How to Use PancakeSwap

PancakeSwap is a decentralized exchange (DEX) built on the Binance Smart Chain. On PancakeSwap, you can swap between cryptocurrency assets, farm its governance token (called CAKE), and even earn rewards. PancakeSwap is governed by the community and can be a lot less expensive than other DEXs as it’s built on Binance, an inexpensive alternative to Ethereum.

How to Use PancakeSwap

In this guide, we shall look at all things PancakeSwap, starting with how it works and how to earn yourself some CAKE.

How Does PancakeSwap Work?

PancakeSwap works by leveraging its utility token known as CAKE. The CAKE token is used in several different ways, including:

  • Yield farming
  • PancakeSwap staking
  • The PancakeSwap lottery
  • Voting on governance proposals

Before we dive into farming and staking on the platform, let’s first understand how PancakeSwap finance works.

Users trade on the platform by drawing against a liquidity pool. To access features on PancakeSwap and start trading, click on “Unlock Wallet” on the platform. Once you do that, you will be provided with a list of supported digital wallets like Trust Wallet or WalletConnect that you can use to buy LP tokens. Different LP tokens have varying returns.

Buying LP Tokens

To get started, you first have to add liquidity to the exchange.

  1. On the sidebar to your left, navigate to “Trade.”
  2. Click on “Liquidity” and then “Add Liquidity.”
  3. Select the token pair that you would like to deposit.
  4. You will now have added to the liquidity pool and be rewarded with your LP tokens.

Yield Farming on PancakeSwap

With tokens in hand, now you can farm on the platform. You do this by staking them to buy CAKE.

  1. Navigate to the “Farms” tab.
  2. Select the option that matches your LP tokens.
  3. Approve the movement of your tokens by clicking on “Approve Contract.”
  4. A prompt will pop up asking you to confirm the transaction and display the fee.
  5. Once the transaction has been confirmed, select the amount you want to stake.
  6. Confirm your decision.

You can now return to the page regularly to see how much CAKE you have earned. Navigate to “Harvest” and confirm the transaction if you want to claim your rewards.

Staking on PancakeSwap

PancakeSwap has other tokens and special staking pools for you to earn tokens in. These pools are called SYRUP pools. When you stake CAKE, you get SYRUP at a 1:1 ratio. Holding SYRUP entitles you to 25% of the CAKE commissions distributed proportionally to holders.

Basically, once you’ve got CAKE, you can stake it in the SYRUP pools.

To do this:

  1. Go to the “Pools” tab. You will see a list of the pools where you can stake your CAKE.
  2. Navigate to the SYRUP pool you are interested in.
  3. Approve the withdrawal by clicking on “Approve CAKE.”
  4. Once approved, select the amount of CAKE you would like to stake.
  5. Now your CAKE has been staked, and you will earn rewards from the pool.
  6. To cash out your rewards, click on “Harvest.”

The PancakeSwap Lottery

You can always try your luck on the PancakeSwap Lottery. Every day on the platform, users deposit CAKE tokens into the lottery and wait for the winning numbers to be announced.

Each lottery session takes six hours, and a ticket will cost you 10 CAKE. You will receive a random four-digit combination of numbers ranging from 1 to 14. The jackpot is 50% of the lottery pool, and for you to win this, your numbers must exactly match those of the winning ticket. However, you still win rewards if two of your numbers match the winning ticket.

NFTs

PancakeSwap even has NFTs, which you can register to win. If you’re the winner, you can keep the NFT as a collector item or trade it for the CAKE value it represents.

Investing on PancakeSwap

If you are looking at PancakeSwap as an investment opportunity, these are the things you need to know:

You Can Earn a Constant Revenue Stream From the Trading Fee

PancakeSwap charges a 0.25% trading fee for users to make swaps or trades on the platform. This fee is divided into three categories:

  • 0.17% goes back into the liquidity pool as a reward for LP token holders
  • 0.03% goes to the PancakeSwap coffers
  • 0.05% goes towards facilitating CAKE buyback and burn

If you are an LP token holder, you will make money each time a trade occurs on the platform.

There Are More Avenues to Earn, Meaning Higher Yields

You can earn rewards by providing LP liquidity and staking LP tokens on the farm. As of January 2022, users could earn an Annual Percentage Rate (APR) of 440%.

Higher Security Compared to Other DEXs

PancakeSwap is audited by two well-respected blockchain security firms; Certik and Slowmist. These companies provide hacker-resistant protection for asset exchanges, cryptocurrency wallets, public chains, and smart contracts.

Auto-Compound Staking

The platform has an auto-compounding feature that saves users the headache of having to re-stake manually each time their CAKE tokens get to the best percentage yield.

Binance Backs PancakeSwap

PancakeSwap runs on Binance Smart Chain, and Binance is the world’s largest cryptocurrency exchange. With that kind of name recognition, PancakeSwap comes with credibility. Binance is also a less expensive alternative to Ethereum, meaning that your money goes a long way.

Using PancakeSwap

For a relatively new platform, PancakeSwap has some attractive features for those looking to get into the cryptocurrency game. With this guide, you too can now take your seat at the table and start farming and staking your very own CAKE tokens.

Have you invested in any decentralized exchanges? Which ones did you find most profitable? Let us know in the comments section below.

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