What is PancakeSwap and How to Use It

Learn more about the BNB Chain decentralized exchange and NFT marketplace

What is PancakeSwap, the leading decentralized exchange or DEX on BNB Chain, and home to various innovative financial services built on top of blockchain technology. The entire PancakeSwap ecosystem utilizes the native cryptocurrency CAKE.

What is PancakeSwap?

PancakeSwap is one of the largest decentralized exchanges (DEX) and NFT Marketplaces built on the BNB Chain. Moreover, the exchange expanded its empire from BNB Chain to also include Ethereum, Base and zkSync Era. On a monthly basis the DeFi dapp serves approximately 1 million wallets, making it one of the most popular dapps in the industry.

PancakeSwap is listed on DappRadar as two version, V2 and V3. Each of these dapps utilizes a different way of providing liquidity, with the V3 version being more efficient and therefore cheaper for the end user. In addition, liquidity providers on V3 generally earn more from fees.

PancakeSwap’s CAKE Token?

The CAKE token is PancakeSwap’s native token, serving several purposes. You can use it to pay transaction fees, earn rewards for providing liquidity, and also vote on PancakeSwap governance proposals.

CAKE is a BEP-20 token on BNB Chain, which serves as the backbone for most staking and liquidity pools on the platform. 

Aside from its foundational function, CAKE enables users to benefit from a wide range of use cases, including the governance of the platform itself: 

• Stake it in Syrup Pools to earn free tokens
• Use it in Yield Farms to earn more CAKE
• Buy Lottery tickets in the PancakeSwap Lottery
• Participate in IFO Token Sales
• Create your Pancake Profile and mint NFTs
• Vote on proposals relating to the PancakeSwap ecosystem

PancakeSwap services

One of the great things about PancakeSwap is that there’s something for everyone. Whether you’re interested in DeFi, NFTs, or even gaming, PancakeSwap has you covered. Here are the main ways you can benefit from using PancakeSwap.

• The decentralized exchange, where the community provides the liquidity to make the automated market maker work properly.
• The NFT marketplace where PancakeSwap and its partners offers various collectibles, game items and digital artworks.
• Pancake Protectors, a mobile strategy and tower defense game that utilizes the CAKE token. The game launched in May 2023.

Getting started with PancakeSwap

Before you can do anything on PancakeSwap, you’ll need to connect your digital wallet. PancakeSwap supports a wide range of wallets, including MetaMask, Opera Wallet, Blocto, SafePal, and others.

Once you’ve created your wallet, all you need to do is click on the “Connect Wallet” button on the PancakeSwap website and follow the instructions. After connecting your wallet, you’re ready to start exploring.

If you don’t have a digital wallet yet, we recommend checking out our video below.

Trade crypto and generate passive income with PancakeSwap DEX

Now that you’re all set up, it’s time to start PancakeSwap’s main product: the Decentralized Exchange.

Swapping tokens

Trading tokens in PancakeSwap is a fairly easy experience. Once your wallet is connected, and your tokens are ready, you just have to choose your amounts and swap!

You will have to pay a 0.25% trading fee for each swap, and the transaction will be available for view on the BSCScan block explorer.

Providing liquidity

As we mentioned before, PancakeSwap is a DEX that uses Liquidity Pools (LPs) composed of funds provided by several users.

These LPs are created when users deposit their tokens into the PancakeSwap smart contract. In return, they receive LP Tokens that represent their share of that pool.

For example, if you deposit 100 BNB into the CAKE/BNB LP, you will receive 100 CAKE-BNB LP Tokens. PancakeSwap or other exchanges allow you to trade these tokens for other BNB Chain assets.

Staking CAKE with Syrup Pools

PancakeSwap has what are called “Syrup Pools”, which are very similar to LPs, but with one main difference: the rewards are in CAKE, PancakeSwap’s native token.

They are basically staking pools that offer liquidity providers an additional way to earn rewards.

Yield Farming

You can also earn PancakeSwap’s CAKE token by staking your LP Tokens. For every trade that happens in a pool you provide liquidity to, you will receive a small amount of CAKE as a reward.

This is what’s called Yield Farming, and it’s one of the main ways users can earn passive income on PancakeSwap.

It’s important to point out, however, that these rewards don’t come without risks. Providing liquidity means you have exposure to impermanent loss – and permanent loss.

Trade NFTs on PancakeSwap

PancakeSwap’s latest launch, the NFT Marketplace, allows users to buy and sell non-fungible tokens on BNB Smart Chain. With great UX and transparent processes, this is one of the many NFT marketplaces out there.

Buying NFTs on PancakeSwap

To buy an NFT on PancakeSwap, all you need to do is find the one collection and token desired, check the item details and price, and click “Buy”. You will then be prompted to confirm the transaction with your connected wallet.

Once the transaction is confirmed, PancakeSwap will add the NFT to your wallet.

Each transaction on the PancakeSwap NFT marketplace comes with a trading fee of 2%, used to buy back and burn CAKE tokens.

Selling NFTs on PancakeSwap

To sell an NFT on PancakeSwap, you’ll first need to get your collection whitelisted. If your application is accepted, then you can list your NFTs for sale on the marketplace.

Some things will definitely help your NFT collection listing on PancakeSwap, for example having all the NFTs minted. If a project has an active website and social media accounts, it shows that a collection has an engaged community and a strong business plan, being worthy of PancakeSwap.

PancakeSwap’s official NFT collections and profiles

In addition to user-created collections, PancakeSwap also has its own official NFT collections. These include the Pancake Squad Collection and the Pancake Bunnies Collection.

Furthermore, users on PancakeSwap can create their own NFT user profiles, totally personalized. By allowing users to choose their names, teams, and also a NFT profile image, the marketplace creates a community-driven environment.

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The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research.