Unlike known centralized exchanges like Binance and the likes, decentralized exchanges offer their traders the opportunity to carry out their activities without the need for a middleman. At this present time, most of these centralized crypto exchanges use Ethereum. However, with the market getting broader by the day, more decentralized exchanges are entering into the sector. One such is Pancakeswap, which started back in September 2020 on Binance Smart Chain. In this article, we will be looking at How to use Pancakeswap crypto.
What is PancakeSwap crypto?
Pancakeswap, just like a host of other decentralized exchanges in the DeFi sector, allows you to trade your tokens without the need for a middleman, as in the case of centralized exchanges. The project was developed on Binance Smart Chain, a platform that belongs to the popular crypto exchange, Binance.
Even though all the activities on Binance are purely centralized, the company has zero control over PancakeSwap. As a matter of fact, PancakeSwap is said to be developed by unknown developers. Even though Pancakeswap has established itself as a force to contend with in the DeFi sector, it faces stiff competition from big wigs such as Uniswap. Reason being that Uniswap boasts a very high volume when it comes to trades on the exchange.
How does PancakeSwap work?
Like most decentralized exchanges in the sector, Pancakeswap allows traders to use liquidity pools to swap different token pairs. While some users exchange their tokens for another one, others earn rewards through transactions by staking their tokens in the liquidity pools.
However, that is just one small part of the larger game as traders can use the Syrup Pools to increase their rewards. A typical example is staking the native token of PancakeSwap, Cake in a Syrup Pool, to accumulate massive rewards over months. Taking a thorough tour through the platform is advisable, as new users might struggle to understand the platform.
How to use PancakeSwap
Before using PancakeSwap, a trader needs to have a personal wallet since the platform does not list fiat as a supported currency. To enjoy a better experience, traders use wallets such as Trust Wallet, MathWallet, and a few other trusted wallets. One significant difference between using a DEX and a centralized exchange is that a user would not need to input their details to use the exchange.
A trader would need to purchase a token, preferably Binance Coin, and transfer it into his wallet to kickstart the process. After the first step, the Binance Coin converts to Binance Smart Chain and is ready for use on PancakeSwap. However, a small transaction fee passes to the user for the conversion of the tokens mentioned earlier. Finally, the trader can now swap tokens by using the Exchange function on the platform.
To earn rewards, traders must provide liquidity by buying liquidity pool (LP) tokens. To buy LP tokens, traders need to spend the exact amount of a pair of tokens, for example, CAKE-BNB. The liquidity can dissolve whenever the trader wants, and the rewards will be sent in the token that was spent on buying the LP tokens in the first place.
PancakeSwap is still very much young in the DeFi sector and cannot yet rival heavyweights such as Uniswap and SushiSwap when it comes to value. Still, it is already gaining massive attention in the market. If Ethereum doesn’t work on most of the issues ridding its network, it is only a matter of time before PancakeSwap woos in developers and users from Uniswap and SushiSwap in the sector.