The advancement in decentralized finance (DeFi) has led to new financial iterations prioritizing autonomy, speed, and inclusion – three dynamics missing from the traditional financial realm. This applies in the decentralized exchange (DEX) space, where more and more people interact with autonomous markets supported by blockchain technology. One of the prime examples of such markets is PancakeSwap, the BNB Chain variant of decentralized exchanges such as SushiSwap (SUSHI) and UniSwap (UNI).
What Is PancakeSwap?
It’s a decentralized exchange of the BNB Chain. Simply put, Pancakeswap is similar to many platforms like UniSwap, where users can exchange their coins with other coins without any service providers. The only big distinction is that PancakeSwap functions with BEP20 tokens crafted by Binance. It lists new tokens’ functions to work with the large Binance ecosystem (dapps, wallets, etc.).
Setting Up Your Wallet
You’ll need a compatible wallet to begin using PancakeSwap. The most common options include Trust Wallet, BNB Chain Wallet, and Coinbase Wallet. You can also use MetaMask, although you might need to set up your MetaMask wallet to function with BNB Chain-based apps such as PancakeSwap.
First, create or choose a wallet with Binance Smart Chain support. It’s because you need safe interaction with PancakeSwap, and the secure control of your assets is important, so you must configure it. Create the wallet, and deposit some Binance Coin (BNB) if you want to pay transaction fees from your balance.
Adding Liquidity
Once you connect your wallet to BNB Chain, you can access apps like PancakeSwap and supply liquidity to one of the pools.
To achieve this, you connect your wallet to PancakeSwap. A window should Pop Up on the upper right corner of PancakeSwap’s home page. Click On Connect Wallet.
After the wallet is connected, hit the Trade menu and then Liquidity. Go to the Liquidity page, click Add Liquidity, and select any token pair you want to deposit. You must deposit both tokens into the pool using a predefined ratio and confirm that transaction from your wallet (which costs nothing).
Soon afterward, you will be given liquidity provider (LP) tokens representing your part of the deposited liquidity in that pool.
Farming & Staking on PancakeSwap
All that is left is that you have LP tokens to put into a farm and earn those CAKEs (the PancakeSwap platform’s native token). Farms are just LP staking pools that further incentivize you to provide liquidity.
Farm on PancakeSwap using the following step-by-step instructions.
- Go to the Farms selection from the Earn menu on the homepage, and you’ll be redirected to a page with all available farms.
- Go through the farm list to find one that is compatible with your LP tokens. Another thing to consider is the APR (annual percentage rate) you can earn from staking.
- Select a farm and hit Enable, followed by your wallet confirmation. The Enable button will change to Stake LP.
- After clicking the Confirm button, your wallet will ask you to confirm this transaction. Once you do this, you can see the balance of your LP staked = as much in the farm.
- In any case, you can click on Harvest to withdraw your interests and staked LP tokens.
By staking your CAKE token in the Syrup pools available on their platform, it is achievable to compound your returns. To do this, click on Pools in the Earn drop-down menu. Here, you can see the pools with the annual percentage yields (APYs) and the total amount staked.
So, the first thing you have to do is choose one of the pools. After that, click on the enable button to activate CAKE staking in your wallet. Then, type in the CAKE you intend to stake and press confirm. Whether or not you claim your rewards, they could be harvested and staked into the same pool.