Pancakeswap Staking: Is It A Good Investment?

by Apr 15, 2023Defi, DEX/CEX, Hot Stories0 comments

Pancakeswap is a decentralized exchange based on the Binance Smart Chain. An unnamed group of developers developed it. In keeping with the service’s premise, the Pancakeswap logo represents a pancake. In this Pancakeswap staking review and user guide, we’ll cover all there is to know about Pancakeswap Farming.

Pancakeswap is controlled by the community. It has additional distinctive characteristics that set it apart and enable you to receive advantages, such as the possibility for users to farm liquidity, tokens, and other assets.

The price of Pancakeswap changes based on a variety of factors. Let’s get started by going through all the things that make Pancakeswap so special.

What is Pancakeswap?

Pancakeswap

The Binance Smart Chain must follow the BEP-20 Binance token standard. It stands for Binance Smart Chain Evolution Proposal and is an acronym. To be transferrable on Pancakeswap, however, any other token standard must be included in the BEP-20 standard.

The primary selling point of Pancakeswap is that it is a completely decentralized exchange where trades and orders are carried out automatically through smart contracts. The platform was introduced in September 2020. Although we don’t know who the platform’s developers are, it has been routinely verified by blockchain security firms like Slowmist and Certik.

So, if you’re wondering if Pancakeswap is secure, you can stop worrying because it regularly undergoes security checks, allowing you to exchange CAKE and other assets with confidence.

Additionally, Pancakeswap makes use of an automated market maker model (AMM), therefore although you may trade digital assets on the platform, there isn’t an order book where you can find a direct match with another user. A liquidity pool is used for all transactions.

The Function of Pancakeswap

This is how Pancakeswap functions. Pancakeswap utilizes its utility token, CAKE, which is the Pancakeswap token. On the Pancakeswap platform, the CAKE token can be used in many various ways, including:

  • Yield Farming –  done through the Pancakeswap farm
  • Pancakeswap staking (CAKE staking)
  • The Pancakeswap Lottery
  • Using the Community Governance Portal to Vote on Governance Proposals

Although it is evident that the CAKE token has a lot of usefulness, let’s look at how Pancakeswap Finance functions as a whole.

On the platform, users trade by collecting liquidity from one or more of the mentioned liquidity pools and rebalancing when a transaction is finished. Adding liquidity on Pancakeswap involves users adding liquidity to pools, which participants may do by storing assets in a supported wallet such as the Binance Smart Wallet.

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Here, transactions take liquidity out of one side of the pool and provide liquidity to the other, altering the pool’s relative values.

Users that utilize smart contracts to lock their tokens populate these liquidity pools. As a consequence, the trader and the liquidity pool engage in transactions.

A commission is required for each exchange a trader makes, with a portion of that charge going to the liquidity providers. A further amount e is dedicated to the project budget, CAKE buyback, and burn proposals.

Pancakeswap

Pancakeswap Staking (CAKE Staking)

On Pancakeswap, users may stake their tokens easily and gain extra tokens. You stake CAKE specifically on the platform. Staking is seen to be a preferable choice for people who are new to the cryptocurrency market because it involves far less work than trading. To make money while staking, you don’t need to master complex trading tactics or keep an eye on different platforms. Simply lock your cryptocurrency into a staking pool for a set period, and the platform will take care of the rest. Your rewards are determined by the quantity and duration of your bets.

In other cryptocurrency exchanges, staking is common, and users who add liquidity receive a direct return based on the staked amount.

The operation of Pancakeswap staking:

  • Cake owners choose to stake their way to earn tokens;
  • Users give the network liquidity by Pancakeswap staking (CAKE) tokens;
  • As a result of providing liquidity, you received staking incentives in the form of extra tokens (CAKE).

To supply liquidity to a particular pool, LP tokens or FLIP tokens can be staked on a liquidity pool. In this case, the users receive LP tokens as well as a share of the platform’s trading commissions.

Swap fees are the main source of income for Pancakeswap, and they are distributed as follows:

0.17% is given to the LP suppliers.

0.05% is spent on buybacks and is lost.

To cover administrative costs and to maintain the platform, 0.03% is paid to the Treasury.

Sadly, none of this money goes to the people who stake the real CAKE token. So, from whence do these tokens originally come?

In a short, thin air. Every day, 1.152M are produced, with around 2/3 of them being destroyed. Therefore, every day there are around 364k NEW token emissions in total. That is an inflation rate of 18% based on the current circulating supply. Which, on its own, isn’t inherently a negative thing, but the token emissions aren’t correlated with the protocol’s effectiveness.

According to the statistics, platform liquidity has grown by around 30% year over year, but swap volume has remained constant, indicating a stagnating product with declining APYs.

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And the market is reacting as you might anticipate. Since August 2020, when all of these new tokens entered the market, the price has been declining, and I can’t think of any reason why it will improve significantly in the future. They must set a supply limit, make the token deflationary, or give it a new purpose to give it a more practical application inside the protocol.

It currently only has voting power and discounts on petrol prices if you’re a margin trader. However, this token now appears to be an investment where I will be leaving someone else holding the bag.

How to stake cake on Pancakeswap

To stake CAKE (and all LP tokens) on Pancakeswap, a Binance Chain Wallet must be installed on your mobile device.

It is essential to have a linked wallet that utilizes the Binance Smart Chain since Pancakeswap functions on this network. Additionally, we strongly advise installing Trust Wallet first because the network costs and trade fees are controlled by BNB.

The “Pancakeswap: No Provider Was Found” notification indicates that your wallet was unable to establish a connection with the DApp browser for any transaction.

Step 1: Connect Pancakeswap to Trust Wallet

First, link Pancakeswap and Trust Wallet.

link Pancakeswap and Trust Wallet

Keep in mind that every token offered on Pancakeswap is decentralized, thus you should also use a decentralized, non-custodial wallet.

Read this blog post to find out how to connect your Trust Wallet to Pancakeswap.

Also, you can link MetaMask Wallet.

If you use MetaMask for Pancakeswap staking, connect it to Pancakeswap instead if you do.

The Binance Smart Chain must first be enabled, though.

This is a necessary step to stake the CAKE token since having a Binance Chain wallet is essential as MetaMask operates on the Ethereum Network natively.

Step 2: Log on to the Pancakeswap Platform.

Open Pancakeswap after your wallet and the DApp browser is connected and ready to use.

Log on to the Pancakeswap Platform

The “Pool” option may be found on the app’s left menu.

The site where you stake CAKE tokens is called a liquidity pool.

The necessary liquidity is provided through a CAKE pool by having users stake CAKE on the platform.

Step 3: Visit the Cake Pool (Liquidity Pool)

 Visit the Cake Pool (Liquidity Pool)

Choose the “CAKE Pool” and press the “Approve Cake” button. You will be prompted by the platform to enter the number of CAKE tokens you wish to stake.

Click the “plus (+)” symbol to continue.

Step 4: Calculate How Much Cake You Want to Stake

Simply touch “Max” to wager all of your CAKE tokens. If not, just enter the number of CAKE tokens you wish to stake. The incentives will be better the more tokens there are.

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When you have completed the prerequisites for the pool, click “Confirm,” and you are ready to go.

Step 5: Place a Pancakeswap Staking Bet and Earn CAKE Tokens!

Place a Pancakeswap Staking Bet and Earn CAKE Tokens

Keep in mind that the majority of currencies in the DeFi and crypto market are often quite volatile.

As a result, the value of each payout you receive from staked tokens may differ greatly.

Pancakeswap Staking (CAKE) tokens are a great strategy to get a consistent income from Pancakeswap, but you should exercise caution.

FAQ

Pancakeswap FAQ
What is Pancakeswap staking?

Pancakeswap staking is the process of holding and locking up Pancakeswap’s native token, CAKE, in a smart contract to earn rewards in the form of more CAKE tokens.

How does staking CAKE on Pancakeswap work?

To stake CAKE on Pancakeswap, you need to first acquire CAKE tokens and then connect your wallet to Pancakeswap. Once you have CAKE in your wallet, you can go to the staking page on Pancakeswap and choose the amount of CAKE you want to stake. Your staked tokens will then be locked up for a set period of time, during which you will earn rewards for holding them.

What are the benefits of staking CAKE on Pancakeswap?

The main benefit of staking CAKE on Pancakeswap is that you can earn a passive income in the form of more CAKE tokens. Additionally, staking can help to stabilize the price of CAKE by reducing the number of tokens available for trading on the open market.

What are the risks of staking CAKE on Pancakeswap?

Like any investment, staking CAKE on Pancakeswap carries some risks. The value of CAKE tokens can be volatile, so there is a risk that your staked tokens could lose value over time. Additionally, there is a risk of smart contract bugs or other passive income that could result in the loss of your staked tokens.

Is Pancakeswap staking a good investment opportunity?

Whether or not Pancakeswap staking is a good investment opportunity depends on your individual investment goals, risk tolerance, and financial situation. It’s important to do your own research and consider the potential risks and rewards before investing in any cryptocurrency or staking program.

Conclusion

Pancakeswap is a decentralized exchange that is generally safe to use. It has undergone a CertiK audit. But even several audits carried out by respected organizations should not be taken to imply that the DApp is entirely secure and that there won’t be any problems.

A few other DApp, including Pancakeswap, are also excellent instances of it. For instance, the SYRUP exploit took place after the audit was completed. So, exercise caution while using any DApp, especially Pancakeswap, and avoid putting all of your eggs in one DApp just in case.

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