PancakeSwap Project Insight: A Dex AMM and Yield Farming Project

Pancakeswap has taken the Binance Smart Chain by storm and continues to innovate and bring excitement to the decentralized finance (De-Fi) space.

By
Greg Gotsis
on
November 16, 2020
Category:
BSC News

What is Pancakeswap?

PancakeSwap is a decentralized exchange (DEX) on the Binance Smart Chain (BSC), which uses permission less liquidity pools run by algorithms. This creates what is known as an automated market maker (AMM).

By this point in time, I am sure everyone is familiar with the food token craze that hit decentralized finance (DEFI), whether it's SushiSwap, BakerySwap, PancakeSwap or the plethora of other projects. With CAKE being a BEP-20 token used on the BSC, it allows users to boast fast transactions and fees that trump those of Ethereum. PancakeSwap is the #1 AMM platform on the BSC, which puts it in the same field as ERC-20 based AMM's such as Uniswap and Sushiswap.

For those who are unfamiliar with AMM's, they allow people to trade their digital assets against liquidity pools. This is different from traditional markets that use an order book to match buyers and sellers. On AMM's users can provide their funds once deposited, they become liquidity providers (LP) to the respective pool are receive LP tokens, which we will dive into further.

Source: https://pancakeswap.info/home
https://pancakeswap.info/home

Advantages of PancakeSwap

Earn tokens from Pancake Swap

PancakeSwap has its own native BEP-20 token, CAKE, which can be staked or spread across Syrup Pools. Syrup pools provide tokens from other BSC projects such as Injective Labs (INJ) and CertiK (CTK), to name a couple.

No Know Your Customer (KYC) policy

Unlike many centralized exchanges, anybody can trade from the hundreds of digital assets with over $100,000,000 in liquidity. Did I mention it's super simple to use? There will be more information below.

Low Fee's & Quick Transactions

As previously mentioned, PancakeSwap runs on BSC, using BEP-20 tokens. BSC has much lower fees than Ethereum, with fees ranging anywhere from $0.04- $0.20 and transaction taking about five seconds on BSC.

PancakeSwap is Secured and Audited by CertiK

PancakeSwap has gone above and beyond and received an audit from CertiK. On top of this, CertiK and PancakeSwap have integrated all the following resources:

--Security Oracle

--CertiK Shield

--DeepSEA

--The CertiK Virtual Machine

More information on CertiK's service can be found on their website.

Tokenomics

It is very important to to note that CAKE has an unlimited total suppy, and at the time of writing is still a positive emissions rate. At this point in time CAKE is still an inflationary token but its team is working to introduce new deflationary measures on top of its lottery system.

Yield Farming

Yes, I all know why most of you are attracted to PancakeSwap, yields that you cannot even fathom from centralized finance (banks). They are a couple of different ways to earn yield on PancakeSwap. There are 27 liquidity pools on PancakeSwap at the time of writing, and they offer yields ranging from 5%-310% APY for supplying liquidity. To name a few:

· CAKE-BNB FLIP

· BUSD-BNB FLIP

· ADA-BNB FLIP

· BAND-BNB FLIP

· DOT-BNB FLIP

· EOS-BNB FLIP

· LINK-BNB FLIP

· BAKE-BNB Bakery LP

· BURGER-BNB FLIP

The yield from the LP is reward in CAKE. This governance token can also be staked and used to participate in a deflationary lottery. When providing liquidity to these pools it is crucial to understand how AMM's work and the arbitrage opportunities they provide, putting the LP's at risk of Impermanent Loss (IL). This can be exceptionally risky when pooling un-correlated assets and have high volatility, so it is essential to understand the risks associated

Yield can also be generated through staking CAKE tokens. Cake can be staked in the SYRUP pools that average about 500% APY at the writing time. As mentioned previously, you can stake CAKE to earn INJ, CTK,CAKE, and even TWT (TrustWallet token).

Accessing PancakeSwap

To access PancakeSwap you must use one of the following wallets, for this guide we will show how to create a custom network in the Metamask wallet and connect it to BSC.

Source: https://pancakeswap.finance/staking
Source: https://pancakeswap.finance/staking

If you are unfamiliar with navigating Metamask this tutorial by an early BSC project, Spartan Protocol, is great. Once completed you will be able to access PancakeSwap and begin swapping, staking, and providing liquidity.

Once liquidity is provided, simply navigate to the farm tab, select your respective pool, approve the FLIP tokens, and then begin farming.

To stake CAKE navigate to the SYRUP POOL tab and approve the contract, then stake CAKE to respective pool.

What's Next?

The team behind PancakeSwap recently released their road map. This outlines many exciting features that are on their way. The most significant updates consist of the Initial Farm Offering's, Lending & Borrowing, Margin Trading, and the building out of a NFT Ecosystem. Below the complete roadmap published by the team over at PancakeSwap can be seen.

Source: https://twitter.com/PancakeSwap

Overall thoughts

Pancake swap is the most used AMM and farming projection BSC. It boasts a TVL of ~$100,000,000 and a daily volume of $12,205,198.This pegs it as one of BSC's largest projects if not the largest. PancakeSwap will continue to provide high volume and lots of liquidity to the BSC, especially as the world of DEFI expands.

DeFi on BSC is a massive step as it allows users to participate DeFi while not worrying about exorbitant fees, which can be seen on Ethereum. While BSC has a lot of growth ahead of it, Binance is stimulating the ecosystem and PancakeSwap specifically through the Binance Accelerator Fund, a $10,000,000 fund to help DeFi projects in the BSC.

Overall, the DeFi space is rapidly expanding both on Ethereum and BSC, and PancakeSwap is building itself a name in the room where it continues to innovate. The team has plans to develop itself further and bring more innovation to both DeFi and BSC making it a project worth paying attention to.

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Greg Gotsis

Greg (GoonTrades) is BSC News' Chief Editor and is also a writer for the team. Currently enrolled as an economics major, he finds himself as a cryptocurrency researcher, writer, and technical trader.

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