The Decentralized Finance market is growing rapidly, making it meaningless to write about its current capitalization, considering the fact it is beating new milestones on a virtually daily basis. The DeFi market is far more than just transfers and transactions facilitated by blockchain technologies – it is as an entire economy that gradually merges with the traditional economy and entices businesses and traditional investors to make the move into blockchain-based solutions.
But it is the users and base market participants who make up the DeFi market, pouring their liquidity into it in hopes of capitalizing on the vast array of opportunities being presented by the variety of protocols and other financial solutions offered by an endless number of projects and platforms. The exchanges are also making their move into DeFi, rapidly taking up leading positions as providers of liquidity pools and other services that make the essence of DeFi – attracting user liquidity in exchange for rewards to facilitate financial transactions and operations among market participants.
One of the leading DeFi solutions providers is currently PancakeSwap – a highly-developed and versatile platform that emerged at the dawn of the market and offered a slew of innovative solutions that have since been picked up and adopted by a variety of protocols. PancakeSwap still remains one of the leading players in the DeFi space, but many newcomers into the decentralized environment are wondering how to use PancakeSwap. The questions of how to use the PancakeSwap exchange and how to work on PancakeSwap have simple answers, since the platform was initially designed to be extremely user-friendly and intuitive.
The PancakeSwap exchange was launched on the Binance Smart Chain as one of the first projects ever to be hosted on the network a few days after the launch of the global exchange’s mainnet. At its core, PancakeSwap is a fork of the acclaimed Uniswap protocol’s V2, but a much faster one, leveraging the capabilities, low transaction commissions, and high transaction processing times of the Binance Smart Chain.
The Binance Smart Chain further reduced commissions and transaction processing times on PancakeSwap, making it a viable alternative to Uniswap, attracting a large number of both institutional and retail investors to start pouring their liquidity into the pools on offer.
Apart from AMM, the PancakeSwap exchange started offering a host of other solutions for leveraging the full capabilities of DeFi. Among the options are staking, liquidity farming, lotteries, and other options that users can resort to for generating additional income. At present, PancakeSwap is the AMM with the highest Total Value Locked on the market and one of the highest trading volumes, which has been spiking in recent weeks on the wave of growing cryptocurrency prices and favorable news backgrounds.
The PancakeSwap exchange operates as an Automated Market Maker, essentially meaning that it does not have an order book, where trades are placed in expectation of execution. This means that there is no matching against other trades placed by other users. Instead, the trades and orders are placed against a liquidity pool filled by other users with pairs of cryptocurrencies. This makes trading near instant, since traders do not have to wait for matching pairs, but rather have an open and readily filled pool to take advantage of and instantly receive the pair they want.
The users of the PancakeSwap liquidity pools receive rewards for filling the pools with liquidity. The assets placed in the pools are used by the PancakeSwap exchange for conducting operations, but the owners receive a percentage of the commissions as rewards for their contributions. The users have the option of extracting their assets at any time. The assets are largely BEP-20 standard tokens, but others are acceptable as well as liquidity.
Farming is one of the main points of focus on PancakeSwap, as users can deposit their liquidity pool tokens and lock them for a specific period of time to generate rewards.
To make use of any of the functions offered by PancakeSwap, users need to have a Metamask wallet connected to the Binance Smart Chain. This will streamline operations and reduce commissions, giving users more opportunities to monetize on PancakeSwap.
The first step to start using PancakeSwap is adding liquidity to one of the pools on offer. Given that the PancakeSwap website is fixed, users need to navigate to the Trade sidebar and then proceed to the Liquidity button. Once there, they can select the assets they want to contribute and generate Liquidity Pool tokens in return that will be used within the framework of the PancakeSwap protocol.
With the liquidity added, users can start using the Liquidity Tokens to earn CAKE governance tokens. The first and most basic way of doing that is going to the Farming tab and selecting the matching option therein. Then users need to approve the contract and confirm that they access the fee. Then users need to select the amount they want to contribute and then watch the amount of CAKE they will be earning as rewards for their assets and actions. Once a sufficient amount has been collected, users can select the Harvest option and transfer their earnings to their wallets.
Another option is staking, which allows users to select any of the pools and stake their tokens to assist the selected network to operate using the contribution while generating commissions as rewards. A fairly common function in DeFi space, staking is a good means of generating passive income.
Other options on offer on PancakeSwap include Lotteries, where users can buy tickets worth 10 CAKE each and try their luck. The lottery issues four random digits, with only all four matching numbers giving the user the right to win half of the pool. Smaller amounts of rewards are issued for less matching numbers.
PancakeSwap also offers NFTs as part of its product lineup, as well IFOs, or Initial Farming Offerings, which are a more recent addition to DeFi space. As part of IFOs, users can contribute their Liquidity Pool tokens to support newly-launched pools.
One of the core benefits of PancakeSwap is that it is an automated market maker, meaning that there is no intermediary to maintain an order book that would slow the process of operations. Another benefit is that the PancakeSwap exchange allows for instant execution of orders against a liquidity pool, thus minimizing transaction processing fees and times.
One of the main benefits of PancakeSwap is that it offers a wide range of products and is also fully decentralized, meaning that users can reliably place their assets and expect to receive rewards instantly for their contributions. The combination of available liquidity and leveraging of the versatile and highly-functional Binance Smart Chain make PancakeSwap the venue of choice for users seeking quick liquidity pool options and low commissions.
The PancakeSwap automated market maker is the biggest protocol of its kind in the DeFi space and one operating on the Binance Smart Chain. The protocol offers a host of innovative features and allows users to track all of their metrics in real time.
The launch of PancakeSwap on the Binance Smart Chain has allowed users to take advantage of the low commissions and transaction fees, opening up new opportunities for generating passive income and tapping into the possibilities of NTFs and some innovative functions like IFOs. Combined, the PancakeSwap exchange is the go-to solution for users seeking liquidity and other functions like staking and farming.