PancakeSwap uses an automated market maker (AMM) model. That means that while you can trade digital assets on the platform, there isn’t an order book where you’re matched with someone else. Instead, you trade against a liquidity pool. Those pools are filled with other users’ funds. They deposit them into the pool, receiving liquidity provider (or LP) tokens in return. They can use those tokens to reclaim their share, plus a portion of the trading fees.
The PancakeSwap Exchange offers several features that support decentralized trading:
PancakeSwap lets users trade without the need to go through a Centralized Exchange. Everything you do on PancakeSwap is routed directly through your own wallet—no need to trust someone else with your coins!
You can only swap tokens on PancakeSwap if there is enough liquidity for those tokens. If nobody has added much liquidity for the token or tokens you want to swap, it will be difficult, expensive, or impossible to do so.
Providing liquidity will get you LP Tokens, which will earn you rewards in the form of trading fees for making sure there's always liquidity for the exchange to use.
Yield farming lets users that are providing liquidity earn CAKE rewards by locking their LP tokens into a smart contract. The incentive is to balance out the risk of impermanent loss that comes along with locking in your liquidity.
Initial Farm Offerings (IFOs)
An Initial Farm Offering is an event that lets users buy into a limited-time offer to purchase new tokens. The IFO price is usually very generous.
The PancakeSwap token CAKE is a BEP20 token that originally launched on Binance Smart Chain. The main function of CAKE is to incentivize the liquidity provision to the PancakeSwap platform.
Users can stake their tokens to earn rewards, which is done by depositing Liquidity Provider tokens and locking them up. This is known as farming and is rewarded by the system with CAKE tokens. The tokens can be un-staked with zero holding time. CAKE gives users the opportunity to invest and increase returns in the future but comes with risks.
CAKE can be used to enter a lottery on PancakeSwap. Each lottery session takes 6 hours. A single ticket costs 10 CAKE and comes with a random combination of four numbers between 1 and 14, for example, 8-6-4-13. To win the jackpot, which equals 50% of the entire lottery pool, the numbers in your ticket need to match all four of the numbers in the winning ticket.
Users can also win non-fungible tokens that can be traded for CAKE or kept in a wallet.
Please refer to the tokenomics page on TokenInsight for details.
You can add liquidity for any token pair by staking both through the Liquidity page. In return for adding liquidity, you 'll receive trading fees for that pair, and receive LP Tokens you can stake in Farms to earn CAKE rewards. Please click here for detailed tutorial.
If you want to remove liquidity, you can click the pair on the page “Your Liquidity" and click "“Remove”.
Please click here for detailed tutorial.
After getting the LP token, users can start staking them in a Farm and earning rewards.Please note that Farms can only accept their own exact LP Token; for example, the CAKE-BNB Farm will only accept CAKE-BNB LP Tokens.
Please click here for detailed tutorial about Farms.
Each lottery session takes 6 hours. One ticket costs 10 CAKE, which will give you a random four-digit combination of numbers between 1 and 14, for example, 12-8-4-3. To win the jackpot (50% of the entire lottery pool), the numbers in your ticket need to match all four numbers in the same position as the winning ticket.
Please click here for detailed tutorial about Lottery.