Binance Smart Chain’s pancakeswap is now one of the top DEXs

In the letter

  • Pancakeswap is now one of the most frequently used DEXs.
  • It is based on Binance Smart Chain and offers inexpensive trading and fast transactions.
  • The increase is due to the fact that traders are looking for alternatives to DEXs based on Ethereum.

Pancakeswap, a decentralized exchange (DEX) that is built on Binance Smart Chain, saw a trading volume of $ 400 million yesterday and briefly gave birth to the world second largest DEX Service by trade volume, data from the market service CoinGecko shows.

The project was previously written off by market experts, but has since grown into an outsider growth story with various cryptocurrencies valued at over $ 1.7 billion in DEX.

Pancakeswap started out as a pale imitation of SushiSwap – the one ether-based, (now) third largest decentralized exchange. The use case of Pancakeswap was straightforward: the users provided liquidity to the platform (in return they received FLIP tokens) and managed SYRUP, the platform’s governance token.

This agreement was similar to the many peer-to-peer exchanges that took place in 2020 that offer users who become liquidity providers high “returns” and the ability to control the platform. Newer products like a lottery service and a non-fungible token (NFT) The art platform has further developed the use cases of Pancakeswap.

To date there are over 176 markets on Pancakeswap. Wrapped BNB, a token issued by the Crypto Exchange Binance, is the most heavily traded market with a volume of over $ 81 million last day. Next up is $ 45 million in volume, CAKE, and then there are the meme tokens like “Birthday Cake,” “Burger Swap,” and “Monster Slayer Cash,” which are each much smaller in volume.

Pancakeswap’s high-yielding farms remain a draw for users. As the following image shows, the liquidity pool for ZEE / BNB (ZEE is the token for ZeroSwap, a multi-chain DEX aggregator) pays out over 1,300% to users annually.

High yield farms on pancake swap. Image: pancake change.

Considering the volumes are not fake, much of Pancakeswap’s success can be attributed to the fact that its anonymous team chose the Binance Smart Chain (BSC), the public blockchain created and managed by Crypto Exchange Binance becomes.

The BSC network only charges a few cents per transaction and is a so-called high-speed blockchain, which, according to Changpeng Zhao, CEO of Binance, offers around 300 transactions per second. This is in contrast to Ethereum’s massive transaction fees (at extreme levels they can go over $ 100 or even over $ 1,000) and the much slower speed (around $ 15) Transactions per second). However, BSC is far less decentralized, which means that any “decentralized” exchange based on it has a similar level of security and carries potential risks.

Low fees open up Pancakeswap to more users who might want to trade a small sum like $ 100 without paying at least 25% of it as trading fees.

The data confirm this. Pancakeswap’s native token, CAKE, today boasts a market cap of $ 792 million at a price of $ 6.97 per token. Over $ 76 million of the token changed hands last day, and the CAKE token is constantly being “burned” (permanently withdrawn from circulation; possibly more valuable to holders).

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