On Binance Smart Chain (BSC), CAKE coin, as the native token of the decentralized exchange PancakeSwap, is attracting more and more investors. This article will provide an in-depth analysis of the operating mechanism of CAKE currency and its importance in the DeFi ecosystem, helping you better understand this digital asset with a hundredfold potential.
What is a decentralized exchange?
Decentralized Exchange (DEX) is a completely different trading platform from traditional centralized exchange (CEX). DEX does not require users to log in or perform KYC real-name authentication, so users’ funds and personal information will not be stored in the exchange’s cloud. It only serves as a software, responsible for matching peer-to-peer transactions between buyers and sellers, ensuring the privacy and security of transactions.
The rise of PancakeSwap: Since its launch in September 2020, PancakeSwap has quickly risen to become the current leader among centralized exchanges with its low gas fees and rich features. According to data from CoinGecko, PancakeSwap’s 24-hour transaction volume exceeds 100 million US dollars, and the number of website visits is as high as 5.47 million times, showing its strong user base and market influence.
Advantages of PancakeSwap
PancakeSwap is able to maintain high popularity in a highly competitive market mainly due to the following advantages:
Low transaction fees: Because it is built on the BSC chain, PancakeSwap’s transaction fees are much lower than the gas fees on the Ethereum chain.
Friendly user interface: PancakeSwap provides an intuitive user interface and supports multiple language versions, making it convenient for users around the world.
Diverse investment applications: In addition to basic token exchange functions, PancakeSwap also provides diversified investment options such as farms, lotteries, rise and fall predictions, NFT sales and initial mining offerings (IFOs).
Rich currency selection: Users can purchase most of the currencies on BEP-20 (BSC chain) on the platform.
How does PancakeSwap (CAKE) work?
PancakeSwap adopts the automatic market maker (AMM) model, which provides users with an intermediary-free, smart contract-driven token exchange experience. AMM replaces the traditional order book through an on-chain liquidity pool, allowing users to efficiently exchange tokens without an intermediary.
For each token exchange, PancakeSwap will charge a 0.2% transaction fee, of which 0.17% is paid to the liquidity provider (LP) and 0.03% is used for the development and operation of the platform. This mechanism not only ensures user transaction security, but also encourages more liquidity providers to participate.
Main functions of PancakeSwap
PancakeSwap offers a variety of features to help users better manage their investments. Here is a brief introduction to its main features:
Transaction: The core function of PancakeSwap is token trading. Users only need to connect a compatible wallet (such as Metamask) and use $BNB to pay the handling fee to complete the transaction.
Stable currency exchange: Through the StableSwap function, users can exchange stable currencies on PancakeSwap with lower slippage fees. This feature is especially suitable for users who need to frequently trade stablecoins.
Farm: Users can participate in PancakeSwap’s farm by pledging LP tokens and earn CAKE tokens. The annualized interest rate of the farm consists of two parts: transaction fee rewards and CAKE rewards obtained by staking LP tokens.
Capital pool/syrup pool
The capital pool allows users to pledge a single currency. Although its return on investment is lower than that of the farm, users do not need to bear the free losses caused by the price fluctuations of the two currencies.
Lottery and prediction: PancakeSwap also provides lottery and prediction functions. Users can participate with small amounts of funds and enjoy the fun of fair lottery draws on the chain.
NFT Market: Users can trade their favorite NFTs with low fees on PancakeSwap’s NFT market, further enriching the platform’s functionality.
IFO (Initial K Offering) IFO allows users to participate in the issuance of new tokens, providing diversified investment opportunities.
Purpose of CAKE Coin: CAKE Coin, as the native digital currency of the PancakeSwap platform, has a variety of uses. Users can use CAKE coins to trade, pledge, participate in IFO, etc., and even receive additional rewards on the platform. As the PancakeSwap ecosystem continues to expand, the application scenarios of CAKE coins are also increasing.
in conclusion
As the core asset of the PancakeSwap platform, CAKE currency shows great potential with its powerful functions and wide range of application scenarios. As the DeFi ecosystem continues to develop, investors' attention to CAKE coins will continue to rise. If you are looking for a digital asset with a hundredfold potential, CAKE coin is undoubtedly a choice worth considering. Let us pay attention to the dynamics of PancakeSwap now and seize this investment opportunity!