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Review of PancakeSwap Exchange (2024)
Decentralized Finance is one of the hottest topics in cryptocurrency, with decentralized exchanges popping up on just about every blockchain network there is.
PancakeSwap Exchange launched in September 2020 on the Binance Smart Chain as an alternative automated market maker (AMM) to Uniswap Exchange, with lower transaction costs and higher speeds. While it started out as pretty much a copy and paste of Uniswap on another blockchain, PancakeSwap Exchange has developed a host of features which have caused it to be used more frequently than Uniswap.
With a wide range of features and ways for users to earn passive income, the platform now has more Total Value Locked than Uniswap as well. If you are looking for a decentralized exchange with lower fees and transaction costs, our PancakeSwap Exchange review will help determine if it is right for your needs.
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PancakeSwap Overview
- Impressive suite of products including staking, farming, games, and NFTs
- Lower transaction costs with higher speeds than its AMM competitors on Ethereum
- More daily transactions and contract interactions than Uniswap, with an active community
Pancake Pros & Cons
Pros
High APR/APY returns for pools and farms
Lower transaction costs compared to Uniswap
Wide range of products
More daily transactions than Uniswap with active community and developers
Cons
Impermanent loss in liquidity pools
Prediction and lottery can result in losing funds quickly (gambling)
Network can get congested because of popularity
Potential for scams
Supported Wallets on PancakeSwap
PancakeSwap Exchange supports a wide range of cryptocurrency wallets including:
- MetaMask
- WalletConnect Wallets (Full list here)
- Trust Wallet
- MathWallet
- TokenPocket
- Binance Chain Wallet
- SafePal
- Ciub98
How to Connect Your Wallet to PancakeSwap Exchange
It is easy to connect your wallet to PancakeSwap Exchange following these steps:
- Visit pancakeswap.finance
- Click “Connect Wallet” in the top right corner
- Select your wallet of choice
- Verify through your wallet that you want to connect to PancakeSwap
- Done! You can now begin using PancakeSwap Exchange
What You Can Buy on PancakeSwap
You can buy a wide range of crypto assets and tokens on PancakeSwap Exchange including but not limited to:
Is PancakeSwap Safe?
PancakeSwap is very safe to use in terms of security, it has never been hacked. The only risks to using the PancakeSwap Exchange are related to impermanent loss in farms and the potential for scams.
Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. Because the balance of the pair needs to be equivalent one asset will go up or down in quantity to create value parity. This loss can be mitigated by your returns (if you experience 10% in impermanent loss but 20% APR, for example).
Scams are more so the fault of a user for not doing research, as anyone can create a token and list it on PancakeSwap Exchange, so always make sure the contract address is correct for what you are trying to swap for or that the project itself is real.
What are PancakeSwap Exchange Fees Like?
PancakeSwap has very reasonable fees for a decentralized exchange, as they charge 0.25% for all trades, with tokenomics in place that help the future value of CAKE. The fee they charge is divided as follows:
- 0.17% – Returned to Liquidity Pools in the form of a fee reward for liquidity providers.
- 0.03% – Sent to the PancakeSwap Treasury.
- 0.05% – Sent towards CAKE buyback and burn.
Almost all the fees are returned to liquidity providers, while a small portion goes towards the treasury and the remainder is used for the weekly buyback and burn of CAKE which is meant to be a deflationary mechanism.
Best Features of PancakeSwap
Arguably the most popular and simplest feature of PancakeSwap is the eponymous swap function. You can swap between any of the assets available on PancakeSwap with a simple interface and reasonable trading fees, you can set your preferred slippage tolerance and make trades within seconds.
Syrup Pools and Farms
Syrup Pools are PancakeSwap Exchange’s version of staking, you can stake CAKE in order to earn more CAKE or any of their other available pools (generally a new project or partner). Syrup Pools have no risk of losing assets, and there is an auto-compounding pool for CAKE so that you do not have to harvest and stake intermittently.
Farms are PancakeSwap Exchange’s version of liquidity pool staking. You get liquidity pair tokens by providing two assets that there is a pool for and receiving liquidity tokens in exchange. Once you deposit these tokens into the pool you begin receiving payouts in CAKE but can experience impermanent loss.
Lottery and Prediction
Two fun — albeit risky products — offered by PancakeSwap Exchange. Lottery allows you to buy lottery tickets and win the entire pool if you get all the numbers or win a portion for having a few of the numbers right.
Prediction allows you to guess whether the price of Binance Coin will be higher or lower after the allotted time period, but it is currently not available. If you guess correctly you get a payout based upon how much was bet the opposite way.
Initial Farm Offerings (IFOs)
Much like an Initial Coin Offering (ICO), IFOs are PancakeSwap’s way of introducing new assets to the community. You can buy a new asset at a set market price as long as you have a profile set up on the exchange. Purchases are made in liquidity pair tokens of CAKE and BNB.
Frequently Asked Questions About PancakeSwap Exchange
PancakeSwap and Uniswap are both automated market makers (AMMs) and both offer uses the ability to earn high interest by providing liquidity. The only real difference between the two decentralized exchanges is the blockchain network they are on. You could argue PancakeSwap is better because the network fees on Binance Smart Chain are much lower than Ethereum (Uniswap’s network), and PancakeSwap offers pools with no impermanent loss (Syrup Pools).
Slippage tolerance refers to the difference between the expected price of a trade (what you see) and the price at which the trade is executed (what you get). On PancakeSwap slippage refers to the amount you might receive if the price of the assets you are swapping fluctuates during the trade. When you set the slippage tolerance, it will cause your transaction to fail if the slippage is greater than what you set it at, saving you from receiving less for your swap than you wanted.
In order to add liquidity to a farm on PancakeSwap Exchange you must have two assets that are a valid liquidity pair such as CAKE and USDT. Under the same “Trade” section as “Exchange” there is a “Liquidity” option. Once you click that and unlock your wallet, select the two assets to provide liquidity to (the amounts will need to be equivalent values, for example, $100 in CAKE + $100 in USDT) and then click “Supply”. Once you approve the transaction you will receive Liquidity Pool (LP) tokens to your wallet. Go to “Farms”, find the pair you have tokens for, and then add them to the pool to begin receiving rewards.
Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. This is a paper loss, until you remove the liquidity there is no real loss, and the amount fluctuates as the price of the deposited assets do.
CAKE is the native token of PancakeSwap Exchange. It can be staked in Syrup Pools for returns in CAKE or other assets or combined with another asset as a liquidity pool pair in order to earn farming yields.
You can buy CAKE on both decentralized and centralized exchanges including:
- Binance Exchange
- KuCoin Exchange
- Crypto.com Exchange (Buy and sell only at the moment)
- PancakeSwap
- OpenOcean
