An Overview of PancakeSwap
Decentralized finance, commonly known as DeFi, are a ground-breaking set of technologies. Its goal is to make society financially inclusive without the need for third-parties. Whilst the earlier DeFi protocols were deployed on Ethereum, we are now witnessing an explosion of protocols on Binance Smart Chain (BSC) amongst other networks.
PancakeSwap (BSC) has recently grown in popularity among DeFi users, competing with other decentralized exchanges (DEX) such as Uniswap and SushiSwap.
What is PancakeSwap?
PancakeSwap is the leading DEX running on BSC, allowing users to efficiently and securely trade BEP-20 tokens, one of which is Lendefi’s native token, LDFI. PancakeSwap users are also able to stake and provide liquidity in order to generate returns.
Unlike centralized exchanges (CEX), PancakeSwap makes use of an automated market maker (AMM). An AMM does not employ an orderbook to match sellers and buyers. Rather, the protocol’s smart contract fills orders via its liquidity pools. An AMM is advantageous since it allows for real time processing and the ability to set low slippage.
PancakeSwap is notable for its user-friendly interface. It was built to provide new users access to all of the features and tools they’ll need to swap tokens efficiently. Tokens can be exchanged in a matter of seconds. There is also a large selection of tokens to choose from and the option of importing custom tokens which are not officially listed.
PancakeSwap Liquidity Pools
Users can become liquidity providers for their cryptocurrency assets. This is called providing liquidity and liquidity providers are issued with LP tokens. As the pool’s average value rises, so does the value of each individual’s LP tokens. These liquidity pools will be a benefit to PancakeSwap liquidity providers because they do not need to trade their assets in order to earn income. A percentage of the platform’s trading fees are allocated specifically to the holders of LP tokens. Owners of LP tokens receive 0.17% of the typical 0.2% fee which they only realize when they remove liquidity. You can join over seventy different official liquidity pools on PancakeSwap and thousands of custom pools.
PancakeSwap Farming (Staking)
Users have the option of earning CAKE tokens by staking their LP tokens on PancakeSwap Farms. Staking simply involves depositing your LP tokens into a staking pool, earning a percentage return and the ability to harvest returns.
Syrup pools (Staking)
PancakeSwap also offers other staking options in the way of Syrup Pools. Users can be paid exceptionally higher returns for participating in such Syrup Pools simply by staking CAKE. The annual percentage yield (APY) on some of these pools varies from 43.33% to 275.12%. The advantage is that you can earn other tokens besides CAKE (e.g UST, LINA, etc.) when you stake in Syrup Pools.
PancakeSwap is becoming more and more important in the DeFi space every day. Users are becoming increasingly interested in lower fees, as well as knowing how to utilize their crypto assets to create passive income via staking. PancakeSwap provides several attractive features to accomplish users’ investment goals. In conjunction with BSC, PancakeSwap is fulfilling DeFi objectives by providing new experiences, innovative rewards, and enhanced overall results.
In a future article we will further explain why PancakeSwap is so relevant to the Lendefi Protocol. Watch this space.
The Lendefi protocol will deliver leveraged trading and secured lending for cryptocurrency markets. Utilizing an undercollateralized loan model, Lendefi facilitates a trustless relationship between lender and borrower, managed by the protocol to remove counterparty risk.