🚀 Discovering Higher APR Opportunities: Pancakeswap vs. Uniswap💰

In our last article, we discussed the fluctuations in trading volume and APR across different DEXes. As trading volumes and APR constantly fluctuate, different DEXes employ varied strategies to maintain a reasonable APR for their users. For instance, Uniswap’s recent introduction of V4 allows feature-rich execution, enticing professional traders to join their platform. Today, let’s shift our focus to PancakeSwap and explore its APR dynamics and how they maintain a commendably high APR for their community

PancakeSwap was launched in September 2020, using the Binance smart chain, and served as a scalable and efficient competitor to Uniswap. The crypto ecosystem at the time was ramping up toward an extended bull run that lasted from late 2020 to mid-2022. As a result, all-time-high trading activity saw Ethereum-based dApps, like Uniswap, face gas fees of upwards of hundreds of dollars during peak periods. With the ETH 2.0 merge still years away, there was a need in the market for more DEXes.

In the first quarter of 2021, Pancakeswap saw a 1000% increase in liquidity, with its volume skyrocketing from $37 million to $1 billion. During February 2021, Pancakeswap even briefly surpassed Uniswap as the largest DEX, with $400 million more in trading volume than Uniswap at the time. As it currently stands, Uniswap leads the DeFi AMM space with $7.6b in 7-day average volume, and Pancakeswap comes in second at $2.2b.

The entire DeFi DEX ecosystem is experiencing a low-volume season, including Uniswap and Pancakeswap. However, Pancakeswap provides additional CAKE token rewards for specific pairs, and the pairs offered on their DEX are quite different from the ones seen on Uniswap. This provides an excellent route for liquidity provision on alternative pairs, which might have higher APRs, and offers more diversity for our Unibot users.

Source: Dune Analytics, chef_seaweed

Diamond Unibot is currently on Arbitrum and Polygon as we constantly seek to get on new chains with high volume and APR to further our effort to be a multi-chain platform. On the BNB chain, Pancakeswap dominates DEx volume, averaging 97% daily volume versus Uniswap’s 3%.

Uniswap Arbitrum vs. Pancakeswap BSC

Here, we draw a quick comparison between the BNB and Arbitrum network volume to seek out possible alternative high-fee APR pairs.

Source: Dune analytics, hagaetc

The above market share chart visualizes the market share of different networks’ volumes across decentralized exchanges. Interestingly, data shows that Arbitrum had 23.9% of the volume market share at the start of April, and BNB had 13.9%. By the end of May, arbitrum had 12.6% of the volume market share, whereas BNB had 17.9%; as of today, BNB has surpassed arbitrum in volume market share.

Uniswap V3 Arbitrum vs. Pancakeswap V3 BSC

A more detailed comparison can be made between Pancakeswap V3 BSC and Uniswap V3 Arbitrum. Below are the two’s daily volumes over the past two months.

The above charts show that both Uniswap Arbitrum and Pancakeswap BNB are experiencing a decrease in volume in the past quarter. While Uniswap Arbitrum still has a higher overall volume, averaging at 250m compared to Pancakeswap BNB’s 108m, Uniswap Arbitrum has experienced steeper drops in volume when compared to its YTD high. Uniswap Arbitrum saw a spike in volume in late March and April, likely due to Arbitrum’s airdrop, then fell sharply by over 40% in May. In contrast, Pancakeswap BNB’s volume maintained relatively steady with less magnitude of volume change.

Analyzing the two data sets of daily volume shows a moderate correlation value of 0.57, indicating that the volume of the two networks and DEXs by large do not move in tandem. This may be due to the different target user demographics for Pancakeswap and Uniswap, which also means that liquidity providing on both exchanges could have a beneficial diversification effect for LPers.

Let’s compare two popular Uniswap V3 Arb and Pancakeswap V3 BSC pairs. CAKE/USDT 0.25% and USDC/WETH 0.05%.

CAKE/USDT 0.25% on the BNB chain has far less TVL than USDC/WETH 0.05% on Arbitrum but offers higher APR in terms of fee APR and the other farm APR (CAKE rewards.)

About Diamond Protocol

Hope you enjoyed this quick rundown and comparison between Pancakeswap and Uniswap. Don’t forget to share your thoughts!

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