Key data (August 18, 2022)
Circulating Provide — 146,045,553 CAKETotal provide — 319,812,724 CAKESector — DeFi, sensible contracts platformToken Sort — NativeToken Utilization — Governance, voting, yield farming, stakingLaunch date: September 2020All-time excessive — $44.18ATH Date — April 30, 2022 Market Cap — $624,020,404
Contemplating the meals reference, one may assume that the particular person behind this crypto time period is a world-famous TV chef, like Gordon Ramsay. However no, PancakeSwap (CAKE) shouldn’t be a joke, regardless of its considerably comical identify. Quite the opposite, it is without doubt one of the hottest dApps of all time, because of 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 change into by far essentially 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 alternate tokens and earn charges in return, thereby offering liquidity by way of farming (the method of staking or lending cryptocurrency in alternate for curiosity or different rewards).
Due to its sizeable person base, wide-ranging characteristic set, and large liquidity, PancakeSwap has change into a phenomenon within the cryptocurrency world in current months. Its main goal is to guard customers from dropping 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 alternate, all trades are executed mechanically by means of sensible contracts, eliminating counterparty dangers totally.
A short historical past of PancakeSwap
The PancakeSwap sensible contract code and web site are open to public scrutiny, though the group 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 group contains 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 group 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, 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 may 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? Properly, 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).
Due to this fact, trades that happen on an automatic market maker, comparable to PancakeSwap, draw liquidity from one facet 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 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 circumstances of PancakeSwap
PancakeSwap offers the final word buying and selling expertise to end-users by leveraging a number of of its distinctive properties. As an illustration, it ensures fast execution of trades, because of fast affirmation instances and low transaction charges. Concurrently, PancakeSWAP boasts increased safety than different AMMs on blockchains with slower block instances. That is strengthened by the community not often affected by displacement assaults, comparable to front-running.
Moreover, a variety of secondary options awaits PancakeSwap customers, a few of which working to additional enhance 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 undertaking 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 undertaking tokens in alternate 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 facet of the equation) are burned as a part of the method. Examples of initiatives that have been launched by means of this technique are Sizzling Cross, Soteria, and Ditto.
By utilizing one in all 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. Word that this yield is offered on high of the yields customers earn by way of 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. Nonetheless, when partaking on this exercise and trying to calculate their total yield, customers also needs to consider 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, sometimes CAKE, though others can be found as effectively.
The APY per pool can fluctuate, identical to with the platform’s yield farms. Due to this fact, this exercise additionally warrants the identical warning: when calculating your true yield, it may be helpful to contemplate the altering worth of your staked property.
The lottery characteristic accessible on this decentralized alternate is yet one more side that makes it stand out. It allows customers to doubtlessly take down a big pot of CAKE by shopping for lottery tickets.
At present charges, the value of a single ticket is roughly $5. Nonetheless, buying 100 tickets concurrently might enable 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.
PancakeSwap additionally encompasses a distinctive prediction market instrument, which allows customers to watch a five-minute timeframe and try and predict whether or not Binance Coin’s (BNB) value 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.
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 an entire profile will change into a part of a particular group to earn rewards by collaborating in community occasions.
PancakeSwap token CAKE
PancakeSwap’s native utility token is named CAKE, and it serves numerous functions throughout the DEX’s constantly rising panorama. Its main features embrace:
Yield farmingStakingParticipating within the PancakeSwap LotteryEnabling voting on governance proposals by way of the platform’s group governance portal
The group partially governs PancakeSwap, which means that people who personal CAKE tokens can vote on governance proposals by means of the community’s native voting portal. A number of the proposals are tabled straight by the group, and others are proposed straight by the PancakeSwap core group.
At CEX.IO, you may purchase CAKE and alternate it for USD (and, sometimes, 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 gives, you too can commerce CAKE to benefit from its widespread adoption potential.