PancakeSwap is a new decentralized exchange on the Binance Smart Chain. Ethereum’s top competitor, Binance has been making some big improvements to their platform recently.

The Binance Smart Chain blockchain was created by the company Binance who are one of the largest centralized crypto exchanges in the world. Binance is now competing with two established cryptocurrency projects – Ethereum and Uniswap.

The other thing to mention is that PancakeSwap, like any decentralized exchange, can outshine Binance itself if trade volume gets intense enough. But really, unless you’re into cryptocurrency narratives (who isn’t these days?), PancakeSwap is one of the largest protocols for decentralized finance and definitely worth checking it out even if you’re not.

The following article is designed to help you understand how the PancakeSwap trading platform and liquidity protocol work, so that you can take full advantage of them.

What is PancakeSwap? Why PancakeSwap is trending on reddit?

PancakeSwap was created to provide a fast and affordable alternative to Ethereum. It’s completely decentralized, meaning that you’ll never have to worry about any third party altering your transactions.

Much like the acclaimed Uniswap DeFi AMM protocol running on Ethereum, PancakeSwap will enable users to swap between crypto assets by tapping into user-generated liquidity pools. PancakeSwap offers a lot of opportunities designed to help liquidity providers. Indeed, over $1 billion in TVL has migrated to PancakeSwap since its launch.

However, unlike Uniswap, PancakeSwap has a different rewards system for those who stake its native BEP-20 token called CAKE. When you stake CAKE, you get SYRUP at a 1:1 ratio. Holding SYRUP entitles you to 25% of the emissions of CAKE that we distribute proportionally to them

PancakeSwap vs. Uniswap vs. SushiSwap

As of today, there are three major decentralized exchanges that are trending and being used most by the users:

• Uniswap — UNISWAP is a decentralized cryptocurrency exchange which leverages UNISWAP network protocol. The UNISWAP protocol is the brainchild of company UNISWAP. The protocol helps individuals trade crypto tokens across Ethereum without the need for a centralized party by using smart contracts.

• SushiSwap — SushiSwap is an Ethereum-based application that uses incentives to create a network of users to operate a market where people can purchase and sell digital assets. Sushiswap is a community-governed Uniswap fork that has evolved into a decentralized finance hub with token swaps, farming, and crypto lending/borrowing..

• PancakeSwap — PancakeSwap is a decentralized exchange (DEX) that allows investors to swap BEP-20 tokens. BEP-20 tokens are tokens built on top of the Binance Smart Chain that don’t have their own blockchain.

All three protocols enable decentralized transaction, community governing, yield farming, and LP opportunities- Sushi pays rewards back to token holders who stake their tokens.

Rewards is the way

SUSHI tokens holders who stake their tokens will receive xSUSHI, a revenue-sharing token that earns transaction fees from the protocol. Similarly, CAKE holders who stake their tokens receive SYRUP, entitling holders to rewards paid in CAKE.

The fundamental difference between the three DeFi protocols is that the UNI token is only used for governance. This difference explains why many liquidity migrations have occurred from Uniswap to both Sushi and PancakeSwap, as LPs sought more wealth creation opportunities.

Farming LP on PancakeSwap

It’s not difficult to start on PancakeSwap. Just look through the LP asset pairs that you already have or are willing to provide, fire up your Metamask wallet, and start farming! PancakeSwap is much cheaper than SushiSwap. Binance Smart Chain, on the other hand, has different developer goals than Ethereum and thus has different tradeoffs.

PancakeSwap offers convenience, speed and less cost than Uniswap and Sushi. The reason is that PancakeSwap is built on Binance Smart Chain, a high-throughput blockchain which can compete with Ethereum. BSC is scaling more rapidly than Ethereum because it is less decentralized, but this doesn’t seem to deter users from taking advantage of the lower transaction fees. PancakeSwap helps people who can’t afford to spend a lot on gas.

New users on Ethereum can feel at home while using PancakeSwap since Metamask is installed for use on the exchange just like it would be on Uniswap and SushiSwap.

Gamified exchange experience

Uniswap is a decentralized crypto exchange that’s not just quirky, it also happens to be serious about the business of crypto trading. It features an appealing unicorn symbol and offers other tokens besides cryptocurrencies, including digital collectibles.

PancakeSwap has a different way to deal with the user depositing their CAKE tokens. For every day players deposit a number of CAKE tokens into the lottery which is then drawn for winning numbers later on.

The more CAKE you place into the lottery, the more CAKE you might win! To increase your chances of winning, deposit more CAKE. The Lottery has some simple mechanics which makes it fun and emphasizes what it has to offer, which is why there are so many players/users on it!

How to use PancakeSwap?

PancakeSwap is a decentralized exchange platform. It’s an online exchange and brings a model of AMM which stands for Automated Market Maker.

Put simply, an AMM is a protocol that decentralizes liquidity for the network’s exchange function. Users like you provide liquidity so that others can seamlessly swap tokens on any of these exchanges including PancakeSwap and Uniswap. PancakeSwap AMM replaces the order book found on exchanges like Coinbase and Binance. It’s also advantageous for users who want to use PancakeSwap to swap or buy cryptocurrencies as the data of the user is secured and the custody of digital assets is decentralized.

Before starting on PancakeSwap, you should make sure to connect Metamask to Binance Smart Chain. The guide below will help and is easy to follow:

1. Go to Pancakeswap.finance, then click Trade from the menu. (Assuming you have connected to decentralized wallet like Metamask, Formidable, etc.)

2. You will get an option of Exchange and Liquidity. Click the Exchange button to change the tool to the Swap option.

3. Add inputs for the exchange as per your requirement. Select the cryptocurrencies you want to swap on the drop-downs per line. Trading crypto with PancakeSwap is done against AMM liquidity pools instead of an order book. (This makes trades on the DEX very intuitive and provides a level of expandability that is unmatched by centralized exchanges. Anyone can swap one currency for another, add some liquidity to it, and then create new pairs to sell.)

4. Once you’ve selected the assets you want to exchange, hit the Swap button, then confirm the transaction in your wallet. You’re all set!

PancakeSwap trades only BEP-20 tokens. However, if you have many ERC-20 tokens, use the Binance bridge to trade them for BEP-20 tokens on the PancakeSwap DEX.

How to Buy Crypto on Pancakeswap Using Metamask Wallet: a Step-by-Step Guide – MUO – MakeUseOf https://t.co/d2Y8AAPVb3

— DeFi (@defidecentraliz) July 21, 2022

How to Use Binance Bridge?

If you want to trade any ERC-20 tokens on PancakeSwap, you need to wrap them up in the Binance Bridge and turn them into a BEP-20 asset. This is a token standard for holder of Bitcoin, Bitcoin Cash, etc.

To do this, head on over to the Binance Bridge and connect your wallet. Assuming you’re using a Metamask wallet on the Ethereum main network, you’ll be asked to confirm the transaction after inputting the token you’re bridging to BSC.

While this may be expensive due to high Ethereum gas fees, once you get your crypto assets wrapped and bridged over to BSC, you’ll save tons in trading fees by virtue of PancakeSwap’s low costs over Binance network in future.

Binance Bridge isn’t just for trading. You can also use it to bridge Ethereum assets and work as a liquidity provider and yield farmer on PancakeSwap. In order to convert your BEP-20 assets back to ERC-20, just follow these simple steps in reverse using Binance Bridge.

How to become liquidity provider to PancakeSwap?

Like Uniswap and SushiSwap, you can become a liquidity provider on PancakeSwap to receive rewards. Doing so is easy and keeps the AMM liquid for exchange users.

Liquidity can be obtained in two ways. You can either click on ‘Liquidity’ and then ‘Add liquidity’, make sure your wallet is unlocked, and specify which tokens you’re providing liquidity for (remember, you provide it in pairs).

You can provide liquidity to either:

1. Existing pools

2. A pool created by you

Creating own token pool is usually done by new projects in order to introduce their cryptocurrency token. The other option is providing liquidity to an existing pool is the better option

Once you pick the pair you want, go ahead and deposit by confirming the transaction. You’ll an LP token that represent your stake in the pool.

By providing liquidity to the pool, you’ll be able to earn LP rewards every time an exchange taps into your pool’s liquidity. You can then use your tokens to redeem these points and receive ROI.

What is Yield farming and How it Works on PancakeSwap?

Don’t confuse yield farming and providing liquidity on PancakeSwap. We’re here to clarify the two so you get it right.

What is Yield Farming in Crypto?

Yield farming is a new way to invest in crypto that focuses on generating consistent, healthy returns. The main principle of yield farming is that you are investing in crypto not with the intention of getting rich quickly but rather to generate a stable monthly income; your monthly income will be based on the number of coins you own and the current market price.

Yield farming is a term that was coined by farmers in Ireland during the potato famine. It’s essentially a form of crop rotation where one crop is planted to give way to another. In the case of crypto, “yield” can be defined as the amount of tokens mined per day for a given difficulty level.

To get started with PancakeSwap, select the Farms tab and toggle to Live to see what’s going on right now. Then you’ll be able to browse a list of farms that offer work for BUSD and BNB tokens or any other pair of tokens. You can choose the farms that interest you most to see how much CAKE they’re currently earning. Farms like DUSK-BNB are earning over 200% APY on many pairs, making them worth your time.

Clicking on Details will prompt you to unlock your wallet before PancakeSwap detects the currencies inside and allows you to deposit them in the farm. Once that’s successfully done, the page will update with your CAKE Earned.

What is PancakeSwap Lottery?

Sometimes, the crypto market can seem a lot like being lucky in a lottery. Why not just play the lottery instead? PancakeSwap Lottery allows you to do exactly that with your CAKE tokens.

Click Lottery, then buy lottery tickets using CAKE tokens. The more CAKE you spend, the better your chances of winning since you’ll have more tickets. If you match 2 or more of the winning numbers on your tickets, you win a portion of the prize pool.

Lottery sessions happen multiple times per day —-every six hours to be exact. This keeps the turnover rate high and your chances for eventually winning gold intact.

PancakeSwap Vs Uniswap?

PancakeSwap is a decentralized crypto exchange, so you won’t have the security benefits of a centralized platform. That being said, there is still plenty of liquidity on PancakeSwap and it’s a viable alternative to Uniswap and other platforms.

PancakeSwap is on Binance Smart Chain and isn’t fully decentralized. However, not being fully decentralized does come with its benefits.

For one, PancakeSwap is much faster and cheaper to use than Uniswap and has similar levels of liquidity. The only issue there is if you want to trade ERC-20 tokens, you’ll need to use the Binance Bridge coming in and out of Ethereum, which, depending on gas costs, can be prohibitively expensive to few.

PancakeSwap is designed for users who have BEP-20 tokens and would like to keep their activities on the Binance Smart Chain. With the rate of growth in our chain these days it should be a breeze to do so too.