Binance launched another yield farming protocol, PancakeSwap, a new platform that will enable users to provide liquidity using BEP20 tokens on the Binance Smart Chain.
While acknowledging that the DeFi market doesn’t need another food-based yielding protocol, Binance stated that PancakeSwap introduces a new staking feature and will eliminate the high transaction fees problem on Ethereum.
“Yes, another food protocol. But this time it’s on Binance Smart Chain. Will things be different when fees are 0.03 and not $50 per transaction?”
Binance also defines PancakeSwap as a decentralized exchange on the Binance Smart Chain developed by a group of anonymous developers with a preference for ‘breakfast foods and rabbits.’ The launch follows Binance’s first yield protocol, Bella that was launched earlier in September.
PancakeSwap Is Sushi on Binance Smart Chain
Unlike other food-themed yield farming DeFi protocols, PancakeSwap is based on Binance’s blockchain network rather than the more popularly preferred Ethereum.
“It looks a bit like Ethereum’s SushiSwap (community governance, the ability to farm liquidity provider tokens) but also incorporates some kind of staking mechanism.”
PancakeSwap can only be used to farm BEP20 tokens. Yield farmers can provide liquidity using tokens like BUSD, BNB, or BAND and receive Pancake’s FLIP tokens.
“You’ll find these in several flavors-if you added say BUSD, BND to the pool, you’d receive BNB-USDT FLIP tokens in return. BAND and BNB? You’d get BAND-BNB FLIP tokens.”
According to Binance, users who are already familiar with the Sushi protocol will have no issues grasping PancakeSwap.
In addition to the basic principles of liquidly provision and earning tokens in return, PancakeSwap features a new twist that enables staking. It allows users to farm CAKE, a secondary token earned by depositing LP tokens and locking them for rewards.
CAKE rewards are available for a total of 12 FLIP tokens including pairs for ADA, EOS, LINK, and food protocols like BAKE, and Burger. CAKE Rewards can also be staked to earn SYRUP which will be used as the governance token for PancakeSwap.
PancakeSwap is, however, an unaudited platform like numerous other food protocols, a factor that has raised continuous criticism from the crypto community, especially due to the high rate of bugs and exit scams.
Affordable Transaction Fees
The high demand for yielding protocols has made transaction fees (gas) on Ethereum reach higher all-time high figures throughout July, August, and September as seen on on-chain data provider Ethereumprice.
The recent deflating DeFi hype has decreased Ethereum gas prices, but only temporarily, as increased activity will raise transaction costs again, at least until Ethereum 2.0 is launched.
According to Binance, PancakeSwap developers built the platform to compete with Ethereum by providing a cheaper way of farming tokens.