What is PancakeSwap? How to use Binance's DEX smart chain

Unlike popular centralized cryptocurrency exchanges like Binance and Coinbase, that are operated by a single corporate entity, decentralized platforms (DEX) allow you to trade without intermediaries. Many of these DEX are based on Ethereum, where most of the decentralized financial action takes place (DeFi).

Nevertheless, as rival smart contract blockchains take hold, Comparable DEXs emerge elsewhere, sometimes with unique twists. In the case of PancakeSwap, instead of running on Ethereum, it's based on Cadena inteligente Binanceand offers much lower trading fees. Binance's smart chain is newer and less established than Ethereum, but PancakeSwap is already causing a sensation among DEX.

Here's what you need to know about PancakeSwap on Binance Smart Chain, including a quick manual on how to get started.

What is PancakeSwap?

PancakeSwap is a decentralized exchange platform that allows you to exchange cryptocurrencies and tokens without a centralized middleman., maintaining custody of your assets at all times. It's based on smart contracts automated systems implemented on Binance Smart Chain, the blockchain platform is managed by Binance.

Although Binance operates a centralized trading service, no controla ni opera PancakeSwap, was created by anonymous developers. The service looks a lot like Ethereum's popular DEX, Uniswap. PancakeSwap is used specifically for BEP-20 tokens running on Binance Smart Chain, although it is possible to bring tokens from other platforms through the Binance Bridge and “wrap them up” as a BEP-20 token to use in DEX.

Like many other DEX, PancakeSwap is based on an automated market making system (ADM), which relies on user-fed pools of liquidity to enable cryptocurrency trading. Instead of dealing with an order book and finding someone who wants to exchange the tokens you have for the ones you want, users lock their tokens in a pool of liquidity through smart contracts. This allows you to make any exchange you want, and users who keep their coins in the group win prizes all the time.

PancakeSwap is part of the growing wave of DeFi services that allow cryptocurrency operators to transact with trading tokens without a broker taking a significant portion of the funds.. It is one of the largest DEXs of its kind on the Binance Smart Chain, although there is DEX in Ethereum (as Uniswap) with significantly higher average trading volume.

How does PancakeSwap work?

As described above, Token exchanges take place through liquidity pools between pairs of tokens. Users can exchange one type of token for another without intermediaries, while other users who lock their tokens in liquidity pools get a part of the rewards generated by the transactions.

Nevertheless, this is just part of the overall PancakeSwap experience. The DEX also allows you to lock coins into so-called Syrup Pools that provide ever-increasing prizes.. For instance, can block CAKE, PancakeSwap's native token, and earn even more CAKE by simply letting it sit in the Syrup Pool over time. There's even an auto-lock option that re-locks your PASTEL at least once an hour, which continually increases your rewards.

PancakeSwap offers gaming experiences, how to bet on whether the price of Moneda de Binance (BNB) will increase or decrease within a limited period of time. It also has a lottery feature that allows users to buy a ticket in hopes of winning a large number of CAKES., in addition the DEX offers a wide range of non-fungible collectible tokens (NFT) to buy. There are also sales of Initial Agricultural Offers (IFO) that allow you to buy new coins from projects under development.

What's so special?

PancakeSwap removes middlemen from centralized exchanges, letting other users take those commissions instead. If you are willing to lock your tokens for a while, the prizes can be very big, especially with some pools of liquidity and betting options.

Of course, as with other DEX, Crypto newbies will likely have a hard time navigating PancakeSwap and understanding its myriad features. Nevertheless, it might be worth taking the time to understand.

Beginner's Guide to Using PancakeSwap

You will need your own cryptocurrency to use PancakeSwap, since DEX does not support fiat currencies. PancakeSwap works with wallets like Trust Wallet, MathWallet, Binance Chain Wallet and incluso MetaMask. Yes, MetaMask is an Ethereum wallet, but it can be configured to work with Binance Smart Chain. Unlike centralized exchanges, you won't have to enter a ton of personal data, you won't even have to create a profile.

Decipher chose to use Trust Wallet on a smartphone. The first step is to buy Binance Coin (BNB) on Binance.US and transfer it to your wallet. Next, you will need to convert it to Binance Smart Chain to use it on PancakeSwap. You can do it within Trust Wallet by pressing the button “Plus”, playing “Switch to smart chain” and paying a small transaction fee to convert your coins.

All PancakeSwap features are displayed on the left side of your web browser screen. To exchange tokens, go to Trade and select Exchange, and then choose which token from your connected wallet you want to trade, why token is DEX compatible. You will need to confirm the transaction in your wallet to execute it.

In the case of farms, o liquidity pools, you must spend an equal value of tokens on a pair (como CAKE-BNB) to buy LP tokens (Liquidity Pool Tokens), that provide liquidity to the DEX and award rewards in the process. This liquidity can be withdrawn at any time and will be disbursed in the individual tokens that were initially exchanged for the LP tokens..

The future:

Binance Smart Chain is growing rapidly as developers take advantage of its low fees and faster transactions compared to Ethereum. In april 2021, Binance revelado that the platform had run around 4.9 million transactions in a single day, that is to say, three times the amount that Ethereum has achieved in one day.

PancakeSwap does not have the same average daily volume level as Uniswap or SushiSwap, Ethereum's two heaviest DEXs, but it is already very popular considering the relatively young age of Binance Smart Chain.

If Binance's decentralized application platform (dapp) continues to grow and attract more developers and users alike, and if high gas rates and congestion on the Ethereum network continue, then PancakeSwap could fight even harder against rival platforms over time.