PancakeSwap Takes the Lead in the AMM Industry

PancakeSwap was once an underdog in the Defi Automated Market Maker corner. However, now they are dominating the entire AMM market. These are the features worthy of attention and commendations.

By
Wilfred Victor
on
March 29, 2021
Category:
Breaking News


About PancakeSwap

PancakeSwap is the top Automated Market Maker Dex on the BSC network. The protocol competes with leading Ethereum based Dexs such as Uniswap and SushiSwap. PCS has gained prominence due to its ease of use and fast and cheap transactions made possible by the Binance Smart Chain network.


Emerging as the top AMM in the Defi Corner

PancakeSwap rose to prominence following a streak of bad luck when it reported a Syrup protocol exploit late last year. Its rise and further attempt to snatch the top Total Value Lock TVL from SushiSwap and Uniswap--the top two AMMs on the Etheruem blockchain--is quite outstanding.

It’s worthy to note that many factors have given the protocol the edge over other existing AMMs on BSC and Ethereum blockchains.


Why the Increasing Prominence, Users, TVL, and Valuation?

It is simple and straightforward to identify. Factors can be grouped into three;

  • High Gas Fees on the Ethereum blockchain: At the time of this report, Ethereum gas is around 125 Gwei for a standard transaction, 181 for a faster transaction, according to Ethgasstation.

What this means is that for a transaction to take place, users should have an average of $5 to move ERC20 tokens and an upward amount of $20 to interact with ETH-based dapps. While with less than a dollar, users can carry out the same transactions on the BSC network.

These fees are viewed as ridiculous by a lot of Ethereum platform users. Hence the continuous shift into the gas-efficient protocol of the BSC network. A move that has cost ETH Dexes and AMM protocol both their users and their TVL. And have helped gain immense volume for the PancakeSwap BSC protocol.

PancakeSwap came into a strategic position to take on users no longer comfortable with the high fees encountered on the Ethereum network.

  • Strong Backing from Binance: CEO of Binance Exchange, the company that owns the Binance Smart Chain network has in multiple times shown support to the PancakeSwap Dex protocol via his Twitter handle. It is believed that Cake is a CZ-invested project, and the network has helped drive an immense value into the protocol.
Monthly trading volume on PancakeSwap. Source: Delphi Digital
  • Unique Cake Tokenomics: CAKE tokens offers numerous attractions and benefits to holders. Every day the team continues to introduce compelling use cases for its token including: lottery system, NFTs, and various other utilities. This is coupled with the fact that the token has a deflationary property like the BNB token of the BSC network that has scheduled burns. Despite its deflationary mechanics, the current weekly inflation rate for CAKE is 3.78%, significantly higher than UNI's 2% yearly inflation rate. The team has begun solving the problem as it opens up a vote on the emission rate via its governance platform.
4hr Tradingview chart on CAKE/USDT

At the time of this report, the price is currently at $17, a 6% rise since the last 24hrs and more than 100% rise from its previous dip at $8 around February.


Final Thoughts

We may continue to witness a continued rise in the BSC-based AMM protocol’s dominance as its Ethereum AMM counterparts users continue to battle with the high fees.
With solid backing from the Binance Smart Chain network and the network attempts to make the fees still attractive in the long term, many analysts have suggested keeping an eye on PancakeSwap as it’s a worthy competition to Uniswap both in the long and short term.

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Wilfred Victor

Ace finds himself as a blockchain enthusiast who is focused on growing with the entire crypto sector. He is an energetic and passionate writer who believes that all things are achievable.