Crypto Universe
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Crypto Universe

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:

Today, I’m going to focus in one of them in particular: PancakeSwap.

Introduction: PancakeSwap

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.

Screen for providing liquidity to UST-BUSD farm. In this example, we’re adding ~$10,000 worth of liquidity.

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.

Once you get your LP tokens, you can stake them in a farm.

Currently, PancakeSwap offers liquidity farming on the following stablecoin pairs:

  • USDT/USDC.
  • USDT/BUSD.
  • USDC/BUSD.
  • TUSD/BUSD.
  • UST/BUSD.

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.

List of syrup pools where you can stake $CAKE for rewards.

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.

TL;DR

  1. Provide liquidity to stablecoin trading pairs on PancakeSwap.
  2. Stake the LPs you obtain in yield farms.
  3. Harvest $CAKE rewards and stake them in syrup pools or sell them for stablecoins to compound your earnings.

That’s it!

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!

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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!

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