Being the leading DEX on Binance Smart Chain, PancakeSwap is a platform that allows users to trade and earn a variety of BEP-20 coins in a variety of fun and innovative ways. With some of the highest trading volumes we have to wonder, what exactly makes PancakeSwap so popular? In this article, we give you an in-depth PancakeSwap review and take a look at why users are continuously drawn to this platform.
PancakeSwap Fees
One of the main reasons users may be drawn to PancakeSwap is that it offers lower fees when compared to other Defi exchanges. When you trade a token on PancakeSwap, you will be charged a 0.25% trading fee. Interestingly, a significant percentage of the trading fees are returned to liquidity providers, which serves as a great incentive for users to provide liquidity on the platform. This total trading fee is broken down as follows:
Item | Fee |
Returned to Liquidity Pools as a reward for liquidity providers. | 0.17% |
Sent to the PancakeSwap Treasury. | 0.03% |
Used for CAKE buyback and burn. | 0.05% |
How does PancakeSwap work?
By now, you already know that PancakeSwap is a decentralized exchange, which facilitates peer-to-peer trading of BEP-20 tokens. However, as a liquidity pool-focused DEX, Pancakeswap is built on an automated market maker (AMM) system which allows users to trade directly with liquidity pools instead of other users. Since liquidity is at the core of PancakeSwap’s system, you are only able to trade tokens on PancakeSwap if there is enough liquidity for those tokens.
How does PancakeSwap ensure liquidity? In short, it relies on users to add tokens to their pools. PancakeSwap offers rewards as an incentive for providing liquidity to their pools in the form of liquidity provider (LP) tokens. Owning these tokens allows users to earn from the transaction fees when someone uses their pool, as well as allowing them to partake in PancakeSwap’s farms to generate additional yield.
Besides farms, PancakeSwap also offers a few other products which don’t require LP tokens: Syrup Pools. Lottery, Initial Farm Offerings (IFOs), Lottery, NFT Collecting, and Prediction Markets. These products all have different benefits, but overall allow users to earn additional BEP-20 tokens.
PancakeSwap Pros and Cons
✅ Pros
Lower fees compared to other Defi exchanges
Users are rewarded well for providing liquidity, with a constant stream of revenue from trading fees.
High yield returns on farms and pools
Higher level of security when compared to other Defi exchanges
❌ Cons
- Not very beginner-friendly for new crypto users
- There is a risk of impermanent loss in both farms and pools
- Potential for scam tokens on the platform
How to create an account on PancakeSwap?
Getting started on PancakeSwap may not be what you expect. It doesn’t include creating a PancekeSwap account with an email or password, for example. To get started using PancakeSwap, you just need to create a BNB Smart Chain compatible crypto wallet and connect it to PancakeSwap. Pretty straightforward, right?
When it comes to choosing a crypto wallet, you’ll need to factor in that some wallets are only available on mobile devices, while others are available only on desktops. Generally, mobile wallets are easier to use and more transportable, so you can trade from anywhere. On the other hand, desktop wallets can be found to be more secure and damage resistant. It’s up to you to decide which wallet suits your needs the most.
As an additional factor, each wallet comes with its own perks and drawbacks. For example, some wallets, such as TrustWallet and Token Pocket, come with an in-built DApps browser which some users may find easier to use. Whereas other wallets may be compatible with hardware wallets, which TrustWallet and TokenPocket aren’t. It all comes down to what you prioritize as a user, so make sure to do your research before committing to the wallet you’ve chosen.
Read more on: Connect Pancakeswap with Trust Wallet
Is PancakeSwap safe?
There are always some risks involved in trading cryptocurrencies. However, PancakeSwap aims to provide peace of mind for its users by being transparent about their actions and the security audits that have been done on the platform.
PancakeSwap is built on open-source software, meaning that the site and all of their Smart Contracts are visible publicly. In addition, their contracts are all verified on BscScan. When it comes to security audits, PancakeSwap has been thoroughly checked by a few different reputable companies such as Certik, Slowmist, and PeckShield. This transparency as well as the security audits contributes toward PancakeSwap being deemed more secure than other exchange platforms.
While the platform may be safe, there is always the risk that the coins on it may not be. Due to PancakeSwap being built on the Binance Smart Chain, there is the possibility that some coins may be fake. It’s best to stay vigilant and do your research before purchasing any coin you’re not familiar with. There may also be counterfeit versions of coins you already know. so you should try to always use the contract address of the coin you’re trying to swap.
Summary
Boasting extremely low transactions fees and a wide variety of products, PancakeSwap continues to draw users every day. As shown in this PancakeSwap review, its heavy reward system and focus on security allow many users to feel confident and comfortable when trading on the platform. If you’re wanting to expand your crypto experience, PancakeSwap is a fun and reliable way to learn more and earn more!
If you’re looking for a coin to buy, you should check out HI. It’s available on PancakeSwap right now!