PancakeSwap

Market Making

PancakeSwap is a decentralized exchange native to BNB Chain that allows anyone to trade crypto assets and provide liquidity (to earn trading fees).

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
PancakeSwap is one of the largest decentralized exchanges (DEXs) with low gas fees and offers a wide range of crypto assets so anyone can become a liquidity provider on BNB Chain.
What we like less
PancakeSwap offers more exotic long-tail assets that may be exposed to fundamental security risks and rug pulls. This would result in a two-sided liquidity pool being completely drained in the event of bad actors or any exploits.
What it means for you
Offers an attractive marketplace for you to earn yield due to its high total value locked (TVL) and significant volume.
Information
Info
  • Website
  • Token: CAKE
  • Tags: Market Making
Key Metrics
  • TVL: $1.6B (Rank #16)
  • TVL Ranking by Market Making: #0
  • Blockchain: Binance, Aptos, zkSync Era, Ethereum, Arbitrum, Base, Linea, Polygon zkEVM
  • Chain TVL
    • Binance: $1.53B
    • Aptos: $14.31M
    • zkSync Era: $1.76M
    • Ethereum: $1.42M
    • Arbitrum: $1.22M
    • Others: $591.96K
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by several experienced auditors including CertiK, PeckShield, and SlowMist
  • Anonymous team reduces transparency
  • Several documented protocol hacks
Protocol Maturity
  • Core protocol launched in 2020; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 1% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • This protocol is susceptible to risks related to decentralized exchanges (DEXs), such as impermanent loss
  • PancakeSwap is a Uniswap fork implemented on the BNB chain
Things to know about PancakeSwap

How PancakeSwap works

PancakeSwap is an automated market maker (AMM) like Uniswap that launched in 2020 on BNB Chain. AMMs rely on liquidity pools rather than traditional order books to execute decentralized trades. The liquidity pools are funded by users who deposit two tokens in equal proportion in exchange for a liquidity provider (LP) token that represents their claims to their share of the total pool, plus a portion of trading fees. On PancakeSwap, users can earn additional yield by locking up their LP tokens to farm for the protocol's native CAKE token.

How PancakeSwap makes money

PancakeSwap charges a 0.25% fee on all trades within a liquidity pool. Of this amount, 0.17% is paid to LPs as a reward for providing liquidity, 0.03% goes to its treasury to be used for maintenance and upgrades of the platform, and 0.05% used to buyback and burn CAKE. The last mechanism has the intended effect of constantly putting upward price pressure on the CAKE token.

How you make money on PancakeSwap

You can stake CAKE on the platform to farm additional rewards paid in CAKE and other native protocol tokens. The protocol constantly earns 0.05% of all trading fees to be used to buyback and burn CAKE. LPs also earn 0.17% of fees in return for providing liquidity on PancakeSwap.

PancakeSwap Pools
Pancakeswap BNB-ETH Market Making
10%
Yield
$2M
TVL
Risk
C
Protocol
PancakeSwap
Chain
BNB Chain
PancakeSwap BTC-ETH Market Making
1.3%
Yield
$1M
TVL
Risk
C
Protocol
PancakeSwap
Chain
BNB Chain
PancakeSwap BTC-USD Market Making
5%
Yield
$378K
TVL
Risk
C
Protocol
PancakeSwap
Chain
BNB Chain
PancakeSwap USDC-BUSD Market Making
2.7%
Yield
$112K
TVL
Risk
C
Protocol
PancakeSwap
Chain
BNB Chain