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A Complete Beginners Guide To PancakeSwap and CAKE Tokens

Get detailed insights of PancakeSwap Exchange - A Famous DeFi Protocol

A Complete Beginners Guide To PancakeSwap and CAKE Tokens

The digital world gets sounded more by the growth of DeFi. There are numerous DeFi protocols in the market that provide for a greater share in the global revenue. In those, food-themed DeFi Protocols are most trending.

Here let us look at one of the famous Food-Themed DeFi Protocol “PancakeSwap” and how it rules the DeFi Space.

What is PancakeSwap?

PancakeSwap is one of the famous DeFi based Protocol which aims to provide Automated Market Making (AMM) by being a #1 liquidity provider. This open-source DeFi based exchange is built on the Binance Smart Chain (BSC) through which the platform users can swap BEP-20 tokens.

CAKE is the native token of PancakeSwap and the users can swap, add liquidity, farm, yield, stake, and win CAKE Tokens through lottery.

PancakeSwap Exchange Specification
Type - DeFi Based Exchange
Native Token - CAKE Token
Blockchain Network - Binance Smart Chain (BSC)
Token supported for Swapping - BEP-20
Exchange Model - Automated Market Maker (AMM)


How Does PancakeSwap Work?

Automated Market Maker

An Automated Market Maker is a decentralized exchange protocol that doesn't need an order book but relies on the mathematical formula to set the price for the assets. The price of the assets is fixed according to the pricing algorithms. This pricing formula can vary according to the DEX protocols.As PancakeSwap works on the AMM model, which means the users can trade their digital assets on the platform at any time even if their order book isn't matched with anyone else.

Instead, the trading occurs against liquidity pools.

These liquidity pools are filled with user's funds. The users deposit those funds into the pools just to receive a liquidity provider token or LP Token in return. These LP tokens can be used to reclaim shares and trading fees.So, in short, anyone can trade BEP-20 tokens or add liquidity to PancakeSwap and earn LP tokens as rewards.

These LP tokens are in several ways. For Example: if you add BUSD and BNB to the pool, you will receive BUSD-BNB LP tokens as rewards in return and For BETH and ETH deposits, you will get BETH-ETH LP tokens in return.

Popular Features of PancakeSwap

Listed here are some of the features that attract users to the platform called PancakeSwap.


PancakeSwap is an Open Source DeFi protocol designed specially for swapping BEP-20 tokens. Anyone can use this platform and swap their own BEP-20 token on the exchange which is built on the Binance Smart Chain.


PancakeSwap allows you to farm its own native token called CAKE.The farming feature of PancakeSwap allows users to deposit their LP tokens and lock them up and earn CAKE tokens as rewards. Here is the list of tokens that PancakeSwap supports for farming.



Not only through farming, but you can also even earn more through staking your own CAKE tokens in SYRUP Pools.

This SYRUP pool is for CAKE, where one can stake their CAKE to earn more CAKE Tokens. You can also earn more tokens by staking CAKE.

Addition of Liquidity 

As the PancakeSwap exchange works on the AMM model, the traders can swap tokens without any order books. To farm CAKE tokens, one must first add liquidity to the exchange.

Select the token pair that you wish to deposit and add liquidity to the exchange. Know completely about the impermanent loss, before adding liquidity to the pool.


Once you have got LP tokens, it's time to stake those and earn CAKE tokens. When you have got a CAKE token, you can stake those in SYRUP pools.

When you stake a CAKE token, you will be earning the rewards of CAKE tokens.


Apart from the swap, stake, and farm, PancakeSwap allows lottery tickets using CAKE tokens. Each lottery session takes about 6 hours and a lottery ticket costs about 10 cakes & it will give you a random four-digit combination number between 1 to 14.

To win the jackpot, the four numbers on your ticket should match all the numbers in the same positions. Even if the numbers do not match, you will get rewards when two or three numbers match.


NFTs are Non-Fungible Tokens. Pancakeswap allows one to earn NFTs as rewards. If one is chosen as a winner of NFts they can trade it for the CAKE value and it all represents the cutie in your wallet as a collector's item.

Teams and Profiles

PancakeSwap users can experience more gamification by creating teams and profiles. Users can create public profiles and join any one team and compete for team achievements.


IFO known for Initial Farm Offerings is the way through which anyone can get a newly launched token through yield farming.

In PancakeSwap, anyone can commit LP tokens from a pool to get access to the sale of newly launched tokens.

Is PancakeSwap Exchange Safe to use?

PancakeSwap is a DeFi based DEX exchange, whose smart contract is audited by Certik. Smart Contracts always hold their own risks and bugs. Even though audited properly, there may be any smart contract vulnerabilities at any time, which may result in bugs or errors in the platform which may cause asset loss.

Every platform has its own risks, thus deposit as much as you can afford in the platform PancakeSwap.

Business Benefits of launching DeFi Protocol like PancakeSwap

Listed here are the benefits of creating a DeFi based exchange like PancakeSwap.

Less Initial Investment
Generate High ROI
Huge Liquidity at Launch
Eliminates middleman
Go with DeFi trends
Fast Brand Identification and visibility
100% Guaranteed Trading Volume
No manpower required and more.

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