If you’re a newbie in crypto like me, you have probably heard of this DEX and you’re wondering how to make money on Pancake Swap. Well, this is the topic that I’ll be sharing with you guys today.
I have been using Pancake Swap since February 2021 and so far, I’m loving it. By the way, just to be clear, this is not a sponsored post nor an affiliate post and I really use Pancake Swap. I’m using Pancake Swap to provide liquidity and in return, earn $Cake.
And I also see myself using this for the weeks/months to come as long as it remains profitable for me.
Anyway, going back to the topic…
Pancake Swap is one of the largest Decentralized exchanges (DEX) in the Binance Smart Chain. It uses an automated market maker (AMM) model which means that while you can trade digital assets on the platform, there is no order book where you’re matched with someone else unlike the regular exchanges like Binance.
But instead, you’re trading against a liquidity pool, that’s why often, you’ll notice some price difference on your crypto against the price on exchanges (but then again, the price fluctuates so fast especially on popular crypto LOL!).
Note: (Update as of January 30, 2022) I have discontinued using Pancake Swap since late last year (2021) but since I have not been able to update my blog for the last six months I’m just updating this now (01/30/2022). Please be informed that the information you see here might not be updated by the time you read this. Please DYOR and check Pancake Swap’s official website and social media channels for their most recent updates.
Photo by Chaman Raj on Unsplash
My Personal Experience in Using Pancake Swap
Since this is the first-ever DEX that I’ve tried, I was confused at first. When I first started, I had to set up a browser wallet (MetaMask) and set up the Binance Smart Chain in it. Afterward, I had to transfer crypto ($BNB) from my Binance account to MetaMask which is really scary because if you get some stuff wrong, then you might lose your crypto forever. Luckily, there are tons of tutorials online and I was able to transfer $BNB (you will need $BNB btw to pay for the gas fees or transaction fees) without any issues.
After the first transfer, the succeeding transfers definitely became so much easier.
I don’t have a lot in my Pancake Swap account but I am continuously earning $Cake which I’m using to stake in my Pancake Bunny account to earn more $Cake and to earn some $Bunny as well.
To avoid confusion, I will not discuss Pancake Bunny and l will just write a separate article about it in the future and I will also link it here.
By the way, before we continue, I just want to remind you guys that crypto trading, investing, and also becoming a liquidity provider is a risky investment and this is not financial advice (NFA). I’m just basically sharing my experience and some other information about Pancake Swap.
Always, Do Your Own Research (DYOR) and consult a professional financial advisor if you need help about investing your hard-earned money.
Ok, moving on…
Since the day I started using Pancake Swap, I never had any issues with them except for two instances. The first instance was when their DNS got hijacked. Luckily, I saw their tweet right away and I avoided using both my MetaMask wallet and Pancake Swap during that time. And fortunately, I didn’t lose anything.
The second instance was when they migrated to V2. The migration was a little bit messy because when they announced that it was ready, apparently there were some issues that still need to be ironed out. And the instruction was somewhat confusing, especially for newbies like me. I ended up doing the process thrice and paying fees multiple times because of this. But they said that they’re going to do some form of compensation to affected users, so let’s see.
📣 Slight delay in migration
(1/2) @nipun_pit from the @AlphaFinanceLab team has made us aware of a possible compatibility issue with the new Router and LP implementation.
Due to this, we will need to redeploy, which will set the migration back by 24 hours or so.
— PancakeSwap 🥞 #BSC (@PancakeSwap) April 23, 2021
(2/2) If you have already added liquidity to V2, you will need to remove it.
Addresses that added liquidity to V2 before block #6809310 will be compensated for the inconvenience with an airdrop of $CAKE at a later date.
Sorry for the trouble and we will keep you updated.
— PancakeSwap 🥞 #BSC (@PancakeSwap) April 23, 2021
To be fair with Pancake Swap, system changes and migrations are really messy. I’ve experienced doing this in my previous work and it’s really a difficult process. I do admire that they kept their composure and continuously provided updates via Twitter during the entire ordeal. Kudos to you guys!
Update May 5, 2021:
Pancake swap delivered its promise to Airdrop $Cake to affected users. Personally, it’s enough to cover my transaction costs during the migration hiccups. I can’t say that for everybody else though.
We have bought back $100k of $CAKE from the market and executed the airdrop to 9,408 addresses that added liquidity to the V2 hiccup before the snapshot at block #6809310
Each address got 0.269957483 #CAKE each as compensation to cover transaction fees.
All Tx’s below 👇
— PancakeSwap 🥞 #BSC (@PancakeSwap) May 5, 2021
Anyway, aside from those two instances that I have mentioned, I have never encountered any other issues with Pancake Swap and so far, I love using the app.
How to Make Money on Pancake Swap
So how do you make money on Pancake Swap? Well, there are multiple ways to make money on Pancake Swap and I’ll be enumerating them below.
Make Money by Trading Crypto
Pancake Swap is a Decentralized Exchange, meaning, you can also buy and sell crypto using this website/app. However, the interface is not as detailed as Binance. And the fees are also a bit higher – at around 0.2%, with 0.17% going to the liquidity providers and the remaining 0.03% going to the PancakeSwap Treasury, where they are burned to keep the supply lower (thus propelling the price upward). Please note that fees are of course, subject to change so be sure to check Pancake Swap for updates.
There are lots of other cryptos that are not yet found on Binance that can also be bought via Pancake Swap. This is both a good thing and can be a bad thing if you don’t do your due diligence.
It’s a good thing because once these crypto are listed on major exchanges, the price will definitely shoot up. It can be a bad thing because, if you don’t do your own due diligence, you might end up with crypto that will just continue to depreciate. So before you buy any crypto from Pancake Swap (or to any other exchanges) always DYOR.
Personally, I don’t buy and sell crypto using Pancake Swap. I use Binance for this. I only buy crypto on Pancake Swap so I could use it as a liquidity provider.
This leads me to the next item.
Earn Money and $Cake by Becoming a Liquidity Provider and by Staking Your LP Tokens in Farms
You can also earn $Cake by becoming a liquidity provider on Pancake Swap and staking your LP tokens on farms. To become a liquidity provider, you will have to create an LP Token using the Liquidity page. All you have to do is to add equal amounts (value) of two cryptos, like for example $100 worth of $Cake and $100 worth of $BNB and once you have created an LP Token, you will then have to stake them on the corresponding farm.
In this example, since we have created a $Cake – $BNB LP Token, you will have to stake it on the $Cake – $BNB Farm. By the way, please bear in mind that you will have to pay some fees in doing this process.
You will earn proportionately the percentage of your LP tokens in the liquidity pool. And also, when you stake your LP tokens on the farms, you will earn $Cake.
This is my favorite feature of Pancake Swap. I have four farms as of now. I actually have three more but I transferred them to Auto Farm (which I will write about also in the future and link here).
Please be aware that there’s a risk in becoming a liquidity provider and it’s known as Impermanent Loss. Here’s a very detailed explanation of what Impermanent Loss is all about.
And also, take note that the interest percentage that you see on farms changes from time to time depending on the number of participants. The more participants there are, the lower the percentage and vice-versa.
Some people don’t like being a liquidity provider because of the Impermanent Loss, but since I’m new to this, I’m going to observe if the $Cake that I will earn is worth the Impermanent Loss that I will encounter. I did put a small amount of money on my Pancake Swap farms that I earned from my short trades from Binance, so let’s see what will happen.
Related Post: My Pancake Swap Strategy
Make Money if You Win the Lottery
Pancake Swap Lottery is currently not operational as of the time of writing and they are due to update the mechanics. In the past, 1 lottery ticket cost 1 $Cake and the number is randomly generated by the system. However, due to the price increase of $Cake, it now seems to be expensive to join the lottery.
Pancake Swap Team will be updating the process and the proposal is for the ticket to be pegged to $1 and to give participants the option to pick their own numbers.
I have only tried this once because the prize during that time is so huge!!! Unfortunately, I didn’t win. Hahaha!
Win Money if Your Prediction is Right
They have a new game on their website called prediction. Basically, all you have to do is to predict if the price of BNBUSDT will be higher or lower than it was when the “LIVE” phase starts.
If you enter a “UP” position, and the BNBUSDT “CLOSED PRICE” is higher than the “Locked Price” at the end of the 5-minute LIVE phase, you WIN! And if it’s lower, then you lose!
If you enter a “DOWN” position, and the BNBUSDT “CLOSED PRICE” is higher than the “Locked Price” at the end of the 5-minute LIVE phase, you LOSE! If it’s lower, then you win.
There’s money and fees involved of course.
Personally, I’m not into this and I probably won’t even try. It sounds fun though but I suck in guessing games.
Earn $Cake and Other Crypto by Staking $Cake
You can also earn $Cake by staking $Cake on the different syrup pools on Pancake Swap. You can also earn some more $Cake just by clicking the ‘Claim’ button on the Auto-cake Bounty. There’re fees associated with staking and also by clicking the ‘Claim’ button so be sure to know what you’re doing before you click anything on Pancake Swap.
Personally, I don’t use the Syrup Pools and I stake my $Cake on Pancake Bunny for a bigger yield.
Technically, Syrup Pools are less riskier than being a Liquidity provider, however, I prefer farming my LP tokens because I want to earn $Cake and it’s a risk that I’m willing to take. This is my personal decision based on my risk appetite and other risk management stuff that I do to protect my hard-earned money.
Again, this is not financial advice and please DYOR or consult a professional financial advisor before you invest your hard-earn money on any type of investment.
You can also make money by joining the Team Battle (if your team wins). This is something that I don’t participate in Pancake Swap so I can’t say much about it.
That’s it. These are some of the ways that you can make money on Pancake Swap. For sure that there will be lots of changes in the future as Pancake Swap adapts to the changing demands of its user base.
Update as of August 13, 2021:
Pancake Swap announced that there will be a deduction on $Cake emission on Pancake Swap Farms:
Ladies & gentlemen, the numbers are in.
A massive 44% reduction to $CAKE emissions on farms will occur later in the next few days!
Later tonight we will share a new farm adjustment proposal to be executed in advance to help keep APR stable for high-value farms.
— PancakeSwap 🥞 #BSC (@PancakeSwap) August 12, 2021
And also, an ROI Calculator:
We just deployed a new ROI calculator for you!
To use it, click the icon next to the APR on any farm or Syrup Pool!
Let us know what you think👇 pic.twitter.com/JmmaM66lp2
— PancakeSwap 🥞 #BSC (@PancakeSwap) August 12, 2021
This might make earning $Cake a little bit harder, especially for those who have small farms like me, is it time to look for another AMM?
Personally, I only use Pancake swap to farm $Cake. When I started, Pancake Swap was only trading at around $13/$Cake. In a short period of time, it has appreciated so much and as of the time of writing, it’s hovering between $39 – $42.
All I want to do in Pancake Swap is to farm $Cake and earn more by staking it.
By the way, before you try it out, please Do Your Own Research because providing liquidity and yield farming is considered very risky. NFA!
David @ Filled With Money says
Man there are so many new products, companies, and things that are popping up as a result of cryptocurrencies.
It’s going to change and revolutionize the world! We’re going to prove all the banks who called it a “fraud” wrong.
Thrifty Hustler says
It’s exciting. But as always, like any other new things in life, always tread with caution 🙂