PancakeSwap
PancakeSwap is a decentralized exchange native to BNB Chain that allows anyone to trade crypto assets and provide liquidity (to earn trading fees).
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- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: CAKE
- Tags: Market Making
- TVL: $0 (Rank #266)
- TVL Ranking by Market Making: #0
- Blockchain: Binance, Aptos, Ethereum, Arbitrum, zkSync Era, Base, Linea, Polygon zkEVM
- Chain TVL
- Binance: $1.18B
- Aptos: $17.34M
- Ethereum: $1.29M
- Arbitrum: $985.47K
- zkSync Era: $764.31K
- Others: $395.1K
- Code reviewed by several experienced auditors including CertiK, PeckShield, and SlowMist
- Anonymous team reduces transparency
- Several documented protocol hacks
- 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
- 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
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.
