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What Is PancakeSwap (CAKE)?
PancakeSwap (CAKE) is a decentralized exchange (DEX) built on the Binance Smart Chain (BSC), a high-performance blockchain that uses the Proof of Stake (PoS) consensus mechanism, that enables users to trade cryptocurrencies or exchange cash in order to earn CAKE tokens as a reward.
PancakeSwap launched in September 2020 and quickly gained popularity due to its comparatively lower fees and faster transaction speeds than other decentralized exchanges. It also offers features such as yield farming, staking, and lotteries meant to incentivize users to participate and earn rewards.
CAKE is the native token of PancakeSwap and is used for governance, liquidity provision, and to reward users who stake their funds on the platform. It can be traded on various cryptocurrency exchanges.
Overall, PancakeSwap and CAKE have become popular among crypto enthusiasts looking for an alternative to traditional centralized exchanges and a way to earn rewards through various DeFi features.
Who are the Founders of PancakeSwap?
Like with many decentralized projects, PancakeSwap’s founders are anonymous and operate under pseudonyms. Due to its decentralized nature, the PancakeSwap platform is maintained by a global team of developers and contributors, some of whom choose to remain anonymous.
In cryptocurrency and DeFi spaces it is very common for projects to be maintained by decentralized teams or communities as it helps protect the privacy of those involved and avoids any potential legal and regulatory issues.
What Makes PancakeSwap Unique?
There are a handful of factors that set PancakeSwap apart from other decentralized exchanges and crypto platforms:
- Lower fees: PancakeSwap operates on the BSC, which has lower transaction fees compared to blockchain networks like Ethereum, making it more affordable for users.
- Faster transactions: The BSC also offers faster transaction speeds.
- Rewards system: PancakeSwap’s reward system aims to incentivize users to provide liquidity and participate in the platform. Users who stake their funds in liquidity pools or farms can earn CAKE tokens.
- User-friendly interface: PancakeSwap’s user-friendly interface makes it accessible to both new and experienced crypto users. The platform also offers various features like yield farming, staking, and lotteries.
- Decentralized governance: PancakeSwap is community-driven, meaning decisions about its development and management are made through a decentralized governance system, allowing users to have a say in the platform’s direction.
How Many PancakeSwap (CAKE) Coins are There in Circulation?
According to CoinMarketCap, as of October 11, 2023, the total circulating supply of PancakeSwap (CAKE) was approximately 218 million tokens, with the maximum supply capped at 750 million tokens, leaving around 532 million tokens not yet in circulation. However, the release schedule of these remaining tokens is subject to change and is determined by the PancakeSwap community through its decentralized governance system.
How is the PancakeSwap Network Secured?
The PancakeSwap network is secured through a variety of different mechanisms:
- Binance Smart Chain: PancakeSwap is built on the BSC, making it more energy-efficient than proof of work (PoW) blockchains like Bitcoin, given that it does not require mining and high computational power.
- Smart contract audits: PancakeSwap contracts have been audited by multiple independent cybersecurity firms that have certified the reliability of the code.
- Liquidity insurance: PancakeSwap has an insurance fund that protects liquidity providers (LP) against losses due to market volatility or unexpected events.
- User security measures: PancakeSwap has advanced security features, such as two-factor authentication (2FA) and email confirmation for withdrawals. These help prevent theft and unauthorized transactions
- Decentralized governance: PancakeSwap’s decentralized governance system ensures the community makes decisions about the platform’s development and management.
Where Can You Buy PancakeSwap (CAKE)?
Users can buy CAKE tokens directly from the PancakeSwap platform by connecting their cryptocurrency wallet to the exchange and swapping their preferred cryptocurrency for CAKE. Those who add their CAKE tokens to the exchange’s liquidity pools can earn more tokens as a reward.
Alternatively, PancakeSwap tokens can be purchased on a number of crypto exchanges, among them Binance, Gate.io, and Huobi. Users can exchange other cryptocurrency tokens or fiat currencies for CAKE.
How are CAKE Tokens Earned?
There are several ways to earn PancakeSwap’s CAKE tokens. The most straightforward way is purchasing them on a cryptocurrency exchange or the PancakeSwap platform.
Another way to earn CAKE is by providing liquidity to the platform’s pools. Liquidity providers receive a share of the trading fees generated by their respective pools and CAKE tokens as a reward for contributing to the platform’s liquidity.
Users can also earn CAKE tokens through yield farming, which involves staking their crypto assets in yield farming pools on the PancakeSwap platform. By staking their assets, users can earn CAKE tokens as a reward for contributing to the platform’s liquidity and trading volume.
Additionally, PancakeSwap occasionally offers various incentives and reward programs, such as airdrops and lottery systems, which allow users to earn tokens.
What is the Fully Diluted Valuation of PancakeSwap (CAKE)?
The fully diluted valuation of PancakeSwap (CAKE) can be calculated by multiplying the current price of CAKE by its maximum supply of 750 million tokens. As of October 11, 2023, the price of CAKE was $1.12. Therefore, the fully diluted valuation of PancakeSwap is $831.4 million. It’s important to note that this is a theoretical valuation based on the maximum supply of tokens. The actual market capitalization may differ due to circulating supply and market demand.
How Does the Price Performance of PancakeSwap Compare Against its Peers?
PancakeSwap has shown solid price performance compared to some of its peers in the DEX space. For example, in early 2021, PancakeSwap’s daily trading volume surpassed that of major DEXs like Uniswap and SushiSwap. Additionally, PancakeSwap’s CAKE token price experienced a significant surge, reaching an all-time high of over $44.18 in April 2021 before undergoing a correction along with the broader cryptocurrency market. The current price is 97% below the peak price, which indicates weak demand. However, it’s important to note that the cryptocurrency market can be volatile, and past performance is not always a reliable indicator of future performance.
How Does PancakeSwap Work?
PancakeSwap is an automated market maker (AMM) DEX built on the BSC. It allows users to trade cryptocurrencies, including the native CAKE token, without needing an intermediary like a traditional exchange.
PancakeSwap uses liquidity pools instead of an order book to execute trades. Users can add funds to the liquidity pools by depositing two tokens of equal value. For example, a user can deposit Binance Coin (BNB) and CAKE into a pool, and in return, they receive LP tokens representing their share of the pool. LP tokens can then be staked on the PancakeSwap platform to earn additional rewards.
When users want to trade, they select the token they wish to trade and the one they want to receive. PancakeSwap then uses a mathematical formula to calculate the price based on the ratio of the two tokens in the liquidity pool. This ensures prices are always balanced, even for less common or newly listed tokens.
PancakeSwap also offers other features, such as yield farming, where users can earn additional tokens by staking LP tokens, and lottery-based games, where users can win prizes. Overall, PancakeSwap aims to provide a user-friendly and cost-effective way for users to trade cryptocurrencies and earn rewards.
What are the Fees Incurred from Using PancakeSwap?
Using PancakeSwap incurs several fees, including:
- Network fees. Fees paid to the blockchain network for processing transactions. For example, when you swap tokens on PancakeSwap you’ll need to pay a fee to the Binance Smart Chain network to process the transaction.
- Trading fees. These are paid to PancakeSwap for facilitating trades on the platform. The trading fee is set at 0.25% of the transaction amount.
- Liquidity provider fees. If you provide liquidity to PancakeSwap’s liquidity pools, you’ll earn a portion of the trading fees generated by the platform. PancakeSwap allocates 0.17% out of its 0.25% transaction fee to liquidity providers.
It’s worth noting that these fees are subject to change and may vary depending on the specific transaction and market conditions.
How to Start Using PancakeSwap?
Users must have a cryptocurrency wallet that supports the BSC network in order to start using PancakeSwap. Some examples are MetaMask, Trust Wallet, or the Binance Chain Wallet.
- Set up a crypto wallet that supports the Binance Smart Chain network.
- Add BSC to your wallet network settings.
- Purchase BNB on a cryptocurrency exchange such as Binance or Coinbase, and transfer it to your wallet.
- Connect your wallet to the PancakeSwap platform.
- Use the swap feature to exchange BNB or other BSC-supported cryptocurrencies for other tokens. Alternatively, you can add your tokens to the platform’s liquidity pools and earn rewards.
How to Add PancakeSwap (CAKE) to MetaMask?
To add PancakeSwap (CAKE) to MetaMask, you can follow these steps:
- Open your MetaMask wallet extension and click the ‘Add Token’ button.
- Click on the ‘Custom Token’ tab.
- In the ‘Token Contract Address’ field, paste the PancakeSwap contract address.
- The ‘Token Symbol’ and “Decimals of Precision” fields should automatically fill in with ‘CAKE’ and ‘18’, respectively. If they do not they can be manually input.
- Click on ‘Next’ and then ‘Add Tokens’ to confirm.
Once you have added the CAKE tokens to your MetaMask wallet, you can see your token balance and make transactions on the PancakeSwap platform.
How to Provide Liquidity in PancakeSwap?
To provide liquidity in PancakeSwap, you need to follow these steps:
- Go to the PancakeSwap website and connect your wallet (e.g. MetaMask) to the platform.
- Once connected, click ‘trade’ and select ‘Liquidity’ from the top menu.
- Click ‘Add Liquidity’ and select the tokens you want to add. For example, if you add liquidity for BNB and BUSD, you must have both tokens in your wallet.
- Enter the amount of each token you want to add to the liquidity pool. The platform will automatically calculate the other amount based on the exchange rate.
- Once you have entered the amounts, click ‘Approve’ to allow PancakeSwap to access your tokens. Confirm the transaction on your wallet.
- After the approval, click ‘Supply’ to add liquidity to the pool. Confirm the transaction on your wallet.
Once you have provided liquidity to the pool, you will receive LP (liquidity provider) tokens in return. These tokens represent your share of the liquidity pool and can be used to withdraw your liquidity and any earned fees.
What are Syrup Pools?
Syrup Pools are liquidity pools on PancakeSwap that allow users to earn additional tokens, such as CAKE or other project tokens, by staking their liquidity provider (LP) tokens. When users provide liquidity to a Syrup Pool, they receive a certain amount of syrup tokens in return, representing their stake in the pool.
Users can then stake their syrup tokens to earn additional rewards, which are distributed based on the number of syrup tokens staked and the duration of the stake. These rewards can include CAKE or tokens from other projects that have partnered with PancakeSwap.
Syrup Pools are a way for users to earn additional tokens on top of the trading fees they earn for providing liquidity on the platform.
What is the Cake Lottery?
The Cake Lottery is a game in which users can purchase lottery tickets using their CAKE tokens. It runs every week, and the winning numbers are drawn randomly and the more tickets a user buys, the higher their chance of winning. The prize pool for each lottery is determined by the number of tickets sold, with 50% of the pool going to the jackpot winner, 20% to the second-place winner, and 10% to the third-place winner.
The remaining 20% is used to buy back and burn CAKE tokens, which reduces the overall supply and increases the value of the remaining tokens. The Cake Lottery is just one of the many features offered by PancakeSwap to incentivize participation in its ecosystem.
What is Initial Farm Offering (IFO)?
An Initial Farm Offering is a fundraising mechanism used by decentralized exchanges such as PancakeSwap. It is similar to an Initial Coin Offering (ICO) or an Initial Exchange Offering (IEO) in the traditional cryptocurrency market.
In an IFO, a new project launches on a DEX’s platform, and users can participate by staking their LP tokens in a designated pool. Users who stake their LP tokens can then earn the project’s new token.
The IFO process typically involves several stages:
- A whitelist phase where users can apply to participate.
- A lottery phase where participants are randomly selected.
- A public sale phase where anyone can purchase the new token.
An IFO aims to provide a fair and decentralized way for new projects to raise funds and distribute their tokens to a wide audience.
Key Events and Management of PancakeSwap
After its launch in September 2020, PancakeSwap quickly gained popularity as a decentralized exchange on the Binance Smart Chain. The platform has undergone several key events and developments since its inception.
- Launching its initial liquidity pools: PancakeSwap started with a few liquidity pools, including CAKE/BNB, CAKE/BUSD, and BNB/BUSD. The network has continued to add more liquidity pools and farms over time, including single asset staking pools, non-CAKE farms, and more.
- Introducing staking and yield farming: PancakeSwap introduced staking and yield farming in October 2020, allowing users to earn rewards by staking LP tokens and CAKE.
- Integrating with other DeFi projects: PancakeSwap has merged with other DeFi projects such as Chainlink, Cream Finance, and Autofarm to expand its offerings.
- Launching Syrup Pool: Syrup Pool was found to reward CAKE token holders and incentivize liquidity provision on the platform.
CAKE Price Statistics
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PancakeSwap Market Cap
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PancakeSwap Price History
|All-Time High April 30, 2021
|All-Time Low November 3, 2020