PancakeSwap Review 2024: Binance Smart Chain's One-Stop DeFi Solution

Decentralized Finance is one of the most innovative pieces of financial technology in the past decade. Today, we are going to explore one of the market leaders in the space that exists on the Binance Smart Chain- PancakeSwap.

PancakeSwap came onto the scene in September 2020 and has quickly expanded its set of features and services to rival those offered by most decentralized exchanges and some centralized exchanges. In the article, I’ll be giving you a good idea of all you need to know before you use the exchange.

PancakeSwap Summary

What is PancakeSwap

PancakeSwap is a decentralized exchange (DEX) on the BSC network that employs an automated market maker mechanism to facilitate token swaps. It was launched in September 2020 by a bunch of anonymous developers. It is also a permissionless DEX which allows anyone to list their tokens on the exchange as long as they create a liquidity pool for the token.

PancakeSwap offers a variety of features for its users such as token swaps, liquidity provision and farming, staking, perpetual trading, lottery, NFT marketplace, launchpad etc. It is one the few DEXs that offers users a more well-rounded Defi experience with access to a variety of financial products in one interface. This sort of user experience is usually native to centralized exchanges that work with huge operational teams and funding. DEXs tend to focus on one or two financial products and stick to them.

Currently, PancakeSwap is the largest DEX and DeFi application (by TVL) on the BSC network with an estimated $2.95 billion in assets held on the platform, according to DeFi tracker platform Defi Llama. PancakeSwap also has its own governance token called ‘CAKE’ that allows holders to vote on proposals. CAKE is also issued as a reward to liquidity providers and stakers.

PancakeSwap Exchange Key Features

PancakeSwap has managed to hold on to the title of ‘biggest DEX on the BSC chain’ this long for one reason- its ability to offer a wide range of financial products and services in one interface. Well, most of this is possible because of the diligent work done by its team of developers behind the scenes. In just under two years, PancakeSwap has managed to extend its range of services from simple token swaps to an on-chain derivatives market. A list of its current set of services are:

• Spot Trading
• Yield Farming
• Syrup Pools (Staking)
• Prediction Market
• Lottery
• Perpetual Futures Trading
• IFO- Initial Farm Offering
• NFTs

PancakeSwap Spot Trading

Spot Trading on PancakeSwap is executed via the swapping of assets in a liquidity pool through an automated market maker (AMM). Usually, AMM swaps are executed live with the price being determined by the ratio of assets in the pool, users do not have definitive control over the price at which they purchase or sell assets.

PancakeSwap solves this for users by allowing them the option to pre-set orders via the limit order function on its interface. Unlike centralised exchanges, this does not entail the matching of one order against another. Instead, the AMM deploys a swap on its liquidity pool once the pre-set price target is hit. However, keep in mind that PancakeSwap does not support limit orders for tokens that have a fee/tax on the ‘transfer’ of tokens. Open limit orders will remain open indefinitely until they get executed or cancelled by users. A customizable expiration date feature is planned for the near future.

Moreover, since PancakeSwap is built on the BSC network, transaction speeds are faster and much cheaper than they are on Ethereum. While executing swaps on PancakeSwap ensure that you’re using the V2 swap, as the older version (V1) is more prone to slippage which results in loss of capital.

PancakeSwap Yield Farming

Users can farm rewards in the form of CAKE tokens by providing liquidity to the Liquidity Pools on PancakeSwap. PancakeSwap has several yield farms, all of which require you to stake two tokens to get the LP tokens that correspond to the exact farm. Each farm on PancakeSwap has its own yield rate and multiplier, so be sure to check out which farm you want to earn from before providing liquidity. For example, the CAKE-BNB farm has a 40x multiplier, which means that, for every block produced, it receives 40 CAKE.

PancakeSwap Syrup Pools (Staking)

Syrup Pools allow users to stake CAKE and earn rewards in the form of CAKE or other tokens. The CAKE Syrup Pool in particular allows users to choose between flexible and locked staking. The locked staking option provides a high APY but requires users to lock their tokens for a set duration of time. The flexible staking option offers users a lower APY but allows them to withdraw the tokens at any point in time.

PancakeSwap Prediction Market

PancakeSwap’s prediction market allows users to earn tokens by accurately predicting the price movement of either BNB-USD or CAKE-USD pairs. Users can either bet on the price of BNB or CAKE going up or down within a five-minute time frame.

Based on the closing price at the end of the round, results will be calculated and rewards will be distributed.

PancakeSwap Lottery

The PancakeSwap Lottery allows users to buy lottery tickets which each have a 6-digit combination on them. Each lottery period lasts between 12-36 hours, at the end of which a random six-digit combination is generated.

To win, users must possess tickets that match the winning combination from left to right. The closer your number is to the winning combination, the greater your rewards will be.

For example,

If the winning combination is 8-9-6-5-9-4, and your ticket is 8-9-6-2-3-4. You’ve successfully drawn a ticket which is eligible for the ‘match-three’ prize bracket. The more users with winning tickets in the bracket, the lesser your rewards will be.

If the winning combination is 8-9-6-5-9-4, and your ticket is 0-9-6-5-9-4. You’ve lost the lottery even though the last 5 digits match, this is because winning combinations are counted from left to right.

Under Lottery V2, each ticket costs $5 paid in CAKE.

PancakeSwap’s Perpetual Futures Trading

PancakeSwap has partnered with ApolloX Finance to allow users to trade perpetual futures contracts on its interface. The trading infrastructure is built with off-chain order-book matching and on-chain settlement, which enables crucial trading features like different order types (such as limit orders, stop limits, and post-only orders) while maintaining the privacy and security of a DEX — i.e., does not require KYC and does not involve intermediaries when interacting with smart contracts.

PancakeSwap Initial Farm Offering (IFO)

IFO, or initial farm offering, is a new ICO concept pioneered by PancakeSwap. To participate in an IFO, users must have a PancakeSwap ‘profile’ created. After which, users can commit CAKE tokens to the IFO pool in order to purchase the token. The amount of CAKE a user can commit is determined by the number of iCAKE that a user has acquired. iCAKE is not a token but rather a numerical metric used to calculate the number of CAKE staked in the fixed-term CAKE staking pool and the total staking duration of your current fixed-term staking position.

PancakeSwap’s NFTs and NFT Marketplace

PancakeSwap is staying ahead of the game by launching its own NFT collections and offering users the ability to create personalised profiles on the exchange by linking them to an NFT. PancakeSwap also has its own NFT marketplace that allows for the trading of white-listed NFT collections.

For a more detailed “how-to” on all the different features of PancakeSwap, refer to our dedicated profile.

PancakeSwap Fees

Liquidity Pool Token Swapping

PancakeSwap’s spot market trading happens via the swapping of assets in liquidity pools. Trading via liquidity pools does not entail the ‘matching’ of orders like in ‘order-book’ exchanges, therefore there are no maker or taker fees. The only trading fee charged is a protocol liquidity pool fee that is paid to the liquidity providers either in part or in full. PancakeSwap charges a 0.25% trading fee, which is broken down as follows:

0.17% - Returned to Liquidity Pools in the form of a fee reward for liquidity providers.

0.03% - Sent to the PancakeSwap Treasury.

0.05% - Sent towards CAKE buyback and burn.

Also, keep in mind that apart from the above-mentioned fees, certain tokens might charge a ‘tax’ for transfers or sales of the token. This ‘tax’ could bump up the effective fee paid by the user.

Perpetual Futures Market

The perpetual futures market of PancakeSwap utilizes an off-chain order book and on-chain settlement mechanism. This means that users are subject to ‘maker’ and ‘taker’ fees. The trading fees are 0.02% of the notional value for makers and 0.07% for the taker. CAKE will be the default payment option for trading fees, followed by APX (ApolloX’s token) and USDT. Any users who are paying the trading fees in CAKE will enjoy a 5% discount on trading fees. This translates to a trading fee of 0.019% for makers & 0.0665% for takers who are paying the fees using the CAKE token.

PancakeSwap KYC and Account Verification

PancakeSwap is a decentralized and non-custodial exchange, this means that there is no legal entity holding and taking control over your funds for you. All funds and trades are executed on-chain via smart contracts and the software is open source. This means there is no KYC or account verification process on PancakeSwap. The only requirement for using the DEX is a self-custody browser wallet or hardware wallet and some BNB or CAKE to pay for network fees.

PancakeSwap Security

PancakeSwap is open-source and has gone through multiple security audits by Certik, Peckshield and SlowMist. There is a total of 9 security audits listed on the official documentation.

PancakeSwap also employs the best security practices by using multi-sig for all contracts and enabling a time-lock feature for them. Moreover, most of PancakeSwap’s code is publicly visible and all their contracts are verified on BscScan for maximum transparency.

Cryptocurrencies Available on PancakeSwap

PancakeSwap enables the trading of any BEP-20 token via token swaps as long as there is a liquidity pool created for it.

PancakeSwap’s perpetual futures exchange is made possible by partnering up with ApolloX. Therefore, all trading pairs currently available on PancakeSwap are those listed and approved by ApolloX on their own interface.

PancakeSwap Exchange Platform Design and Usability

PancakeSwap has a simple and pleasant user interface that provides users access to a wide range of financial products and features. While the exchange is originally a fork of SushiSwap, it has since expanded its services and features far beyond what SushiSwap currently provides for users.

From a design perspective, the platform offers users a wide range of language options that they can choose from. Some of the languages supported are English, Dutch, Spanish, French, Arabic, Russian, etc. PancakeSwap also allows users to configure their preferred trade setting via the settings icon present next to the language selection icon. It also offers a dark mode setting that reduces the intensity of white light produced by the screen. This is a personal favourite, I can’t count the number of times I’ve been greeted with a gush of light while trying to trade tokens late at night in my crypto dungeon.

From a usability perspective, I absolutely love that PancakeSwap allows users to create a personalised profile of themselves on the exchange. Of course, I must mention that this feature costs the user a fee of 1.5 CAKE tokens, but you do get a profile and an NFT out of it. As of now, having a profile allows you to track past transactions and view all PancakeSwap NFTs owned by you on your profile.

PancakeSwap also has extensive documentation and a vibrant community that provides answers to any queries you might have or come across.

Deposits and Withdrawals at PancakeSwap

PancakeSwap only enables deposits and withdrawals for users who wish to access its perpetual futures trading product. By depositing funds, you are allowing the protocol to hold your funds as collateral for any margin trades that you do. This collateral might get liquidated in the event that you fail to repay or close positions before certain key price levels.

Currently, only USDT, BUSD, APX or CAKE are accepted as deposits. To withdraw deposited funds, close relevant positions if needed and click on the withdraw button under the assets tab.

PancakeSwap Token (CAKE)

PancakeSwap has a native governance token called CAKE.

Utility

CAKE acts as both the governance token as well as the rewards and utility token of the PancakeSwap exchange. CAKE holders can vote on governance decisions, claim discounts on trading fees in perpetual futures, gain access to IFOs, purchase lottery tickets, etc.

Token Supply and Emissions

The current total supply of CAKE is 307,093,614, with a max supply of 750,000,000. The current market cap of CAKE is $410 million with an emission rate of 13.75 CAKE/block.

Price History

According to CoinMarketCap, CAKE seems to be currently trading at $2.89, close to its all-time low of $2.51 during the current cycle, with a market cap of $410 million. The token reached an all-time high of $44.18 in April of last year. The current price of CAKE is due to the current bear market conditions and its steady token emissions as rewards for providing liquidity. Much of the future price action for CAKE depends on the growing adaptation of the BSC chain and the Defi ecosystem built on top of it.

Where to buy CAKE

CAKE can currently be bought on both centralized and decentralized exchanges. The available markets are listed below

Centralized Exchanges- Binance, KuCoin, Huobi Global

Decentralized Exchanges- PancakeSwap

Can you stake CAKE

CAKE can be staked on the PancakeSwap exchange via the Syrup Pool feature. Syrup Pools allow you to stake CAKE and earn CAKE or other tokens in exchange. Syrup Pools offer users flexible and locked staking. The locked staking option provides a high APY but requires users to lock their tokens for a set duration of time. The flexible staking option offers users a lower APY but allows them to withdraw the tokens at any point in time.

PancakeSwap Customer Support

PancakeSwap does not officially offer customer support that you can get in touch with. On the PancakeSwap website, users can find the troubleshooting page that lists common issues like "price impact is too large" and "PancakeSwap router has expired," along with fixes and an explanation of why they happened.

While there is no official customer support, users can find help from the community via the various chat spaces on Telegram and Discord. Personally, I found that PancakeSwap’s telegram had a more engaging presence with quicker replies than its Discord Channel. However, be warned that you will be spammed with ‘support lines’ and ‘customer support’ scamsters claiming to be helpful with your issue. DO NOT ENGAGE with these chats. The best thing to do is to switch your privacy settings to more favourable options that will block these calls from coming through.

Users of PancakeSwap’s perpetual futures market are provided with a ‘support ticket system’ via ApolloX. This will allow users of the product to always receive timely assistance.

PancakeSwap Top Benefits Reviewed

PancakeSwap is an excellent exchange on the BSC network due to the following reasons-

• Wide range of services- PancakeSwap is the closest DEX that compares with the range of services provided by most centralised exchanges.
• Built on the BSC Network- PancakeSwap provides a faster and cheaper Defi experience than its Ethereum counterparts.
• Liquidity- PancakeSwap provides the best liquidity on the Binance Smart Chain with a total TVL of $2.95 billion.

What can be Improved

Honestly, there isn’t much to complain about when it comes to PancakeSwap. The exchange has a sufficiently well-rounded suite of services that cater to the needs of most defi users. The only pain point on the exchange at this point of time would be the impermanent loss faced by liquidity providers. There are other DEXs on the Ethereum network such as Bancor that have focused on solving this pain point for Defi users. Another feature that PancakeSwap could consider implementing would be expanding onto other chains besides the BSC network.

Closing Thoughts

Having seen what we have thus far, I’m convinced that PancakeSwap is one of the best DEXs across chains. Of course, there are some concerns about the relatively centralized nature of the BSC chain but I believe the future is multi-chain. Most exchanges have already started expanding their presence onto multiple chains. I wouldn’t be surprised to learn if PancakeSwap has similar plans too in the future.

Top Features

1. Low Transaction Costs- 8/10
2. Range of Features- 9/10
3. DEX Fees- 7.5/10

Pros and Cons