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PancakeSwap Review 2023: Features, Fees & Security
Luis Clark
- URL: https://Pancakeswap.finance
- Headquarter: Fukuoka, Japan
- Year Founded: 2020
- Platform App: Web
- No. of Cryptos: All BEP-20 tokens
- Fiats Available: N/A
- Withdraw Method: Crypto wallet
- Payment Method: Blocto, MetaMask, Coinbase Wallet, WalletConnect, Ledger, Trust Wallet
- KYC Verification: No
- Native Token: Yes (CAKE tokens)
PancakeSwap Review: Our Opinion
The PancakeSwap exchange offers a large selection of products including yield farming, games, NFTs, and staking. It also charges lower trading fees than its automated market maker competitors on the Ethereum blockchain. That said, PancakeSwap exchange is best for advanced traders, crypto beginners used to centralized exchanges may find the platform complex to use.
Intro/Company Overview About the PancakeSwap Exchange
Launched in 2020, PancakeSwap is an open-source automated market maker (AMM) decentralized exchange built on the Binance Smart Chain, that enables users to trade BEP-20 tokens while offering opportunities to profit from staking and liquidity pools.
Its automated market maker (AMM) model runs on user-fueled liquidity pools between crypto token pairs to facilitate trades.
The exchange was founded by a group of anonymous developers numbering about 12 including 2 co-leads identified as Thumper and Hops.
It is governed by CAKE holders. The CAKE token is the native token of the PancakeSwap ecosystem.
Holding the CAKE token allows users to participate in the governance of the platform. CAKE holders can use the PancakeSwap voting platform to vote on governance proposals.
That said, the primary difference between PancakeSwap and other decentralized exchanges like SushiSwap and Uniswap is that it operates on the Binance Smart Chain (BSC), not Ethereum. Due to this, the decentralized exchange can charge low PancakeSwap fees in comparison to its Ethereum competitors.
Beyond the functionalities of regular centralized exchanges (NFTs, yield farming, swapping, trading, staking), PancakeSwap offers users a couple of other unique features including Syrup Pools, NFT Collectibles, Initial Farm offerings, Prediction Markets, PancakeSwap Lottery, and Yield Farms.
Pros
- It has a native token (CAKE tokens)
- Low PancakeSwap fees
- It has a native utility token
- It offers a large selection of crypto products like farming, staking, gaming, and NFTs
- No KYC verification required
- It supports multiple payment methods
Cons
- Not suitable for beginners
- Limited withdrawal methods
- No fiat currency is available
Key Features of PancakeSwap
PancakeSwap Syrup Pool
Investing in a syrup pool on PancakeSwap is one of the easiest ways to earn free tokens on the exchange. All that is required is for the user to stake CAKE tokens and earn free tokens in return. Some PancakeSwap pools allow users to stake other tokens besides CAKE.
There are many syrup pools on PancakeSwap, this includes Auto CAKE, Manual CAKE, IFO CAKE, and other Syrup Pools.
While both the Auto CAKE and Manual CAKE syrup pools allow you to stake your CAKE tokens and earn more tokens, these 2 syrup pools are different.
With the Manual CAKE pools, you will need to manually harvest and reinvest your tokens by yourself. Syrup tokens will be deposited into your wallet once you stake your CAKE tokens and you are advised to keep the tokens in your wallet because they represent the number of tokens you staked. Simply put, syrup tokens are your proof of ownership over your manual staked CAKE, you will not be able to claim your tokens without them.
The interest for the staked token is displayed as APR but it does not include compounding.
The Auto CAKE pool on the other hand does not deposit SYRUP to your wallet upon staking. Your tokens will also be automatically reinvested for you. You will be charged a transaction fee whenever the pool automatically reinvests your tokens. The transaction fee is deducted from your earnings. If you unstake within 3 days of staking, you will be charged an unstaking fee.
Unlike the manual CAKE pool, the interest is displayed as APY. This includes compounding.
PancakeSwap syrup pools offer both locked and flexible staking. Flexible staking allows you to withdraw your tokens at any time. The downside of this is that the APY is lower than that of locked staking.
If you choose the locked staking option, your tokens will be locked for a fixed duration. The APY for this is higher than that of flexible staking.
Users can choose a lock duration between 1 to 52 weeks. Also, rewards can only be harvested at the end of the locked duration and the staked CAKE be removed from fixed-term staking via contract until the end of the lock duration when the CAKE is unlocked.
If you wish to extend the lock duration, you can do so by adding more time to your initial lock duration. Note that the new extended lock duration is a total of the initial lock duration and the added duration.
Because fixed-term staking and flexible staking are a part of the same pool, certain factors can affect the APR/APY of both. The following factors can affect the APY/APR:
The average lock duration of all tokens locked in fixed-term staking. The longer the average lock duration, the lower the APY/APR
The total number of CAKE staked in flexible and fixed term staking. The more staked tokens, the lower the APY/APR.
Total CAKE locked in fixed-term staking. If more tokens are locked it means more yield boosts. This can result in fewer cake rewards, especially for users under flexible staking.
It is also important to note that the fixed-term staking CAKE pool APR can change after you lock your tokens. This is because the APR is variable and dependent on the following factors:
The average lock duration of all CAKE locked in fixed-term staking
The total CAKE (both flexible and fixed term) staked in the CAKE pool
The yield boost is calculated from a user’s initial lock duration. The longer the token is locked, the higher the yield boost.
You can vote if your CAKE token is locked in the fixed-term staking pool but you cannot participate in IFOs. The tokens in the fixed staking pool only grant you access to IFO public sales, to participate in an IFO, you will need a separate amount of CAKE.
PancakeSwap allows users to use both flexible staking and fixed-term staking at the same time. When you opt for fixed-term staking, a flexible CAKE staking side pool will appear automatically for you to choose from. Asides from gas fees, PancakeSwap does not charge any additional fees for moving CAKE from flexible staking to fixed-term staking.
Once your tokens are unlocked at the end of the lock duration, you have 7 days to either begin new fixed-term staking or convert your staked token to flexible staking. If after 7 days you do not any, your tokens will enter After Burning.
This means that your CAKE rewards will be sent to burn. The After Burning lasts for 90 days during which the percentage of CAKE rewards being burned will linearly increase until it reached 100% which means that all the CAKE rewards are burnt and permanently taken out of circulation.
PancakeSwap Yield Farming
PancakeSwap users who commit CAKE tokens to the liquidity pools can earn free CAKE rewards via yield farming.
Unlike the syrup pools, users who wish to provide liquidity to the liquidity pools are required to stake 2 tokens to get LP tokens. Once the two tokens have been pooled together the LP tokens can be staked in the PancakeSwap Yield Farm to earn rewards. This allows the liquidity provider to maintain their position on their other tokens.
Yield Farming offers more rewards to users than PancakeSwap Syrup pools but liquidity providers have to deal with the associated risk of impermanent loss.
As already stated, you will need LP tokens to enter into a Yield Farm, but farms only accept their own exact LP token. To get the exact LP token of a farm, you will first need to provide liquidity for the exact trading pair.
Below is a step-by-step guide on how to start Yield Farming on PancakeSwap:
First, you need to find a Farm that’s right for you by going through the list of available farms.
Next, click on the row of the farm you chose to view more details. On the left-hand side of the new page, you will see some links. Click on the “Get (your pair) LP link”. Once you do this you will be able to add liquidity and get your LP tokens.
The next thing you need to do is to put your LP tokens into the farm. But you will need to go back to the Farms page and locate your Farm.
Once you have located your Farm, click anywhere on the row showing your Farm to expand and view more details.
Next, click the “Enable” button and confirm the action in your crypto wallet.
After a while, the “Enable” button will change to “Stake LP”.
Click on the “Stake LP” tab to view a new window.
If you wish to stake all your “LP” tokens, click “Max”. Alternatively, you could input the number of tokens you would like to farm in the field.
Click the “Confirm” button and confirm the action in your wallet.
After a short while, the window will close and you will be able to view your new staked LP balance.
Note that if you are performing cross-chain farming on a different EVM blockchain from the BNB chain, it may take about 30 minutes for the transaction to be confirmed. You will also need a small amount of the native token of the blockchain for the first-time setup.
Cryptocurrencies Available on PancakeSwap
PancakeSwap supports the trading of all Binance Smart Chain tokens (BEP-20 tokens). Supported cryptocurrencies include Binance Coin, CAKE, Cardano, Alchemy token, Baby CAKE, Basic Attention Token, ANKR, Biswap, Compound Finance, Binance USD, Tether, Dogecoin, Dodo, Polkadot, etc.
PancakeSwap Review: Can You Buy and Sell NFTs on PancakeSwap?
Yes, you can buy and sell NFTs on PancakeSwap via its NFT marketplace here: https://pancakeswap.finance/nfts.
Just like the decentralized exchange, the PancakeSwap NFT marketplace runs on the BNB Smart Chain and features collections like Pancake Squad, Pancake Bunnies, Gamester Apes, and Pixel Sweeper.
That said, you won’t find the popular Ethereum NFTs like Mutant Ape Yacht Club or Bored Ape Yacht Club on the marketplace.
PancakeSwap Review: Trading Fees
PancakeSwap, unlike centralized crypto exchanges, does not use a maker or taker model but a flat fee for token swaps.
For every token swap, you’ll have to pay 0.25% in trading fees.
PancakeSwap trading fees are broken down as follows:
0.17% is sent to liquidity pools as a reward in trading fees for liquidity providers.
0.225% is put in the PancakeSwap Treasury and 0.0575% is sent towards the buyback and burn of CAKE tokens.
So almost all of the received trading fees are returned to liquidity providers while a small portion is sent towards the PancakeSwap Treasury and what’s remaining is used for a weekly buyback and burn of CAKE tokens, which is a deflationary mechanism.
PancakeSwap Review: Payment Methods
PancakeSwap isn’t a regular cryptocurrency exchange so you won’t find the regular fiat currency payment methods here as the exchange does not support traditional fiat currencies. Rather, PancakeSwap offers various non-custodial Web3 crypto wallets as its payment methods. These include Wallet Connect, Trust Wallet, Coinbase Wallet, MetaMask, Ledger, and Blocto.
Security
The PancakeSwap exchange is a noncustodial decentralized exchange. This means that it doesn’t store users’ crypto assets directly in hot wallets like centralized exchanges. PancakeSwap users are solely responsible for the security of their crypto assets.
In terms of security, PancakeSwap uses multi-sig for all contracts and all contracts are time-locked to ensure security.
PancakeSwap is a transparent and reliable exchange built on open-source software. This means that all the exchange’s smart contracts are visible to the public.
PancakeSwap Review: Staking Rewards
PancakeSwap offers staking rewards via its CAKE syrup pool, which offers 6 liquidity pools with up to 43.26% APR on locked assets.
The program allows you to stake CAKE and earn SD, USDC, Squad, PStake, and CSIX.
You can also stake LP tokens via its initial farm rewards that offer up to 78.62% APR.
Supported Countries
PancakeSwap is a decentralized exchange and can be accessed by users from around the world. Users from various countries including the United States of America, the United Kingdom, the United Arab Emirates, Sweden, Australia, Nigeria, South Africa, Qatar, Germany, etc. can use the platform.
However, in March 2022, several reports that despite not being a centralized exchange, PancakeSwap geo-blocked users from some countries.
The reports stated that users in Cuba, Iran, Sudan, Belarus, Zimbabwe, Iraq, Crimea, the Democratic Republic of Congo, and Syria were blocked from accessing the platform. While the exchange did not release any statement on the reports, users in the affected countries received a pop-up notification with the geo-ban notification.
PancakeSwap Review: Opening a PancakeSwap Account
PancakeSwap isn’t a traditional exchange, so you don’t have to create an account and go through KYC verification to use the platform.
To get started, you first need to connect a wallet that supports the Binance Smart Chain (BSC).
Supported wallets include Wallet Connect, Trust Wallet, Coinbase Wallet, MetaMask, Ledger, and Blocto.
After creating a wallet with any of the above-listed non-custodial options, go to https://Pancakeswap.finance and click on the Connect Wallet button.
Follow the on-screen prompt to connect your preferred wallet and load funds for the swap.
Once that’s done, you’ll be able to perform a token swap on the platform.
There’s no need to sign up for an account or undergo a KYC process.
It’s important to note that these non-custodial wallets work on mobile (Android and iOS) and desktop devices.
PancakeSwap Review: Trading Experience
Trading CAKE tokens and any other BSC token on PancakeSwap is straightforward when compared to a lot of other decentralized and even centralized exchanges.
You won’t find any technical jargon or charts as you would on centralized platforms.
That said, before you can commence trading on PancakeSwap, you would need to connect your Binance Smart Chain compatible wallet as mentioned above. You also need to hold BEP-20 tokens in your wallet to trade onc the exchange.
Now to further understand trading on the platform, let’s see a walkthrough on how to execute a trade:
First, head over to the PancakeSwap exchange.
Next, connect your wallet by clicking the Connect Wallet button at the right corner of your screen.
Select the token you intend to trade/ swap from the drop-down menu under the From section. You should see the default setting which is Binance Coin. Regardless of the token you pick, you will need to hold enough BNB to cover the trading fees. You will be able to see your balance above the token drop-down menu.
Next, select the token you want to trade for using the ” To” section. Then input an amount for your “To” coin by tapping inside the input box.
After this, PancakeSwap will automatically estimate your “From” currency amount. It also gives you the option of typing your “From” amount to have the “To” amount estimate automatically if you choose.
Lastly, go over the details of your trade and click the Swap button.
You’ll see a window with additional details, go over them to ensure your input is correct.
Once that’s done, click the Confirm Swap button. Your wallet will request you to confirm the action. That’s it!
Customer Service
PancakeSwap does not offer customer support. Users who are experiencing any issues are advised to first check the troubleshooting page for their error code. Alternatively, users can check their local Telegram channel for answers to their problems.
However, it needs to be highlighted that users need to be extremely careful when interacting with PancakeSwap Telegram support as there are many imposters trying to scam users.
Customer Satisfaction
The lack of support channels is a major downside of the PancakeSwap experience especially since the exchange is not beginner-friendly.
Does PancakeSwap Offcer Education?
No, PancakeSwap does not offer decentralized finance education. However, it offers resources on how to use the platform.
Is PancakeSwap Right for You?
PancakeSwap is right for you if you’re searching for a decentralized crypto exchange built for tokens on the Binance Smart Chain.
Final Thoughts
PancakeSwap is among the top decentralized exchanges in the crypto space. It is best for intermediate traders who want to invest in BEP-20 tokens via NFTs, staking, and token swaps.
There are no Pancakeswap withdrawal fees and trading fees are also very low compared to other DeFi platforms.
To get a clearer understanding of the world of Crypto Decentralized Exchanges and to explore other options, we recommend taking a look at our detailed review of OpenOcean.
FAQ
Most frequent questions and answers
Binance is the largest cryptocurrency exchange in the world by trade volume while PancakeSwap is the most popular decentralized crypto exchange on the Binance Smart Chain Network.
The better option is dependent on what you’re looking for in a crypto exchange. For example, if you’re looking for an exchange that offers complex trading features such as margin trading, futures trading, graphs, and charts and where you can invest and trade with fiat currencies then Binance is the better option.
However, if you want to have complete control over your crypto assets alongside features like staking, NFTs, and token swaps then PancakeSwap might be the better option.
A lot of decentralized exchanges offer services that some users may consider superior to those offered by PancakeSwap. For example, Uniswap allows users to purchase crypto tokens on its platform using their credit or debit card. This offers a soft landing for beginners who are new to the crypto space and want to experience the control that comes with the decentralized space with a few familiar procedures.
That said, according to most users PancakeSwap is one of the most popular decentralized crypto exchanges on the BSC chain.
PancakeSwap on the other hand is a better option for users who are interested in trading only BEP-20 tokens and want complete ownership over their digital tokens.
PancakeSwap crypto exchange is a decentralized platform while Crypto.com is a centralized exchange. This makes them very hard to compare as they cater to 2 different types of users. Crypto.com is better for crypto enthusiasts who want access to a large variety of crypto assets and don’t mind giving custodial control of these digital currencies to their exchange.
It is also the best fit for users who want advanced trading features like margin trading and futures trading.
A liquidity pool is a crowdsourced pool of digital currencies kept in a smart contract to facilitate trades between tokens on an exchange. Simply put, a liquidity pool makes it possible for users to buy and sell cryptocurrencies on a decentralized platform.
We always try to provide the most accurate information available, and make sure our team follow through.
If you want to know more about our Crypto Exchanges Review Methodology follow the link below
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