PancakeSwap (CAKE): an overview of the cryptocurrency and its possibilities

PancakeSwap - what is it?

PancakeSwap is a decentralized exchange that allows you to trade tokens and also offers opportunities to profit from liquidity and staking pools.

What makes PancakeSwap different from Uniswap and SushiSwap is that it is powered by Binance Smart Chain (BSC) instead of Ethereum. Because of this, it can charge significantly lower transaction costs compared to its Ethereum-based counterparts.

PancakeSwap's trading fees can be as low as 0.2% per trade, making it a cheaper alternative for casual traders looking to save on costs. It is also cheaper to deposit assets on PancakeSwap than on SushiSwap.

Executing trades on PancakeSwap is also much faster than Uniswap as BSC is currently more scalable due to higher bandwidth compared to the Ethereum network.

However, it is worth noting that these advantages of building on top of BSC are a trade-off as it sacrifices decentralization. This presents a disadvantage for users or developers who prefer fully decentralized applications.

Despite this, PancakeSwap has become a strong contender for the DEX, due in part to its other revenue-generating features such as the Pancake Lottery, Pancake Collectibles, or NFT, team battles and the initial offer of the farm (Farm Initial Offer - IFO).

When and by whom was PancakeSwap created and launched?

Nobody knows who is behind the development of PancakeSwap, because the developers decided to remain anonymous. However, this project begins its history in September 2020. Since then, the coin has become very popular and has achieved tremendous success. All that PancakeSwap was very different at the time of launch was that it was launched on the basis of Binance Smart Chain (BSC), which in turn offers users many times cheaper and faster transactions than on the Ethereum network.

The launch of PancakeSwap comes at a time of rapid growth and popularity of DeFi, during this time, Ethereum was also suffering from expensive and slow transactions. PancakeSwap offered a much lower swap fee of 0.2%, compared to the industry standard of 0.3%. Due to such a low fee, PancakeSwap was able to show a rapid increase in trading volume as well as TVL (Total Value Locked).

In February 2021, PancakeSwap became one of the largest DEXs (decentralized exchanges) in the industry in terms of trading volume, while equaling Uniswap, the very first DEX.

Features of PancakeSwap

1. One of the most talked about features of PancakeSwap is its Initial Farm Offerings, or IFO. It is a decentralized fundraising model, but it is fairly new in nature, which makes it attractive to bold investors. Pre-sales of proven projects appear on the platform and tokens, and users finance them with LP tokens (liquidity provider tokens). The Binance team reviews projects that appear on the IFO platform to limit risk as much as possible.
2. Income farms are also a very important element for investors who want to earn passive income, and they are also a staple on many decentralized exchanges (DEXs). Through PancakeSwap, you can earn CAKE tokens by pre-staking LP liquidity tokens. By working with profitable farms, the user receives CAKE tokens and rewards in LP for providing liquidity.
3. PancakeSwap lottery - this lottery is held 2 times a day, everyone who bought tickets can take part in it. By matching all 6 numbers on the ticket, you will earn 40% of the prize pool. Previously, the prize pool was over $1,100,000,000. Because of this, PancakeSwap started using the Chainlink Verifiable Random Function (VRF) to prove that the lottery winner was chosen fairly.

Pros and Cons of PancakeSwap

Advantages:

• Trades on Binance are conducted at lower fees than other DeFi platforms built on Ethereum.
• Users can earn income from providing liquidity, betting and playing the lottery.
• PancakeSwap is rigorously vetted by external blockchain security firms.
• A high daily transaction volume results in low slippage.
• Offers perpetual trading contracts with leverage.
• Web3 wallets and most hardware wallets supported

Disadvantages:

• Investors may suffer irreparable losses.
• Investing in high yield pools carries a higher risk than providing liquidity or staking.
• Binance is not compatible with popular hot wallets.
• Gambling (lotteries) can be risky.
• There is no official customer support.

What is a CAKE token?

Like Uniswap and SushiSwap, PancakeSwap uses an automated market maker (AMM) exchange model based on liquidity pools to facilitate trades.

When depositing funds into the liquidity pool, users or liquidity providers are compensated in a native token called CAKE.

The PancakeSwap governance system allows CAKE holders to propose and vote on modifications to the platform.

As with most decentralized exchanges, users must first receive a certain amount of CAKE in order to be eligible to vote.

CAKE has 170,110,000 tokens in circulation today. The market capitalization is $649,020,000 and the price of the token is $4.1.

How does PancakeSwap work?

Like Uniswap, PancakeSwap uses an automated market maker (AMM) model that uses an algorithm to set asset prices and allows for permissionless trading through liquidity pools.

The direct exchange of tokens is carried out through PancakeSwap liquidity pools, and this, in turn, makes it possible to trade without intermediaries and allows liquidity providers to receive a share of commissions for transactions.

Each liquidity pool is a smart contract that holds reserves of two tokens and allows anyone to deposit and withdraw tokens from them based on a set of rules.

The PancakeSwap platform uses the protocol Proof of Stake Authority (PoSA) as a verification mechanism, which is a hybrid between Proof of Stake (PoS) and Proof of Authority.

As such, it supports shorter block times and lower costs than a Proof of Work (PoW) consensus model like Ethereum. However, this comes at the cost of some degree of network security and decentralization.

Where to buy and how to store PancakeSwap?

Cryptocurrency PancakeSwap is traded on many exchanges and cryptocurrency exchanges. Among them, the most popular are the following:

• Binance;
• KuCoin;
• Bithumb;
• PancakeSwap;
• Huobi;
• Gate.io;
• Bybit;
• Poloniex;
• Bitget 
• and others.

You can store CAKE on the following crypto wallets:

• MetaMask;
• Binance Smart Wallet;
• Trust Wallet;
• MathWallet;
• and others.

PancakeSwap Price Forecast

PancakeSwap is a great option for users looking for cheaper alternatives to decentralized exchanges. It also provides users of the BNB network with an investment opportunity. With many different earning opportunities, it is very useful for its users.

As for the cryptocurrency rate in the near future, many experts expressed their opinion:

• Wallet Investor: expect long-term growth of CAKE; for 2026, they are waiting for the exchange rate of $65.06. With a 5-year profitable investment, PancakeSwap's rate of return will be approximately +564.48%.
• Digital Coin Price: the rate can grow 3 times in 6 years, by 2026, there will be a clear rally on the chart around $15.81.
• GOV Capital: Projected to be around $64.86 by the end of 1 year and $522.46 by the end of the next 5 years.
• Cryptocurrency Price Prediction: The future price could exceed $35.52 by the end of this year and $156.65 by the end of 2025.