In the latest wave of DeFi protocols, we’ve seen numerous platforms emerge that allow users to stake their funds in return for the protocol’s tokens. The food-based farming craze has captivated participants in the crypto space for months. It looks a bit like Ethereum’s SushiSwap (community governance, the ability to farm liquidity provider tokens), but also incorporates many other features that let you earn rewards. PancakeSwap is a BNB Chain-based DEX launched by anonymous devs with a penchant for breakfast foods and rabbits.
With this setup, restaking CAKE can lead to yields as high as 83% instead of the regular 65% or so.Another food-themed DeFi protocol? You know it. There now are 1,647 coins and 9,152 trading pairs listed on the Pancake platform, much more than on competitors.įinally, PancakeSwap's smart contracts enable automatic restaking, that is, every CAKE a user earns can be put back into the staking pool, earning further "interest." It's similar to how bond investors can get compounded returns by reinvesting their coupon payments back into the underlying debt. The lower the trading volume for an asset, the greater the spread between the bid and ask prices, and the more one can earn in potential commissions by providing liquidity.
What's more, users can also pledge their CAKE to offer liquidity for crypto-to-crypto trading on the PancakeSwap DEX, turning themselves into market markers for potential triple-digit percentage yields. The adjusted return in this case would be much lower than the nominal rate. dollar deposits was 80%, but the inflation rate was 50%. Imagine, for the sake of argument, if the interest rate on U.S. So the rate of supply increase is quite high (though still above staking yields). In addition, the rate of CAKE emission, or coin creation, is about 100 million per year, compared to a total circulation of about 221.8 million tokens. However, don't expect yields always to be this high, especially when other blockchain developers affiliated with CAKE have gained enough traction and stop issuing marketing rewards. The issuance of new CAKE to incentivize adoption.Payments made by other blockchain developers to list or advertise their tokens on PancakeSwap.A user can connect their wallet and stake BEP-20 CAKE on PancakeSwap and earn more than 60% per year in rewards. That brings up the second layer of returns. The two are equivalent, except BEP-20 CAKE enables use of smart-contracts, self-executing agreements that are triggered when certain conditions are met use. Users can swap between BEP-2 and BEP-20 CAKE by using a digital wallet like TrustWallet. There are three ways to make money when it comes to investing in CAKE.įirst, coin holders can purchase BEP-2 CAKE tokens directly on exchanges and store them, profiting as prices rise.īut its main beauty comes from the use of its Binance Smart Chain CAKE tokens, or BEP-20. Like auditors who certify the financial statements of publicly traded companies, one can usually give more trust to audited DeFi projects than unaudited ones. What's more, the protocol is audited by leading smart-contract security firm, CertiK. Former Binance employees also happen to be the ones who started PancakeSwap. PancakeSwap is a token built on the Binance Chain BEP-2, which is run by Binance, owner of the world's largest cryptocurrency exchange, processing $27 billion worth of trades a day on average.
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