Key data (August 18, 2022)
- Circulating Provide — 146,045,553 CAKE
- Whole provide — 319,812,724 CAKE
- Sector — DeFi, sensible 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
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) just isn’t a joke, regardless of its considerably comical identify. Quite the opposite, it is without doubt one of the hottest dApps of all time, due to frequently clocking in additional than $100 million in 24-hour buying and selling quantity.
PancakeSwap skilled unprecedented adoption following its meteoric development 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) software functioning as an AMM (automated market maker). It allows customers to trade tokens and earn charges in return, thereby offering liquidity through farming (the method of staking or lending cryptocurrency in trade for curiosity or different rewards).
Due to its sizeable consumer base, wide-ranging function set, and big liquidity, PancakeSwap has develop into a phenomenon within the cryptocurrency world in latest months. Its main goal is to guard customers from dropping management over their non-public keys by eliminating the necessity to depend on centralized companies. 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 trade, all trades are executed mechanically by means of sensible contracts, eliminating counterparty dangers totally.
A quick historical past of PancakeSwap
The PancakeSwap sensible contract code and web site are open to public scrutiny, regardless that the workforce 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 obtainable on the founders reveals that the workforce contains quite a few “cooks” (as its members are known as), varied engineers, and two co-leads, Thumper and Hops.
United by their obvious ardour for pancakes, the workforce 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 complete ecosystem of DeFi instruments designed across the native utility token of this platform, known 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? Nicely, in case you are a consumer 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).
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 often called liquidity suppliers, or LPS, contribute this liquidity in equal values to each side of a pool.
Their contributions develop the general quantity of liquidity obtainable 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 charge, 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 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, due to speedy affirmation instances and low transaction charges. Concurrently, PancakeSWAP boasts larger safety than different AMMs on blockchains with slower block instances. That is bolstered by the community hardly ever affected by displacement assaults, equivalent 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 embody:
- 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 accumulate new early-stage venture 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 venture tokens in trade 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 full funds (on the CAKE aspect of the equation) are burned as a part of the method. Examples of tasks 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 an extra yield. In different phrases, customers earn a CAKE yield on their liquidity supplier tokens by taking part in a yield farm. Be aware that this yield is offered on high of the yields customers earn through transaction charges.
Though the APY can go as excessive as a number of hundred %, the precise quantity often varies from one farm to a different. Nevertheless, when participating on this exercise and making an attempt to calculate their total yield, customers must also consider potential impermanent losses.
Syrup swimming pools
Customers can stake varied BEP-20 tokens and earn a yield by utilizing the platform’s Syrup swimming pools — the equal of PancakeSwap’s simple staking performance. The ensuing yield is often obtainable 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. 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 property.
The lottery function obtainable on this decentralized trade is one more facet 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 worth of a single ticket is roughly $5. Nevertheless, buying 100 tickets concurrently could permit 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.
PancakeSwap additionally includes a distinctive prediction market instrument, which allows customers to watch 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 contributors.
PancakeSwap added NFT Profiles in February 2021 – a novelty function permitting customers to buy one of many obtainable Bunny NFTs and even select an NFT profile image. These with a whole profile will develop into a part of a particular workforce to earn rewards by taking part in community occasions.
PancakeSwap token CAKE
PancakeSwap’s native utility token is known as CAKE, and it serves varied functions throughout the DEX’s constantly rising panorama. Its main capabilities embody:
- Yield farming
- Collaborating within the PancakeSwap Lottery
- Enabling voting on governance proposals through the platform’s neighborhood governance portal
The neighborhood 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 immediately by the neighborhood, and others are proposed immediately by the PancakeSwap core workforce.
At CEX.IO, you’ll be able to purchase CAKE and trade 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 make the most of its widespread adoption potential.