A Guide to PancakeSwap

Is this another food-themed DeFi protocol? The platform resembles the SushiSwap platform on Ethereum (community governance, the ability to farm liquidity providing tokens), but also incorporates many additional features that make you earn rewards.

Introduction

Participants in the crypto space have been captivated by the food-based farming craze over the past few months. There has been an increase in platforms emerging for staking funds that offer tokens in exchange for staked funds in the latest wave of decentralized finance protocols.

Several of these activities have been focused on the Ethereum blockchain. Since it was one of the first blockchains that supported smart contracts, it has attracted a huge community of users, developers, and tools for the development of strong, scalable decentralized applications.

What is PancakeSwap?

It is a decentralized platform for exchanging BEP-20 tokens.

Know Uniswap or SushiSwap? If you are familiar with the fundamentals of PancakeSwap, you will have no problems with it - they are very similar.

The PancakeSwap exchange

The PancakeSwap platform uses the automated market maker (AMM) model. This means that although you can trade digital assets on the platform, you won't be able to put your order into a matching order book with other traders. Rather, you trade against one of many liquidity pools.

There are some pools that are filled with funds that belong to other users. A liquidity provider (or LP) token is given to each participant who deposits their tokens into the pool. By reclaiming those tokens and a portion of the trading fees, they can reclaim their share of the profits.

As a result, you will be able to trade BEP-20 tokens, or add liquidity to your account to earn rewards. But, there is also another feature that we will discuss later in this article. The LP tokens are offered in several flavors - if you add, say, BUSD and BNB to a pool, you will receive BUSD-BNB LP tokens back in exchange.

Farming and staking on PancakeSwap

Nevertheless, there is more to come! Additionally, PancakeSwap also provides users the opportunity to farm the governance token - CAKE.

Your LP tokens can be deposited on the farm and will be locked up in a process that rewards you with CAKE as a reward. Which LP tokens can be deposited on it? Here's a sample of some of the most popular ones:

CAKE – BNB LP
BUSD – BNB LP
BETH – ETH LP
USDT – BUSD LP
USDC – BUSD LP
DAI – BUSD LP
LINK – BUSD LP
TWT – BNB LP

However, the rewards do not stop here! In addition to these earnings, if you stake your CAKE in a SYRUP pool you can earn even more. It appears that you've deposited some funds in order to receive LP tokens, and that you've used them to cultivate CAKE. Through these special staking pools, you can stake your CAKE and gain other tokens.

One of the biggest SYRUP pools, allowing you to stake your CAKE in order to earn even more CAKE, is simply for CAKE. You can earn a lot more tokens by staking CAKE, so make sure that you keep an eye on the SYRUP pool page to find out how much more tokens you can be earning.

Using PancakeSwap

In order to use many of the features on https://pancakeswap.finance you must click on "Unlock Wallet" before you can access them. After you click on that option, you will be given a number of options, including MetaMask, Trust Wallet, WalletConnect, and many others.

After completing the setup process, you will be able to unlock your wallet in order to see additional information. Once you have the wallet configured, you’ll see that different LP tokens promise different returns. How can you add liquidity to LP tokens?

Adding liquidity

If you've used any AMM before, you're probably well aware of how this works. The first step to farming CAKE is to add liquidity to the exchange.

Click on Trade in the left hand menu, then click on Liquidity, then Add Liquidity, and choose the token pair you wish to deposit. Additionally, you should be aware of impermanent losses when adding liquidity to a pool.

Farming

So you got your LP tokens, now stake them so you can earn CAKE. The Farms tab is accessible from the game's main menu. Select the option that corresponds with your LP tokens.

BEP-20 tokens require your approval, just as ERC-20 tokens do. This is how the contract can withdraw your BEP-20 tokens. Clicking Approve Contract will bring up a pop-up asking you to confirm the transaction and displaying the fee. As soon as that transaction is confirmed, all you have to do is select the amount you would like to stake and confirm it.

The CAKE you've earned will increase over time - if you want to harvest your rewards at any point, click on Harvest and confirm the transaction. You can navigate away from the page and come back at any time to check how much CAKE you've earned.

Staking

After you have obtained CAKE, you are able to stake it in the SYRUP pool. The pools will be listed on the Pools tab, and you will be able to stake your CAKE in any of these pools.

To withdraw your tokens, you must once again approve the withdrawal. Click Approve CAKE. You will need to choose the amount you would like to stake once that approval has been granted. After you staked the CAKE, you will earn passively the reward token of the pool that you contributed to. Click on Harvest if you are ready to cash out your rewards.

Lottery

What else can you do with a cake? On PancakeSwap, you are able to enter a lottery.

It takes 6 hours for each lottery session to take place. The cost of one ticket is 10 CAKE, and for that money you will receive a four-digit combination from 1 to 14, for example, 12-8-4-3. To win the jackpot (50% of the entire prize pool), the numbers on your ticket need to match the four numbers printed on the winning ticket in the same order.

But what happens if you do not match them all? There is no need to worry. In addition, you can win rewards if more than two of your numbers match up with those of the winning ticket, or vice versa.

NFTs

So PancakeSwap does even more than that? Of course, you can win special NFTs. When you win an NFT, you have the option of trading your cutie for the CAKE value it represents or keeping it in your wallet as a collector's item.

What is the process? A participant must register in order to be eligible for a prize, and the winners will be selected at random. Make sure to keep checking the page on the NFT website for upcoming opportunities.

IFOs

Using the power of yield farming, Initial Farm Offerings (IFOs) are a way to get a recently launched token in the hands of users. Using PancakeSwap, you can participate in new token sales by committing LP tokens to a pool that accepts LP tokens to get access to a newly launched token sale.

On the IFO page of PancakeSwap, you can find a list of the currently active IFOs.