What Is PancakeSwap (CAKE) How It Works & Where To Buy It?

PancakeSwap is the 2nd largest decentralized exchange in the world. CAKE token is the governance token of the PancakeSwap decentralized exchange (DEX).

PancakeSwap provides users with access to a multitude of decentralized finance (DeFi) products such as liquidity pools, staking protocols, lotteries, and yield farming for users’ crypto assets.

The CAKE token is currently the 43rd largest cryptocurrency in the world by market cap.

How PancakeSwap (CAKE) Works

PancakeSwap is a decentralized exchange that runs atop the Binance Smart Chain (BSC). The DEX utilizes an automated market maker and an array of DeFi products that make it unique in comparison to traditional centralized exchanges.

Most crypto trading typically takes place on centralized exchanges such as Coinbase or Binance. However, exchanges like these normally require KYC (know your customer) verification before individuals are allowed to trade crypto. Strict requirements like these deter many users around the world, which is exactly why there is a need for decentralized exchanges which don’t have these strict requirements.

Essentially, PancakeSwap facilitates easy trading on the platform, participation in liquidity pools, staking, lotteries, and many other DeFi products – without the need to provide any identification.

The PancakeSwap protocol values user privacy at its core – upholding what most would call the “true ethos of crypto”.

Smart contracts are utilized to optimize the accessibility and functionality of liquidity pools on the platform. BNB is used to pay for transaction fees and various interactions on the platform.

Users can participate in any liquidity pool and earn liquidity provider tokens (LP tokens). Users who partake in liquidity provision give x amount of x token and the same amount of the other token for a liquidity pool. LP tokens promise to allow for even more yields, users can farm liquidity provider tokens to earn cake tokens or other tokens.

Simply put, the token pair could be CAKE/BNB and the LP tokens would be CAKE – BNB LP (each in the same ratio). LP earnings would be equal for both tokens. There are varying rewards based on which LP tokens are most in demand.

This allows users to earn a passive income because they earn from trading fees in liquidity pools. They can decide to deposit LP tokens and farm additional tokens on the Binance Smart Chain-powered platform.

Additionally, the platform allows users to stake multiple tokens. Most notably, users can stake CAKE (the native token) and earn rewards.

All interactions on PancakeSwap are anonymous and there is no order book, which is a standard for centralized exchanges.

What Is PancakeSwap (CAKE) Used For?

PancakeSwap is predominantly used for yield returns. Many individuals prefer DeFI products over traditional finance products like savings accounts or fixed deposits.

Another reason people choose DEXes is because CEXes are in control of users’ private keys. This is especially risky given the number of hacks that have taken place.

Individuals can connect a digital wallet such as MetaMask or Trust Wallet and initiate trading on the PancakeSwap platform.

Some of the most utilized DeFi products are the liquidity pools, PancakeSwap lottery, staking products, and the actual trading of digital assets through the Automated Market Maker (AMM).

The Pancakeswap platform has become the leading Binance Smart Chain DEX, and trading volumes on the platform frequently exceed $1 billion in 24 hours.

The CAKE token has performed particularly well since its inception and has amassed a market cap of $1,80 billion (the 43rd largest cryptocurrency in the world).

Where To Buy PancakeSwap (CAKE) Tokens

PancakeSwap (CAKE) is among the most frequently traded tokens on the market. It’s also the 2nd largest DEX token in the world by market capitalization.

CAKE tokens are available to purchase on most centralized crypto exchanges. Before you’re able to purchase CAKE, you’ll need to deposit fiat money onto an exchange, and sequentially CAKE tokens will be credited to your CAKE digital wallet (BEP-20) on the exchange.

The crypto exchanges below are the safest place where you can buy, sell and store CAKE tokens.

Five of the most popular crypto exchanges are:

1. Binance
2. Coinbase
3. KuCoin
4. HTX
5. Crypto.com

All of the above exchanges allow users to buy, sell, transfer and store CAKE tokens in a digital wallet on the specific exchange. You can use your debit or credit card to purchase CAKE tokens on centralized exchanges.

Alternatively, individuals wanting to make use of the PancakeSwap DEX must transfer their CAKE or BNB tokens (via the BSC network/BEP-20) from a centralized exchange to a digital wallet that is BEP-20 compatible such as MetaMask.

Once CAKE tokens, or any BEP-20 tokens, have been transferred to your wallet, you can easily connect your digital wallet to the PancakeSwap platform, and start earning yields from the various DeFi products available on the platform.

FAQs About PancakeSwap (CAKE)

How long has PancakeSwap (CAKE) existed?

PancakeSwap was launched in September 2020. The CAKE token was listed at around $0.40 and surged to more than $40 within 6 months.

The PancakeSwap network experienced its highest trading volume in March 2021, where daily trading volume frequently exceeded $500 million in a 24h period.

CAKE token holders also saw major token price appreciation during this period.

What’s controversial about PancakeSwap (CAKE)?

When researching various DEXes and their native governance tokens, it’s important to do an extensive amount of research into the project, its founders, and the tokenomics of the governance token. CAKE, like many other DEX tokens, has been caught up in controversies.

Let’s take a look at the top two controversies surrounding PancakeSwap (CAKE):

• Anonymous developers – The DEX was built on the Binance Smart Chain by an anonymous group of developers in September 2020. The team consists of at least a dozen members (known as chefs) and 2 co-leads named Hops and Thumper.Many people speculate that the DEX is owned by CZ (founder of Binance) but there is little evidence to support this. One of the main concerns with having anonymous developers is that should there be an issue, no one can be apprehended and held accountable by the community.

  Essentially, PancakeSwap users are entrusting unknown developers with their token trade, staking, and other features. This poses a significant risk if any assets are lost due to a hack or exploit.

• DNS hack – The world’s largest 2nd largest DEX suffered a DNS exploit in 2021. It fell victim to the same exploit as many other DEXes and the announcement of the exploit was met with outrage and fear from the community.Many individuals were fearful of using the DEX after the news broke, mainly because their tokens could be lost. The news caused the CAKE value to plummet and the platform’s daily users also dropped significantly.

How many CAKE tokens are there?

At the time of writing, CAKE has a circulating supply of 298,364,044.43 CAKE.

The total supply of CAKE is 746,123,736.

There is no max supply of CAKE and the token is deflationary.

Can CAKE be mined?

CAKE is not a mineable cryptocurrency in the traditional sense. CAKE is a tradable BEP-20 governance token and it is unmineable.

Users can earn CAKE tokens through liquidity mining, farming, and staking on the platform.

Some centralized exchanges also offer rewards for users who lock up/ stake their CAKE tokens on the exchange.

What is the market cap of PancakeSwap (CAKE)?

The market cap of PancakeSwap (CAKE) is: the total amount of coins in circulation x the current market price of CAKE.

PancakeSwap (CAKE) Market Cap = 298,364,044.43 CAKE x $5,97 = $1,78 billion (43rd largest market cap).

The recent growth of the PancakeSwap platform can be associated with the dramatic price appreciation of the CAKE token. The native DEX token continues to perform well and is traded at more than 10x its September 2020 listing price.

The market cap fluctuates according to circulating supply and market price.

Biggest Competitors Of PancakeSwap (CAKE)

DEXes, like centralized exchanges, rely mainly on trading fees to generate revenue. This is especially critical for DEXes which utilize trading fee profits to distribute profits to liquidity providers, farmers, and stakers. Most DEXes also use the revenue to build more utility, increase value proponents and improve the overall functionality and UX of the platform.

The DEX space is very competitive, and DEXes need to stay ahead by remaining innovative and ensuring simplicity.

Some notable competitors of PancakeSwap and CAKE are:

• SushiSwap (SUSHI)
• Serum (SRM)
• 1INCH Network (1INCH)
• 0x(ZRX)

What Are The Future Plans For PancakeSwap And CAKE Token?

PancakeSwap made a considerably good move by building on the Binance Smart Chain as network fees are cheaper than Ethereum and the transaction speeds are much faster.

Going forward, the PancakeSwap will likely incorporate more features and DeFi products that will increase user adoption and garner popularity for the platform.

Pros and Cons of PancakeSwap and CAKE Token

Pros:

• 2nd largest DEX in the world – PancakeSwap platform is the 2nd largest DEX in the world and the CAKE token is the 43rd largest cryptocurrency by market cap.
• User anonymity – No KYC is required to use the platform, Users can trade digital assets and participate in DeFi products such as staking, farming, and liquidity pools simply by having sufficient BNB (Binance coin) in a compatible wallet.
• Cheap gas fees – PancakeSwap’s trading fees are much cheaper than Ethereum-based DEX, Uniswap.

Cons:

• Competition – There are several popular DEXes that already have thousands of daily users. Uniswap is PancakeSwap’s biggest competitor.