What is Pancakeswap (CAKE): How it Works and Its Features
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What is Pancakeswap (CAKE): How it Works and Its Features

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What is Pancakeswap (CAKE): How it Works and Its Features

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PancakeSwap is a decentralized crypto exchange (DEX), an alternative to centralized crypto exchange (CEX).

DEX was created because CEX was deemed incompatible with the basic principles of decentralization of crypto, which is to give users full control over the assets they own.

Which is why a number of people from the crypto community created exchanges, one of which is PancakeSwap.

So, what are PancakeSwap (CAKE), its history, and its future? Check out the review below.

What is Pancakeswap (CAKE)?

As previously mentioned, PancakeSwap (CAKE) is a decentralized exchange or DEX, where users can exchange a number of crypto assets without the need for third-party assistance and are non-custodial in nature.

That means all transactions are made directly between users, and the platform does not collect users’ funds during the transaction.

This decentralized exchange is known to run using smart contracts built on the Binance Smart Chain (BSC). The CAKE is the default crypto asset of the platform. 

Built from the basic code of UniSwap—the first and most popular DEX on the Ethereum network—, usage of PancakeSwap is similar to that of UniSwap, but the former has various modifications as a distinction.

History of Pancakeswap (CAKE)

 PancakeSwap was created by anonymous developers at BSC, who launched this protocol in September 2020. 

The launch came amid growing enthusiasm for DeFi—now known as “DeFi Summer 2020.” Those were the period marked by network congestion and the price of Ethereum transaction fees was soaring. 

PancakeSwap, which offers low transaction fees, fast transaction processing, and lower asset exchange fees than UniSwap took advantage of this opportunity.

All of those features help this protocol to attract a large number of users to its platform. Only 8 months after its launch, TVL PancakeSwap even managed to break the $7.5 billion mark. Today, this new protocol has become one of the largest DEX applications in the crypto industry offering a wide range of DeFi products.

How Pancakeswap Works

It is also important to know that PancakeSwap is not a blockchain, but a smart-contract built on BSC, which is a proof-of-stake (PoS) based blockchain. Here, the Ethereum Virtual Machine (EVM) capability makes it possible to easily move applications from Ethereum.

With the basis of a PoS network, BSC is also able to process transactions quickly at a fairly low cost. This makes PancakeSwap superior to UniSwap. All transactions on the platform can also be done quickly, without having to worry about network congestion at the BSC.

PancakeSwap itself is a DEX that uses automated market makers (AMM) technology to facilitate two parties who want to exchange crypto assets.

 The AMM system is important and necessary because a DEX does not use a third party that regulates the exchange of assets between buyers and sellers. The exchange of crypto assets in an AMM will take advantage of the liquidity pool filled by the users. Incentives coming from trading fees will be earned by users who store crypto assets in the liquidity pool (LP). 

The transaction fee in this protocol is 0.25% for each trade, with 0.17% of that value distributed to the Liquidity providers, while 0.03% is sent to the platform’s treasury as an income.

Pancakeswap Features

  1. Swapping

PancakeSwap is an Open Source DeFi protocol specially designed for exchanging BEP-20 tokens. This platform can be used by anyone and they can exchange their own BEP-20 tokens on the exchange built on BSC.

  1. Farming

This protocol also allows its users to farm a native asset called CAKE. The farming feature of this protocol allows users to store their LP tokens, lock them and earn CAKE tokens as a reward.

  1. Added Liquidity

The exchange on this protocol works on the AMM model so that investors can exchange tokens without the need for order book. To invest in CAKE tokens, one must first add liquidity to the exchange. 

The trick is to select the pair of tokens you want to deposit and then add liquidity to the exchange. Regarding this feature, make sure that you know the advantages and disadvantages before adding liquidity to the pool.

  1. Staking

If you have obtained LP tokens, then you can start staking to earn CAKE tokens. When you receive CAKE tokens, you can stake them in the SYRUP pool. When you install CAKE tokens, you will get a CAKE token reward.

  1. Lottery

PancakeSwap also enables lottery tickets by utilizing CAKE tokens. Each lottery session takes approximately 6 hours. 

The lottery ticket, which costs around 10 CAKEs, will give you a random four-digit combination number between 1-14. Well, to win the jackpot, the four numbers on the ticket must match or match all the numbers in the same order.

 Even if the numbers don’t match altogether, you will still get a prize when only two or three numbers that match.

How to Farm on Pancakeswap

  1. Enter the Farming Menu
  1. Click Earn or Pool

 Enter the Farming menu by clicking pool or earn and then select farms or the desired collection of farming funds. The pool will contain information regarding the required crypto and the profits to be made as well as the amount of funds in the pool.

  1. Crypto Asset Lock

If you have chosen the desired pool, lock the crypto asset pair that you want to use. Here, users will be asked to write down the amount of crypto they want to lock.

When writing the amount of crypto, users will only write the amount of 1 crypto and the other crypto will adjust the value of the crypto that was written earlier. For example, a user wants to farm BUSD-BNB, they only need to write BNB.

For example, write 1 BNB and then BUSD will adjust the value. This information is important to know because it will affect the amount of crypto that will be locked on the Farming platform.

  1. Get Pool Tickets

The next process is users must get the ticket/ownership of the pool from the platform. The trick is to click on GET crypto LP pairs, for example GET BUSD-BNB LP. 

LP stands for Liquidity Pool, which is a sign that you are part of the pool. Now, if you already have a ticket/ownership, users will be asked to click stake as a confirmation step for crypto locking in the chosen farming pool.

  1. Click Enable

Next, click Enable which will direct to Stake LP. Then, click on Stake LP or Supply or Stake in a number of other DEXs.

  1. Farming done

When every process has been completed, users can do farming. If you want to open it and withdraw the locked crypto assets then please click unlock, collect, or harvest.

The Future of Pancakeswap

What is the prospect of PancakeSwap, is it promising and can be used as an investment?

Keep in mind that BSC is growing rapidly as its developers take advantage of low fees and faster transactions compared to Ethereum. Binance itself in April 2021 stated that there were 4.9 million transactions a day on the platform or three times the transactions made in Ethereum in a day.

 On the other hand, this protocol also doesn’t have the same average daily volume as Uniswap or SushiSwap—Ethereum’s biggest rival DEXs—, but it’s very popular considering BSC is a newcomer in this industry.

 PancakeSwap itself will be the toughest rival for its competitors if Binance’s decentralized application platform (dApp) continues to develop. It can also pose a threat to other exchanges if they succeed in attracting more developers and users.

How to Buy Pancakeswap (CAKE) on INDODAX

After recognizing PancakeSwap (CAKE), you can start investing  by buying this crypto asset on INDODAX easily and safely.

You can access INDODAX via the INDODAX Mobile App which can be downloaded on the App Store or Google Play Store, or by visiting the INDODAX website.

Here is how to buy the PancakeSwap (CAKE)  crypto asset on INDODAX:

  • Register at INDODAX if you are not yet registered as an INDODAX Member or log in to your INDODAX accountThen, make a deposit by reading how to make a deposit below
  • After successfully making a deposit and the balance has entered your INDODAX account, visit the INDODAX market
  • Search for Pancakeswap in the IDR (Cake to IDR) market, and click to visit the crypto asset page
  • On the crypto asset page, determine and enter the desired balance and purchase price for Pancakeswap, or buy instantly (at the current price)
  • Next, wait for the price to increase for some time
  • Once the price increases, the asset can be sold at a higher price with the Instant method
  • If selling using the Limit method, a sell order can be placed after purchasing the asset and make sure the sell number entered is higher

That’s the interesting information about PancakeSwap (CAKE) which is present at INDODAX.

You can also find out the latest information by reading the latest updates from the crypto coin rating on INDODAX Academy and to gain a deeper understanding of the latest crypto terms dictionary you can also read it here.

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Apart from that, INDODAX also offers features other than trading, such as INDODAX Earn crypto which allows you to lock crypto assets and get rewards in the form of interest, as well as INDODAX OTC for large crypto transactions more safely and personally.

Therefore, for a brighter future, let’s start investing in crypto assets now at INDODAX and if you are interested in INDODAX OTC services, you can click the banner above.

Come on, invest in crypto assets in INDODAX for #FutureAssets now!

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