PancakeSwap: BSC’s DeFi crown jewel

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PancakeSwap: Binance Smart Chain's DeFi crown jewel (blog post image)

We all love cute bunnies with syrup-dripping pancakes on their head. However, that is not the reason behind the success of PancakeSwap. BSC’s crown jewel DeFi platform has seen notable growth over the past weeks. Here, we’ll break down some of its best (and worst) features, so if you want to learn more, you’ve come to the right place.

What is PancakeSwap?

Often called “BSC’s Uniswap”, PancakeSwap (PCS) is a decentralized, open-source exchange (DEX). In it, you can trade, earn and win cryptocurrency. Thanks to Binance Smart Chain, the platform enjoys several advantages. Some examples are low network fees, fast transactions and a broad supply of wrapped tokens that enable cross-chain trading. That’s right, you can trade BEP20 tokens on PCS, but also ERC20 and ETH, DOT, BTC and many other cryptocurrencies running on different chains.

Also, PCS features its native token, CAKE, which powers the whole platform. CAKE has many functionalities, like staking to earn more CAKE (or other tokens), voting to decide on future projects, or buying lottery tickets to earn huge prizes. 

PancakeSwap’s success has been so great, developers have straight out copied their code and set up their own exchanges, known as “clones”. But what are the reasons behind this popularity? Let’s take a look at some of the platform’s characteristics.

PancakeSwap best features

First of all, PCS offers fast, secure and cheap transactions. We won’t lie here. Much of it has to do with that last point, especially with Ethereum fees being ridiculously high. After all the controversy regarding the unaffordable gas in Ethereum, PancakeSwap rose as a safe haven for small and retail investors. Honestly, we can’t blame them. Who wants to pay an $80 fee on a $100 transaction anyway? 

On the other hand, yield farming has attracted many investors to the platform too. Whether it is by adding liquidity, staking LP tokens or staking CAKE directly, PCS offers some incredible APRs. They also have many partnerships with different platforms and blockchains, whose tokens you can earn using the syrup pools. That way, if you feel like you’re too overexposed to CAKE token, you can stake it with low risks to earn other cryptocurrencies.

On another note, the lottery has been a clever way to add entertainment to the platform. However, most importantly, it enables a burning mechanism that decreases the supply to stabilize the price. Users can buy as many lottery tickets as they want for 1 CAKE each. PancakeSwap burns 20% of the pot and distributes the rest among the lucky people who match two, three, or all four numbers drawn.

The platform also adds a gamification vein through a collectible program and a team-oriented task system to earn points and compete against other teams. A clever move to keep users engaged and entertained while having them contribute to the team’s goals.

PancakeSwap risks

It all sounds utopic, we know. Of course, there are some significant risks involved in using the platform. In March 2021, for example, the platform’s DNS was hacked, and the official website displayed a malicious pop-up with a message that asked users for their recovery phrase. Luckily, the team was fast to warn everybody, although many people lost their funds.

Another risk regarding PancakeSwap lies within CAKE. The token is the fuel of the platform. It powers almost every feature of it. That said, should CAKE see a profound dip, it could trigger some fear among the community and lead to even more selling pressure. The bright side is the team is constantly working on new ways to reduce selling pressure, add burning mechanisms and cut down supply, which would drive the price up and stabilize it. The ultimate goal? Make CAKE a deflationary token, which means supply will be lower and lower every time. It is an arduous mission, but with tremendous positive repercussions if successful.

What the future holds

PancakeSwap team has shown both dedication and innovation in its work. It is a no-brainer when you think about why it has become the largest decentralized exchange in BSC and a fierce competitor to Uniswap.

Furthermore, the roadmap points at even more growth with the migration to PancakeSwap V2 prepared for early Q2 2021. The update will bring many new features and benefits to the platform, such as NFTs, lending and borrowing, margin trading and even a referral program.

It looks like a green light for PCS, and the community sees that. By the time we are writing this article, CAKE is retesting its ATH. Also, the platform is breaking TVL and CAKE burning records every week.

Nobody knows what will happen. That’s the truth. But all the projects just around the corner, and the thought of CAKE becoming scarcer soon makes it hard to see the token’s top.

 

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