What is Pancake Swap? DeFi enhanced

#blockchain #cryptocurrency #binance

Ever heard of PancakeSwap?
It's the hottest DEX on Binance, and it has more features than your usual exchange.

What is PancakeSwap?

PancakeSwap is a Binance Smart Chain-based DEX whose creators are anonymous.

It shares a few features with SushiSwap on Ethereum

Community governance
Farm liquidity provider (LP) tokens

However, it also has other rewarding features:

Lottery
Prediction Market

Swap tokens with a DEX

PancakeSwap at its core is a DEX for swapping BEP-20 tokens (think ERC20 on Ethereum)

It uses an 'Automated Maker Model' (AMM).
Instead of trading with someone else through an order book, you trade against a 'liquidity pool', which is a pool of funds.

Liquidity Pool Tokens

The 'liquidity pools' (LP) are filled with funds from other users. In exchange for storing funds in the pool, they receive LP tokens.

You can use LP tokens to:

Reclaim your share of funds from the pool
Get a % of trading fees as a reward

LP Tokens come in different varieties depending on the pool you add liquidity to.

Liquidity is added in pairs, so

adding BUSD + BNB to the pool => BUSD-BNB LP Tokens in return
BETH + ETH to pool => BETH-ETH LP Tokens

Farming and Staking

Now to move on to a fun feature of PancakeSwap, Farming and Staking.

You can deposit your LP tokens onto the farm to lock them up and get CAKE tokens in return.

You can now stake your CAKE into different 'SYRUP' pools and earn a variety of tokens

Lottery

PancakeSwap also has a lottery run every day.

First, you have to buy a ticket for 5 USD in CAKE tokens.

The ticket will contain 6 digits that have to match the winning numbers in the same order.

Rewards are distributed among 6 different prize pools.

Prediction Market

The last feature I'll cover is PancakeSwaps simple Prediction Market.

Here, you can place bets on the price of BNB.
Rounds are every 5 minutes. BNB's price is recorded at the start and you bet whether it will go up or down by the end of the round.