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Invest in PancakeSwap in 2024
PancakeSwap (CAKE) launched in 2020 as a decentralized exchange (DEX) that works on the Binance Smart Chain (BSC) and uses what is known as permissionless liquidity pools.
Over time, it became one of the most popular DEXs and CAKE, its native coin, quickly rose up the ranks in the crypto markets.
Let’s take a deeper dive into how to invest in PancakeSwap (CAKE), so you can make more informed decisions going forward.
What is PancakeSwap
PancakeSwap is a decentralized exchange for swapping BEP-20 tokens on BSC. It uses an automated market maker (AMM) model where users can trade against a liquidity pool. These pools are filled with the funds of the users. What this means is that a user can deposit their funds within a pool and receive liquidity provider (LP) tokens in return.
Later on, these tokens can be used to reclaim their share and a portion of the trading fees.
At the time of writing, PancakeSwap has a market cap of $497,000,000, with a circulating supply of 274,000,000 CAKE coins.
- PancakeSwap supports the exchange of many BEP-20 based tokens
- By adding liquidity to the exchange, users can receive rewards
- It offers a variety of different lotteries
- Users can launch their own projects within the BSC ecosystem
- It can be difficult to use for newcomers
- The staking process is complex
How does PancakeSwap Work
PancakeSwap uses an automated market maker (AMM) model, which means that you can trade digital assets on the platform without an order book that matches you with someone else. This means that as a user, you are trading directly against a liquidity pool.
Yield Farming is commonly mentioned in the same sentence as PancakeSwap, and this is due to the fact that many users will typically use the DEX for that purpose as well.
Yield Farming allows users to stake funds in return for staking rewards.
These rewards can be compounded and used across multiple protocols, which in turn allows users to grow their yield and chase the highest interest rates across various parts of the decentralized finance (DeFi) ecosystem.
For example, if you deposit BUSD and BNB to a pool, you will get BUSD-BNB LP tokens in return.
On the farm, you can deposit LP tokens and lock them up. In return, you generate CAKE coins.
Indeed, you can stake CAKE to earn more CAKE as well.
Ways to buy PancakeSwap
PancakeSwap (CAKE) can be purchased in a multitude of different ways.
You can use cryptocurrency exchanges, P2P marketplaces, or in-person trading.
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Cryptocurrency Exchanges – Exchanges are one of the most popular options among more experienced investors due to the fact that they have a wide range of charting tools and indicators, and here, the market sets the price of the CAKE coin.
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P2P Marketplaces – Peer-to-Peer marketplaces connect you directly with sellers of the CAKE coin. Someone has to be selling the coin for you to be able to buy it.
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In-Person Trading – This is a form of trading where you physically meet a person and pay them and then they will transfer the CAKE coins to your private cryptocurrency wallet.
Here is everything you need to know about buying PancakeSwap (CAKE):
You need to create an account at a reputable cryptocurrency brokerage or exchange that offers fair trading fees and a high level of security. Note that you might need to complete KYC /AML forms during this process.
Next step is to fund your account. This can be done by using a direct bank transfer method, credit or debit card, or just by using an e-wallet. You can also deposit cryptocurrencies if you already own some.
Last but not least, you need to find the right market. In this case, search for CAKE in the search bar. Purchase your tokens by clicking ‘Buy’ and the coins should appear in your wallet almost immediately.
How to invest in PancakeSwap
Investing in a token is usually a long-term strategy. This entails buying and holding for a long period of time, which typically leads to more profit than say, trading on smaller time frames. If you intend to hold for a long time, we would recommend you to store your coins in a private wallet, rather than on an exchange.
Here is everything you need to know about investing in PancakeSwap (CAKE).
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Exchanges. Exchanges are an advanced option, which requires you to have at least some level of understanding when it comes to investing in cryptocurrencies. Find one that has many trading pairs with the CAKE coin.
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Apps. There are many cryptocurrency investment applications available on the Google PlayStore as well as the Apple AppStore that will provide you access to the CAKE coin, where you can easily invest in the token from the comfort of your mobile device.
Is it safe to invest in PancakeSwap right now?
Cryptocurrencies such as PancakeSwap (CAKE) are very volatile which means that their price can swing in either direction in a short period of time. Before investing, make sure to research the different pros and cons of each exchange to ensure you get the best value for your money.
Rule number one is to only invest money you can afford to lose and always follow the security measures to the best of your ability.
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