Crypto earnings and passive income
PancakeSwap low-risk strategy for +15% APY passive income
Earn money from stablecoins with this low-risk PancakeSwap strategy
Some time ago, I wrote an article about the best crypto platforms to earn high yields on stablecoins. In case you want to check it out, here it is:
Earn up to 20% APY in passive income from stablecoins with these crypto platforms
If you want crypto gains but don’t like the volatility, you can give these a try
Today, I’m going to focus in one of them in particular: PancakeSwap.
Home | PancakeSwap
The most popular AMM on BSC by user count! Earn CAKE through yield farming or win it in the Lottery, then stake it in…
Binance Smart Chain has become one of the most important blockchain networks in the crypto space. With PancakeSwap as its crown jewel, it has managed to become an attractive destination for many.
Both beginners and experienced crypto users can find many useful features in one of the largest DEXs in the whole industry.
By combining several of those features, you can execute a strategy that allows you to earn high returns on stablecoins with minimal risk.
If you’re new to crypto, don’t feel comfortable with trading, or just want to make some passive income without having to pay too much attention, this article is for you.
I want to make it absolutely clear that I am not recommending you to use these strategies. This is just an explanatory article and not investment advice. Always do your own research and educate yourself before you make any decision.
1. Providing stablecoin liquidity
PancakeSwap is one of the most broad DEXs in term of trading pairs, and stablecoins are not an exception.
The advantage of providing liquidity in stablecoin trading pairs is mitigating the risk of impermanent loss, as both assets are always floating around $1.
Adding liquidity grants you 0.17% of all trades on the selected pair proportional to your share of the pool.
2. Staking your LPs in a farm
Once you provide liquidity to a stablecoin trading pair, you will get liquidity provider (LP) tokens that represent the amount of assets you’ve locked.
PancakeSwap allows you to stake those LP tokens on the platform’s yield farms. Staking your LP tokens will maximize your revenue from providing liquidity, as well as granting you an extra income in $CAKE.
Currently, PancakeSwap offers liquidity farming on the following stablecoin pairs:
It’s important to note that these farms have different yields and $CAKE rewards. APYs are variable and depend on how much liquidity is currently locked and available on each pair.
Additionally, not all stablecoin pairs have their respective farm. Be sure to check that the trading pair you’re providing liquidity to has a yield farm available before confirming the transaction.
3. Reinvesting your profits
Congratulations! You’re now earning a steady, passive income from your stablecoins using PancakeSwap.
However, you can still boost your revenue a little more with a couple of moves: staking your $CAKE rewards in syrup pools or adding more liquidity.
3.1. Staking $CAKE in syrup pools
Syrup pools are PancakeSwap’s feature to reward its users for holding $CAKE. They offer higher yields than any other feature on the platform, as well as rewards in both $CAKE or other BEP-20 tokens.
Nevertheless, they are also more risky, as you need to hold $CAKE for the long run to make the most out of it. $CAKE is a very volatile and inflationary token, so there’s a possibility that it will lose value while you’re staking it.
If you’re willing to take the risk, you can stake your $CAKE rewards earned from the stablecoin yield farms in syrup pools to maximize your income.
If you’re not, you still have another option to increase returns.
3.2. Adding more liquidity
If you’re not comfortable with $CAKE’s volatility, you can always harvest your rewards, sell them for stablecoins, and add even more liquidity to your original trading pair.
We refer to the action of reinvesting your earnings as compounding. It’s a great method to slowly grow your capital, maximize your revenue, and exponentially increase your profitability.
Be aware, however, that all the steps in the process — harvesting $CAKE rewards, selling them for stablecoins, and re-adding liquidity — involves network fees. Make sure to do it when the amount you’re compounding is worth it to avoid unnecessary losses.
- Provide liquidity to stablecoin trading pairs on PancakeSwap.
- Stake the LPs you obtain in yield farms.
- Harvest $CAKE rewards and stake them in syrup pools or sell them for stablecoins to compound your earnings.
The strategy described here is relatively safe — there are always at least minimal risks involved — and protected against crypto’s volatility.
I hope you can make good use of it!
Did you like this story?
I’m glad you did! My name is Santi. I’m a marketing professional and independent writer. I enjoy and write about video games, cryptocurrency, and pop culture. If you’d like to read more content like this, consider following me on Medium and Twitter. I’d really appreciate it!
Other passive income strategies
+10% passive income strategy on TrarderJoe, Avalanche’s main DEX
Put your money to work on TraderJoe with this
If you enjoyed this, I bet you’ll like…
This simple trick will save you lots of time and money when looking for crypto gems
It will only take you seconds and help you separate true gems from cash-grabbing scams.
Decentralized finance will change your (and everyone’s) life
We can finally create our own financial system, one that actually works