What is PancakeSwap?
PancakeSwap Exchange is a decentralized cryptocurrency exchange developed on the BNB Chain to compete with Uniswap Exchange as an automated market maker (AMM). PancakeSwap DEX has cheaper transaction fees and faster transaction speeds. There are many decentralized exchanges built on the BNB Chain, PancakeSwap is the top decentralized exchange on the BNB Chain in terms of market trading volume and number of users. Pancakeswap allows you to do transactions right from your decentralized wallet app. Unlike centralized exchanges such as CoinEx or Binance, PancakeSwap does not hold your funds when you trade; you retain complete ownership of your cryptocurrency.
Trading on PancakeSwap
Compared to most exchanges, trading on PancakeSwap is quite simple. Charts and technical language won't overwhelm you, and computations will be done automatically. You will need a decentralized BNB Smart Chain-compatible wallet before you can trade on PancakeSwap. Decentralized cryptocurrency wallets are accessible for both desktop computers and smartphones. You must select the wallet that best meets your requirements.
Steps in setting up your decentralized wallet
- Only download and install the most recent wallet version from an official website or mobile Appstore.
- Carefully follow the setup instructions to set up your wallet.
- Make a secure backup of your recovery phrases or private key.
- Under no circumstances can you disclose your recovery phrases to anyone.
- NEVER enter your recovery phrase into any other website or app than your wallet app.
Decentralized cryptocurrency wallets used on mobile devices and desktop computers each have their own advantages and disadvantages. Consider which type of wallet best meets your needs before deciding on the device to access your wallet. You can create a wallet on your mobile device and access it via a desktop computer and vice versa. Smartphone/mobile wallets provide you access to your cryptocurrency practically anywhere. Both Android and iOS devices support decentralized wallets. There are several decentralized cryptocurrency wallets, example of the wallets widely used are Trust Wallet and Metamask Wallet.
Trust Wallet is a popular decentralized cryptocurrency wallet for smartphones and PC. Trust Wallet supports decentralized applications, NFT collectibles, and in-wallet staking. Trust Wallet has the following advantages: it is simple to switch between crypto networks, the Binance cryptocurrency exchange supports it, it has in-wallet staking possibilities, and it includes networks by default. Trust Wallet includes NFT collection, BNB staking, and decentralized applications access from within the wallet. Trust Wallet has a few disadvantages, the application language is tied to phone settings, Trust Wallet also supports a few decentralized applications and sometimes transaction notifications can be delayed.
MetaMask is a popular browser-based wallet plugin that supports the Ethereum Network (ERC20) by default. Other blockchain networks, such as BEP2 & BEP20 (Binance Chain and BNB Smart Chain networks), Avalanche, Polygon, and others, can be manually imported into the wallet with a little effort. MetaMask also has a wallet application for Mobile and PC devices. A few advantages of Metamask wallets are that they have a history of security and dependability, have more online resources and instructions, are open source for an audition, have many tools and custom settings, and support a vast variety of languages. Metamask is also designed to support NFTs and a wide range of decentralized apps.
You also need BEP20 tokens to trade on PancakeSwap. BEP20 tokens are the BNB Smart Chain's (BSC) native tokens. To perform transactions on PancakeSwap, you must also pay transaction fees, these transaction fees are commonly known as gas fees. BEP20 BNB coin also known as Smartchain is used as a gas fee in performing transactions on BSC.
Steps in Trading BEP20 tokens on PancakeSwap
You are now aware of the different types of decentralized wallets as well as the pros and cons of the two most well-known decentralized wallets that work with PancakeSwap. You've also set up your wallet and acquired your BEP20 tokens and BNB Chain for your transaction fee; now you just need to connect your wallet with PancakeSwap and you're good to go!
- Visit the PancakeSwap decentralized exchange website.
- The next step is to connect your wallet to the Pancakeswap exchange, for android devices, you just have to open your wallet and go to the Dapp section on the bottom navigation. Scroll down to "Popular" and tap on "PancakeSwap". You can also find it in "Exchanges". The PancakeSwap logo and other information will appear on a new page that will open. Then click the “Connect” button. Trust Wallet has created a thorough tutorial on how to use WallteConnect to connect to PancakeSwap through iOS. Before using WalletConnect to connect to PancakeSwap, read the Trust Wallet user manual. For Metamask users, you can follow the directions to import your BSC network before accessing the PancakeSwap exchange from the decentralized browser in Metamask.
- The default token on the list is BNB, Select the token you wish to trade from the dropdown menu in the "From" area. Make sure you have some tokens to trade with, regardless of the one you select. A balance indicator is displayed above the token drop-down option.
- In the "To" area, select the token you wish to trade to. Next, enter an amount by clicking inside the input box and typing it. The amount in your "From" currency will be automatically estimated. If you'd like, you can write your "From" amount and have the "To" amount estimate itself.
- Click the Swap button after double-checking the details.
- There will be a "Confirm Swap" popup with additional information. Verify the accuracy of the details and confirm the swap. Your wallet then gives you a pop-up to authenticate the swap, after authenticating, the swap is done.
- You can now view your transaction on BscScan to see your transaction details to see if the swap was successful on the blockchain explorer.
Yield Farming on PancakeSwap
Yield Farming is an excellent way to earn CAKE on PancakeSwap. CAKE is PancakeSwap's native cryptocurrency. To gain Liquidity Provider (LP) Tokens, you must stake two tokens, which you then stake in the Farm to earn rewards. This allows you to earn CAKE while maintaining your position in your other tokens! You can get LP tokens and CAKE by contributing your tokens to the liquidity pool as a liquidity provider on PancakeSwap. The primary purpose of CAKE is to encourage the availability of liquidity to the PancakeSwap platform. Users can stake their tokens by depositing and locking Liquidity Provider tokens to gain incentives. This is referred to as farming, for which the system awards CAKE tokens.