 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 includes a distinctive prediction market device, which permits customers to look at a five-minute timeframe and try to predict whether or not Binance Coin’s (BNB) value will rise or fall. On the one hand, unsuccessful predictors forfeit their guess 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 characteristic permitting customers to buy one of many accessible Bunny NFTs and even select an NFT profile image. These with a whole profile will develop into a part of a particular staff to earn rewards by taking part in community occasions.

PancakeSwap token CAKE

PancakeSwap’s native utility token is known as CAKE, and it serves numerous functions throughout the DEX’s repeatedly rising panorama. Its main capabilities embrace:

Yield farming
Staking
Taking part within the PancakeSwap Lottery
Enabling voting on governance proposals through the platform’s group governance portal

Governance

The group partially governs PancakeSwap, which means that people who personal CAKE tokens can vote on governance proposals via the community’s native voting portal. A few of the proposals are tabled straight by the group, and others are proposed straight by the PancakeSwap core staff.

At CEX.IO, you’ll be able to purchase CAKE and change it for USD (and, sometimes, see us use pop-culture references like Gordon Ramsay…however that’s a narrative for one more time). Along with benefitting from the options that PancakeSwap affords, it’s also possible to commerce CAKE to benefit from its widespread adoption potential.