Another food-themed DeFi protocol? You know it.
PancakeSwap is a Binance Smart Chain-based DEX launched by anonymous devs with a penchant for breakfast foods and rabbits.
It looks a bit like Ethereum’s SushiSwap (community governance, the ability to farm liquidity provider tokens), but also incorporates many other features that let you earn rewards.
The food-based farming craze has captivated participants in the crypto space for months. In the latest wave of DeFi protocols, we’ve seen numerous platforms emerge that allow users to stake their funds in return for the protocol’s tokens.
The bulk of this activity has been concentrated on the Ethereum blockchain. As one of the earliest blockchains supporting smart contracts, it has a sprawling community of users, developers, and tools for building powerful decentralized applications.
The PancakeSwap exchange
PancakeSwap uses an automated market maker (AMM) model. That means that while you can trade digital assets on the platform, there isn’t an order book where you’re matched with someone else. Instead, you trade against a liquidity pool.
Those pools are filled with other users’ funds. They deposit them into the pool, receiving liquidity provider (or LP) tokens in return. They can use those tokens to reclaim their share, plus a portion of the trading fees.
So, in short, you can trade BEP-20 tokens, or add liquidity and earn rewards. There are also other features we’ll cover later.
You’ll find these LP tokens in several flavors – if you added, say, BUSD and BNB to the pool, you’ll receive BUSD-BNB LP tokens in return. BETH and ETH? You’ll get BETH-ETH LP tokens.