PancakeSwap is one of the largest decentralized exchanges of Binance Smart Chain. It has multiple features ranging from earning rewards through staking to farming Cake. Pancakeswap is emerging as the most favored way of earning passive income in the crypto market. So let’s take a look into what Pancakeswa is and how you can use it for making money.
What is PancakeSwap Exchange?
The PancakeSwap exchange was launched in September 2020. It allows swapping of BEP-20 tokens. The exchange rose to popularity soon after the launch as it came in competition with Ethereum based decentralized exchange. PancakeSwap is among the top exchanges in terms of the trading volume.
PancakeSwap exchange where you can trade digital coins with a liquidity Pool. It has an automated market maker model. Hence there is no order book.
Liquidity pools are an important aspect of PanCakeswap. Other users fill the pools with their funds and get tokens in return. The tokens can be used for regaining their portion of the investment. Moreover, they can also receive a trading fee as a reward.
Also Read: How to Create your own Deflationary Token?
The user who puts their funds in the pool is called a liquidity provider. They lock the assets using smart contracts. When a trader makes the trade he pays a 0.25% commission fee). 0.17% of the fee goes to the liquidity provider as a reward. 0.03% is paid for the project budget. Lastly, 0.05% goes towards CAKE buyback and burn.
Decentralized exchange (DEX) depends on liquidity providers for launching new tokens. Now let’s discuss the CAKE token.
CAKE token is the native token of PancakeSwap. It is created on BEP-20 Standard. The main function of the CAKE token is to incentivize the liquidity providers. The platform users can also use CAKE for staking, voting on the exchange’s development, lotteries, and Non-Fungible Tokens purchase, etc.
The price of PancakeSwap at the time of this writing is $22.77. It is ranked at 35th position on the coin market cap. CAKE has a market dominance of 0.23%.
Investing in Cake is considered a safe way to earn passive income. It allows you staking
How to Use PancakeSwap?
Connect Your Wallet
Using PancakeSwap is very easy. First, go to the official website of PancakeSwap and connect your wallet. You can use either of the following wallets: Metamask, WalletConnect, TrustWallet, MathWallet, TokenPocket, Binance Chain Wallet, SafePal Wallet, and Coin98 Wallet.
For exchanging tokens, click on the Trade section in the top bar and select exchange from the drop-down menu. Select the token that you want to exchange and the one which you want to receive. The transaction will be completed once you confirm it in your wallet.
You can provide liquidity by clicking on liquidity from the “Trade” section. In the popup, select Add liquidity after confirming the pair of tokens you intend to deposit for providing liquidity. You’ll earn the LP tokens following the pair you deposited.
Staking The Tokens
Staking is very popular on PancakeSwap. It allows you to stake CAKE in Syrup pools and earn new tokens in return. Go to the Pool from Earn section. Approve withdrawal of your tokens and select the amount of CAKE you want to stake.
The reward tokens will reach your wallet over time with Staking. You can cash out your rewards by clicking on ‘Harvest’.
You can earn CAKE by staking your LP tokens. Go to the ‘Farms’ tab and select a Farm for your LP tokens. After approving the contract, you need to confirm the transaction.
After staking the specified amount of tokens, you can visit the site now and then to see how much CAKE you have earned.
Advantages of Using PancakeSwap:
PancakeSwap is becoming popular as a decentralized exchange. The reason for its popularity include:
- Users can earn CAKE and other tokens by staking their assets. There are multiple pools added on PancakeSwap. This makes it a good ay for earning passive income.
2. Unlike UniSwap PancakeSwap has a much low fee. UniSwap is ethereum based decentralized exchange. Ethereum has a high gas fee which makes transactions expensive. PancakeSwap, on the other hand, uses Binance Smart Chain. It has a low fee and faster transactions.
3. Centralized exchnages have the Know Your Customer and Anti-Money Laundering (KYC/AML) model. Users are required to provide identification documents. This model is an anti-thesis of the decentralized nature of blockchain. DEX like PancakeSwap allows users the transaction of assets without having to prove their identity.
4. PancakeSwap is safe for use. The platform is audited by cyber-security firm Cirtik.
5. The users of PancakeSwap can have a voice in the development with voting. As mentioned earlier, CAKE holders can participate in the governance of the platform.
PancakeSwap token is developing rapidly. It has become one of the popular sources of passive income for crypto traders. You can earn through farming and staking. The future of staking seems bright. However, be careful with your investments as the project matures.
Disclaimer: The thoughts presented in this blog are the writer’s own. The information can be outdated or inaccurate at the time when you read it. So your own research. Remember, there is a risk in trading you could end up losing some or all of your money.