Stacking Pancakes. The Tastiest Way to Yield Farm on Binance Smart Chain

Alex Lielacher

Published on 04 Nov 2020

PancakeSwap has emerged as the most popular yield farming protocol on Binance Smart Chain. Read on to learn more about stacking pancakes

Yield farming is arguably the hottest new trend in crypto. Not only has it caused an influx of billions of dollars into the DeFi market, but it has also birthed an entirely new way to generate an income for crypto holders.

Learn why PancakeSwap has emerged as one of the most popular DeFi protocols despite only launching in September.

What is PancakeSwap?

PancakeSwap is one of the latest additions to automated market maker (AMM) platforms in the burgeoning DeFi market.

The decentralized trading protocol enables users to deposit digital assets into trading pools to earn fees and newly minted tokens as a reward for providing liquidity — a process referred to as yield farming or liquidity mining.

Unlike most DeFi applications, however, PancakeSwap runs on the recently launched Binance Smart Chain (BSC) — a new, smart contract-enabled parallel blockchain to Binance Chain.

Binance Smart Chain is EVM-compatible, allowing for interoperability with the Ethereum blockchain and ERC assets. Moreover, BSC has much faster transaction times and lower transaction fees than Ethereum, making it an ideal network for high-volume DeFi applications.

That is why the bunnies over at PancakeSwap have opted to deploy their protocol on Binance Smart Chain instead of Ethereum. To put it in their words:

Why would we want to drive a slower car that costs more to run?

Why’s “Everyone” Suddenly Stacking Pancakes?

PancakeSwap is the largest liquidity provider on Binance Smart Chain and one of the fastest-growing AMMs in the DeFi market.

And for good reason!

Replacing “Old Finance”

First and foremost, PancakeSwap replaces an array of traditional financial services in an open, internet-native manner accessible to anyone with an Internet connection.

Wall Street always had high barriers to entry.

If you go back a few decades, you needed to know someone in the industry who could get you a job. Then, you had to work your way up the ladder. Since the turn of the millennium, the entry requirements have changed to include a degree from an Ivy League college and rigorous, multi-stage assessment procedures.

Not just anyone could become a liquidity provider and start earning Wall Street money…

…until now.

The rise of DeFi protocols, such as PancakeSwap, empowers individuals across the globe to take up roles traditionally occupied by Wall Street professionals.

Thanks to the DeFi market, anyone can now:

Act as a liquidity provider in global, multi-million dollar trading pools to earn trading fees
Invest in innovative, high-yielding financial products
Earn daily interest on crypto holdings without the need for a financial intermediary
Borrow funds in cryptocurrency from anywhere in the world

While the decentralized finance market is still in its infancy, it already shows promise that it could one day replace traditional financial services for a large section of the global population that is being excluded by the global financial industry.

As an automated market maker and yield farming protocol, PancakeSwap allows individuals with a small investable capital to start earning trading an investment income by acting as a liquidity provider and staking tokens on the platform.

Meteoric Growth

PancakeSwap has managed to grow from zero to over $200 million in pooled liquidity in less than a month.

Benefiting from a first-mover advantage as an AMM and liquidity farm on Binance Smart Chain, the food-themed DeFi platform has managed to establish itself as the go-to yield-generating application on Binance’s new blockchain.

Encouraged by BSC’s low fees and high-speed transactions, yield farmers who previously populated the Ethereum blockchain have switched to BSC and PancakeSwap on the hunt for higher yields and a better user experience.

User experience is another area where PancakeSwap scores points. The creators are focusing on the gamification of DeFi by avoiding technical financial terms and sticking to its desert-based food theme.

Liquidity pools are called “Kitchens.” If you are staking FLIP tokens, you earn CAKE. If you stake CAKE, you earn TWT. You get the idea.

So even for non-finance-savvy individuals, earning yield on PancakeSwap is meant to be as easy and user-friendly as possible. As long as you know how to connect your Binance Smart Chain-enabled wallet to Pancake Swap, you are good to go.

Arguably, the easiest way to interact with PancakeSwap is by using Trust Wallet and WalletConnect.

WalletConnect — an open-source protocol for connecting desktop DApps to mobile wallets — allows Trust Wallet users to interact with any decentralized application, such as DeFi protocol on Binance Smart Chain, without compromising security.

Got Liquidity?

Image from https://pancakeswap.info/pairs

Another reason why PancakeSwap has moved to the top of the liquidity provider charts is the sheer number of liquidity pools it provides.

At the time of writing, the protocol offers 22 active liquidity pools, with over $216 million in pooled funds. The five most popular liquidity pools include:

WBNB/BUSD
USDT/BUSD
EOS/WBNB
DOT/WBNB
BTCB/WBNB

For regular Binance users — who are typically long BNB — PancakeSwap is a no-brainer because it allows for seamless, decentralized trading of BNB against a wide range of other assets.

Liquidity miners who are hunting for the highest possible yields are also quickly becoming fans of the food-themed yield farming protocol as it (still) provides much higher yields than many of its more established peers. For example, at the time of writing, you could earn over 600% APY (in CAKE tokens) for providing liquidity to the CAKE/BNB trading pool.

Yield farmers that prefer **stablecoin trading pairs **to avoid Impermanent Loss find PancakeSwap attractive for liquidity pools, such as USDT/BUSD, with over $24 million in pooled funds.

Combined with the cost-saving aspect of Binance Smart Chain’s ultra-low transaction fees, there is little reason to yield farm on Ethereum anymore.

PancakeSwap is arguably winning on all fronts, and social media is one of them.

The protocol’s creators have transposed their gamified, desert-themed ethos over to their social media profiles, which has helped grow its user base and build its community.

From cheesy food puns to tasty giveaway, the platform’s Twitter account is

According to DappRadar, PancakeSwap is the largest DeFi protocol on Binance Smart Chain, with over 5,700 active users. Moreover, there are over 8,000 yield farmers and pancake-curious members in the project’s Telegram channel.

PancakeSwap’s community-building efforts are clearly paying off.

CertiK Inspected the Kitchen and Gave it the Thumbs Up

PancakeSwap also delivers on the security front. All DeFi protocols suffer from a degree of code risk, which can be greatly reduced through a smart contract security audit.

On October 16, blockchain security experts, CertiK, announced that they have completed a security audit of PancakeSwap’s kitchen with a recommendation that it can be safely deployed on Binance Smart Chain.

The smart contract audit is the final piece to PancakeSwap’s puzzle for it to potentially grow from a multi-million to a multi-billion dollar liquidity provider and to attract more DeFi users to Binance’s newly-launched blockchain.

What’s Next?

To enter PancakeSwap’s virtual kitchen and start stacking pancakes, go on pancakeswap.finance to start baking.

And if you need a BSC-compatible wallet, download Trust Wallet and sync it with WalletConnect to interact with all new decentralized applications on Binance Smart Chain.