PancakeSwap is a decentralized exchange platform based on Binance Smart Chain (BSC) and allows users to exchange BNB tokens with other tokens stored on the BSC blockchain. PancakeSwap has its own token called CAKE. It is one of the largest DEX platforms with users participating in the PancakeSwap every day. So this guide aims to help you with some of the most common and frequently asked questions.
Related article | Top 5 Best DeFi Tokens and Best Platforms to Invest in 2022Frequently Asked Questions about PancakeSwap
We will go through common questions about PancakeSwap. The goal is to help people new to the platform gain a better understanding of the features and services offered by the platform.
Q. What are the benefits of PancakeSwap?
A. PancakeSwap is a decentralized exchange. This means it has all the benefits of a decentralized exchange, including no verification requirement. To set up your account on PancakeSwap, all you need to do is add your wallet. No KYC and other ID is required to buy cryptocurrency.
Another advantage is that PancakeSwap is based on Binance Blockchain, also known as Binance Smart Chain (BSC), which is different from Ethereum Blockchain. This means that the transaction costs in BSC are slightly lower compared to the gas costs of Ethereum
PancakeSwap also hosts contests, regularly adding new pools, and has its own lottery system that allows you to earn CAKE tokens.
Also read | Best Places to Buy Bitcoin Anonymously without KYCQ. What cryptocurrency is used on PancakeSwap?
A. PancakeSwap uses Smart chain BNB tokens. These are interchangeable with regular BNB tokens and have similar values. But only Smart chain BNB can be used on the platform.
You can buy regular BNB through any crypto exchange, or preferably Binance, and then exchange it to Smart chain BNB on Binance or Trust Wallet. If you use Metamask, you must first exchange the BNB for Smart Chain BNB and then transfer it to the Metamask wallet to use it on PancakeSwap.Q. How to earn passive income with PancakeSwap?
A. You can earn passive income on PancakeSwap by staking CAKE, the original token of PancakeSwap. You can invest for a certain period and earn interest on it. It is a safe, low-risk method. Another method is Yield farming, where pairs of LP (Liquidity Pool) tokens are delivered to the pool and transaction fees are earned. Crop farming carries a high risk.
Related article | 3 Best Ways To Make Passive Income With CryptocurrencyQ. What is Syrup Pool in PancakeSwap?
A. Syrup Pools allow you to wager a certain amount of your CAKE holdings. You can lock your CAKE tokens for a predetermined set of times and then earn free CAKE tokens as interest. There are other pools where you can wager other coins to earn interest. This is a fairly simple, low-risk method of earning free tokens.Q. What is PancakeSwap Farming?
A. Agriculture refers to the farming of the produce. This includes providing a liquidity pool with a few tokens that can be traded in the exchange. These tokens are then used to fund the exchange. PancakeSwap allows you to seamlessly trade tokens without waiting for a buyer or seller. This can be done with the help of the Liquidity Pool.
People who bet their tokens in the pool earn a high profit margin collected by the exchange from transaction fees. Thus, the amount of revenue from Yield Farming is based on the number of trades that take place during the day.Q. What is slip tolerance?
A. Slippage Tolerance is a transaction fee for trading or bartering on PancakeSwap. It is measured in percentage and is usually low around 0.1% to 0.5%. But it may differ based on the tokens themselves. If you buy SAFEMOON, you have to pay a slip tolerance of 12%.
The transaction costs on BSC are comparatively lower than on any Ethereum-based exchange. But then you still have to pay a small amount. This fee is used to pay the Yield farmers.Q. Can I buy NFT on PancakeSwap?
A. Yes, PancakeSwap recently added an NFT marketplace to their exchange. Since the platform is based on the BSC blockchain, it features NFTs built on Binance Smart Chain. You can buy these with BNB tokens.
It also supports personalized profiles where you can choose your own name, join a team and choose an NFT as your profile display image. PancakeSwap already plans to buy and sell BSC NFTs and third-party NFT gamification to add to the platform at a later date.
Also read | Create and sell your own NFT in 3 easy stepsQ. What is an IFO?
A. IFO is an initial farm offer. Many newly minted tokens are shown on the exchange before being available on other centralized exchanges. Many people like to earn the profits that these new tokens earn in the beginning.
So you can wager your CAKE tokens to participate in the IFO and these tokens will be burned and you will get the minted tokens back.
Users can invest as much CAKE as they want and any amount not used or left over when the sale ends will be returned to the user. This is known as Overflow.To block
We discussed and learned about some key components of PancakeSwap about how it works. We hope you learned something valuable from this article. PancakeSwap is a great alternative to other Ethereum based alternatives like Uniswap and because it is community powered and constantly updated by the developers.
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