PancakeSwap is the leading decentralized exchange on Binance Smart Chain. Launched in September 2020, it supports the exchange of BEP20 tokens on the chain. PancakeSwap uses an automated market maker model in which investors can invest in liquidity pools. Users can also become liquidity providers to deposit funds into the liquidity pool to obtain (LP) tokens in return.
A few months after its launch, PancakeSwap rose to become one of the top exchange platforms on the BSC network and the entire Layer 1 network, with a total locked value (TVL) peaking at $10.5 billion. In addition to trading and providing liquidity, PancakeSwap also offers products such as farms, syrup pools, lotteries, and initial farm offerings (IFOs).
In addition to earning and winning tokens under AMM (automated market makers), PancakeSwap makes revenue farming accessible to the public by gamifying the user experience. Moreover, all smart contracts of PancakeSwap are publicly visible to ensure maximum transparency, and its vision of "fast speed, cheap price, and anyone can use" comes to realization gradually.
How CAKE works
Market orders and their execution times are sometimes inconsistent, and the resulting change in sell/buy prices is called slippage. This price difference is around 0.5% by DEX standards. The more liquidity providers on the DEX, the lower the slippage tolerance, and PancakeSwap's AMM is mainly composed of liquidity pools and liquidity providers.
To maximize its effectiveness, PancakeSwap provides liquidity providers with CAKE token incentives. After choosing to become a liquidity provider (LP), investors add CAKE to another token to generate LP tokens and, therefore, earn CAKE. After removing impermanent losses, the annualized rate of return of staking CAKE is good, and these can be pledged in the farm at present.
In addition, when PancakeSwap runs products such as the syrup pool (syrup pool), investors can also earn CAKE based on the amount of locked cryptocurrencies to keep PancakeSwap running healthy.
What is CAKE?
The CAKE token is the native governance token of the PancakeSwap ecosystem. It is also the core of the PancakeSwap ecosystem. It can be purchased, won as a reward, and used to mine, spend, stake, and vote.
Governance is also another major use of CAKE, which allows participants to use it to vote, for example, to control the minting and burning rates of CAKE tokens. Because PancakeSwap's token economics are different from Bitcoin, CAKE has no supply cap, so its APY can continue to rise.
In order to reduce or even erase the adverse impact on the price caused by its infinite supply expansion, it is possible to control the CAKE burning through governance. In the previous establishment of the deflation mechanism, the number of CAKE minted in the market was reduced from 40 to 14.5 per block, so as to use it to achieve the overall deflation.
Although the CAKE official does not want to set a hard upper limit for CAKE circulation, it has been marked in the official litepaper, that the current circulation upper limit of CAKE is 750M.
There are two schools of thought in determining the price of PancakeSwap.
By way of intrinsic value: This typically involves on-chain metrics, project metrics and financial metrics of PancakeSwap, collectively known as fundamental analysis. The law of supply and demand, tokenomics, use case, project roadmap as well as regulations and governance involved would affect the value of PancakeSwap from a long term perspective.
By way of price action: Primarily analyzed via candlestick chart patterns and technical indicators such as MACD, RSI and the bollinger bands, technical analysis forecasts the price of PancakeSwap on the basis that history tends to repeat itself. As the candlestick charts are a general representation of the emotion of the market, news announcements and community sentiment can be significant price action drivers for PancakeSwap as well.
HODLers tend to prefer the long term nature of fundamental analysis, whereas short term traders tend to rely on technical analysis more. In reality, both analyses may combine and create interesting scenarios for PancakeSwap and the cryptocurrency market as a whole.
2. What is the highest price of PancakeSwap in history?
PancakeSwap achieved the all-time high of €41.85 in 2021-04-30, and is currently trading at €3.72.
3. What is the lowest price of PancakeSwap in history?
In 2020-11-03, PancakeSwap reached the all-time low of €0.19.
4. Should I buy PancakeSwap now?
It is important to remember that PancakeSwap, like all other cryptocurrencies, are subject to extreme market conditions, legal policies, project team management and other unpredictable factors. As such, cryptocurrencies fluctuate greatly and it is important to manage your own risk level. Users are advised to do your own research when making investment decisions in the crypto market.