Every blockchain has their own Decentralized Exchange (DEX). Ethereum has Uniswap and Sushiswap, Cardano has Adax and the Binance Smart Chain (BSC) has Pancakeswap. In this article we will focus on what Pancakeswap is all about and how to use it.
The largest DEX on the Binance Smart Chain
Pancakeswap is a Decentralized Exchange built for the Binance Smart Chain. Pancakeswap is similar to Uniswap in that it uses AMMs (Automated Market Makers) and liquidity pools. In fact, you can think of Pancakeswap as the Uniswap for the Binance Smart Chain (BSC). One of the benefits of using Pancakeswap is that the gas fees are exuberantly cheap compared to Uniswap. This is because Binance is a proof of stake network allowing the transactions to be much fast as well as cheaper.
As of right now, the application has the amount of $16,473,821,537 in liquidity locked making it the largest DEX on BSC. Although Pancakeswap’s volume is consierably lower than Uniswap and other Ethereum based DEXs, it is increasing and CAKE is becoming one of the top decentralized exchanges.
As Pancakeswap is on the BSC network, the underlying currency used to trade on the platform is BNB and BSC.
How to use Pancakeswap?
In order to use the Pancakeswap platform you can use many different wallets, including Trust Wallet, MathWallet, and even MetaMask. To learn how to configure MetaMask for BSC, read our article here.
If you have one of these wallets in your browser or on your phone, you can easily connect your wallet with the platform by clicking “Connect Wallet” in the top right corner of the website.
Important: As there are many scam websites, imitating the Pancakeswap website, you need to make sure to sign up to the correct one. You can find the correct one here: pancakeswap.finance.
As you can see above, you can navigate yourself to the trade feature on the website by clicking on the trade option on the left hand corner. Once, on this page, you can easily swap any BEP20 for another BEP20 token. Like all other DEXs, there is no intermediary which validates transactions. All transactions on Pancakeswap are decentralized and permissionless.
Purchasing BNB and BSC on Binance
Before you can trade on Pancakeswap you first need to purchase the underlying token of the Binance Smart Chain, wich is BNB or BSC. Therefore, you need to open an account on Binance and purchase BNB or BSC. You can do this here:
Features on Pancakeswap
Some other neat features you can see on the left hand navigation window are the farming and pools options. Farming on Pancakeswap provides variable Annual Percentage Rates (APRs) depending on which token you are farming. Users can stake their coins in “syrup pools” and earn interest.
There are also a number of games available on the application. You can even buy lottery tickets and win rewards. There is also a prediction feature which allows users to guess the price of BNB at a certain time. If the user guesses correctly, they can earn rewards in Cake, BNB, or stable coins.
There are small risks in using Pancakeswap. Since BSC is newer than Ethereum, that leaves a lot of room for scammers to abuse a less developed framework. The most common Pancakeswap scams are impersonator websites. When using Pancakeswap, always do a thorough check to make sure you are on the correct website. The address is Pancakeswap.finance. Never send your tokens to any other Pancakeswap domain, as you will risk to loose all of those coins. Bookmark the correct site so you always know you’re on the correct site without having to check.
Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.