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Last updated: Jan 26, 2023
PancakeSwap is a decentralized exchange and an automated money maker, which operates on the BNB Chain.
The project’s interface is pretty similar to other popular DEXes operating on other blockchains, such as UniSwap or SushiSwap, except PancakeSwap introduces some unique services in addition to basic swap or yield farming opportunities.
PancakeSwap was created by an anonymous team of developers in September 2020 and has operated from an undisclosed location ever since.
Since its launch, PancakeSwap has grown to become the most popular DEX and AMM on the BNB Chain. The project’s motto claims that users can earn, swap or win tokens on PancakeSwap.
As an exchange, PancakeSwap enables its users to swap most of BEP-20 tokens available on BNB Chain. All the trades on PancakeSwap are routed directly through connected wallets, so users don’t have to trust their assets to the exchange.
As an AMM, PancakeSwap replaces an order book with a liquidity pool. There are Yield Farms available for CAKE liquidity providers, who are willing to stake their LP Tokens to earn high APR fees.
Another way to earn with PancakeSwap is shown by so-called Syrup Pools, where staking CAKE or selected BEP-20 tokens brings high APR rewards in tokens of partnering projects. The pools change frequently and are the main subject of blog announcements.
PancakeSwap also operates an IFO platform for Initial Farm Offerings, where new DeFi projects built on the BNB Chain can grow their audience and sell their tokens with an incentive model for the DEX users.
PancakeSwap also runs Predictions and Lottery gamification services, letting users win or lose tokens while playing on-chain.
For NFT lovers PancakeSwap launched its Pancake Collectibles, issuing cute bunny-themed NFTs as rewards for different types of on-site activity starting from profile creation and following more complicated interactions like trading competitions.
To interact with the PancakeSwap app users need to connect a BNB Chain compatible wallet with it. Following that, to trade it's only needed to choose the desired token pair and confirm the transaction from the wallet. PancakeSwap’s farming opportunities require users to have LP tokens and deposit them to their appropriate farm where details such as interest rates are available. All trades are subject to fees PancakeSwap collects in the form of CAKE tokens. Traders pay 0.25% fee, of which 0.17% is added to the liquidity pool of the token pair that is being traded.
To participate in the PancakeSwap lottery, users need to buy a ticket (one ticket costs the equivalent of $5 in CAKE tokens) or a bulk of them. Each ticket comes with a random six-digit combination consisting of numbers between zero and nine. Users need to match the numbers with the winning numbers and the more the matches the bigger the prize share they earn. The PancakeSwap lottery uses Chainlink’s VFR to provide a secure random number generator.
The PancakeSwap NFT Marketplace currently only has PancakeSwap NFTs, and community members can apply to list their collection on it.
Users can participate in Initial Farm Offerings through the platform, to do so it is required to commit CAKE tokens to the IFO during the sale. Once the sale is over, the user gets the tokens, however, there is also an overflow method available for investors. That includes users allocation to an IFO pool being based on the amount of funds they put in as a percentage of all funds put in by other users at the time the sale ends. In this case, users also receive any leftover CAKE when they claim their tokens after the sale.
CAKE is a BEP20 token powering the PancakeSwap ecosystem. Its main but not final purpose is to generate incentives for liquidity providers on the platform.
CAKE tokens can be earned as rewards from Farms and Syrup Pools or simply bought on the exchange. CAKE holders are able to stake the coins in Syrup Pools to earn free tokens or use them in the platform’s Yield Farms to earn more CAKE. CAKE tokes can also be spent on lottery tickets as well as on minting NFTs.
The token is also used for governing purposes, letting its holders to vote on proposals related to the PancakeSwap ecosystem.
As long as CAKE token is mainly used as an incentive for liquidity providers, it does not have a maximum supply cap. The amount of tokens in circulation is controlled through built-in burning and regular burning events to counter inflation.
The PancakeSwap team is fully anonymous. All the developers involved in the project are called Chefs (hey there Sushi) and hidden behind cute bunny masks and funny nicknames. Apparently, the bunnies named Hops and Thumper are the Co-leads at PancakeSwap.
As of February 2021, there were 14 developers in charge of the project, but the number of employees has probably grown since the platform was actively hiring. According to its blog, PancakeSwap was originally brought to life by a small group of friends and has been later expanded by employing a few ex-Binance members.
Like any other DeFi platform, PancakeSwap presents some risks for its users and LP providers. The risk of impermanent loss is native to any AMM platform, which may occur in case of dramatic price change in pairs of tokens or a potential CAKE price drop.
According to the developers, PancakeSwap isn’t vulnerable to flash loan attacks. This point is explained by the fact that PancakeSwap’s CAKE token minting is predefined, and can’t be adjusted in a single transaction. CAKE ownership cannot be transferred outside of its smart contract.
There is also a generous bug bounty announced on PancakeSwap, promising up to $1,000,000 in reward for any critical vulnerability found on the platform.
In March 2021, PancakeSwap was DNS hijacked - an attack during which the attacker rerouted traffic towards a malicious server. The PancakeSwap smart contracts weren’t compromised during the attack as it was only limited to the front-end of the website. In such attacks, the risk is present only if users input sensitive data, such as seed phrases and passwords.
Undoubtedly, the main partner of PancakeSwap is Binance Smart Chain. Since its launch, PancakeSwap has become a crucial part of the BSC ecosystem, which in turn helped the platform grow into one of the biggest DEXes and AMMs in modern DeFi.
Since June 2021, it became easy to watch all the platform’s activity via a simple tool PancakeSwap.info. Built on a $150,000 bounty by StreamingFast, it is a data platform for Ethereum and other blockchains.
The PancakeSwap team has published the platform’s roadmap. The developers promise to remake the project’s website, improving the UX and adding a personal dashboard as well as the new navigation system. There is work being done on Lottery Upgrades, Zap - a feature allowing users to provide liquidity for “a second”, adding support for Prediction Upgrades, and finally updating the Fixed-Term Staking Benefits.
Aave will integrate Chainlink's Proof-of-Reserve, further increasing the platform’s security
Uniswap's governance proposal accepted