Investing in PancakeSwap: Everything You Need to Know
26 Aug 2023 by Crypto Presale 4 min read
Investing in PancakeSwap: Everything You Need to Know

PancakeSwap has become a popular choice for those seeking to exchange cryptocurrency for other cryptocurrencies or fiat in a world dominated by centralized exchanges. 

This informative article provides an overview of PancakeSwap, its usage, and whether or not investing in its native token, CAKE, is worthwhile.

What is PancakeSwap? Definition

So, what exactly is PancakeSwap? It is a prominent decentralized exchange built on the Binance Smart Chain but operates on the Ethereum and Aptos networks. Unlike centralized exchanges, PancakeSwap has more to offer than just the ability to swap one cryptocurrency for another. Its numerous features will be discussed in detail in the following section.

One of the advantages of PancakeSwap is that you do not need an account to conduct transactions. Instead, you need a compatible Web3 wallet (such as MetaMask, Binance, or Coinbase Wallet). Alternatively, you can use Wallet Connect to link your wallet to the DEX and begin trading immediately.

What is PancakeSwap Used For?

Besides exchanging cryptocurrencies, PancakeSwap's easy-to-use interface allows users to perform other actions, these include:

  1. Farming: 

A process where users can stake their liquidity provider (LP) tokens from USDT, BNB, and CAKE, earned by providing liquidity to a decentralized exchange (DEX) to earn additional tokens.

The amount of tokens earned depends on the pool and the liquidity provided. Users can sometimes earn more than 100% in APR on select pools.

  1. Liquidity Staking

Regarding liquidity, Pancakeswap's liquid staking feature is different from the norm as it allows you to earn rewards without sacrificing your liquidity.

  1. Win: 

PancakeSwap offers BNB Smart Chain network users exclusive opportunities for users to participate in pools, trading competitions, and lotteries through Win.

Interested users can access Win by switching the network on their wallet to BNB Smart Chain and having some BNB to pay for gas fees. However, this function should be used with caution as it involves activities similar to gambling.

  1. Bridge 

A feature enabling users to seamlessly swap one token on one chain for another on a different chain. Users can choose between CAKE, Aptos, and EVMs like Axelar and Stargate.

  1. NFT Marketplace

PancakeSwap also features an NFT marketplace where users can purchase top collections such as the Degen Ape Club and Brave Tigers. Most NFTs are priced in BNB. This was likely done to support the BNB Smart Chain.

PancakeSwap also offers futures trading and limit order features for advanced traders who wish to do more than simply swap and buy cryptocurrencies.

PancakeSwap vs. Uniswap: What is the difference?

PancakeSwap and Uniswap are both decentralized exchanges (DEXs) that operate on blockchain networks and facilitate the trading of cryptocurrencies without the need for intermediaries like traditional exchanges. While they serve similar purposes, there are some key differences between the two:

  1. Blockchain:

PancakeSwap operates on the Binance Smart Chain (BSC), which is a blockchain developed by Binance. Uniswap operates on the Ethereum blockchain. As a result, transactions on PancakeSwap are typically less expensive than those on Uniswap.

  1.  Token Standards:

PancakeSwap uses the BEP-20 token standard for creating tokens. Most of the tokens it supports are also BEP-20 tokens. Users who prefer to interact with ERC-20 tokens would likely choose Uniswap instead, as it seamlessly supports these tokens.

  1.  Governance and Ownership:

PancakeSwap is strongly linked to Binance, which has been criticized as a highly centralized entity. This infers that PancakeSwap’s governance could be centralized. Uniswap, however, is more decentralized, and decision-making usually rests on the entire community. 

While PancakeSwap is better in terms of speed and fees, Uniswap accommodates more tokens and is less centralized, making it a good choice for those who want to go neck deep into DeFi. 

Let’s take a closer look at CAKE, PancakeSwap’s yummy native crypto.

What is CAKE?

Cake is a beloved dessert, enjoyed by many. However, PancakeSwap's CAKE is a unique token that differs from the sweet treat you're used to. CAKE is the native token of the PancakeSwap ecosystem, allowing users to earn money through various methods on the DEX.

Staking on PancakeSwap often results in CAKE rewards, which can be exchanged for other tokens or converted into real money. The token's name, CAKE, was inspired by the ecosystem's sweet bunny story and can be purchased on different exchanges. This purchase will cost you a fee on other exchanges, but on PancakeSwap, it is free. 

If you're interested in investing in CAKE but haven't earned any yet, you can purchase it from various crypto exchanges.

Where to Buy PancakeSwap

Buying CAKE shouldn’t be a hard process. You can choose to use centralized or decentralized exchange for this, but we recommend centralized ones for newer users as they are easier to transact with. 

Once you have settled on the exchange to use, create an account with them, get verified, and choose how you want to buy CAKE. Many exchanges allow you to use a credit/debit card or p2p trading, spending on your preference. 

When you have CAKE in your wallet, you can transfer it to one of the Web3 wallets we listed earlier to interact with PancakeSwap or keep it in your hot wallet and make a profit by trading or staking it.

Should You Buy PancakeSwap (CAKE)?

Buying CAKE is a personal investment decision that should only be taken after adequate research on the token. As an exchange token, CAKE seems like a good investment as it powers a vibrant DeFi DEX. The token’s main utility is tied to PancakeSwap, which could be good or bad.

On one hand, as PancakeSwap grows, CAKE is bound to grow with it, becoming a profitable investment. On the other hand, if PancakeSwap flops and fails to stand the test of time, the token would nosedive too.

So, before you buy CAKE, ensure you research and understand the risks involved in your decision.

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If you're new to the crypto space, seek financial advice from a professional and don’t invest what you cannot afford to lose. This article is for educational purposes and is not financial advice.