I have been using Pancake Swap now for 2 months and a couple of weeks now and I’m here to share with you my personal Pancake Swap strategy. I started using Pancake Swap a couple of weeks after I got used to using Binance website/app and so far, I’m loving it. There have been a few hiccups on the website but everything has been addressed by the Pancake Swap team.
By the way, before we continue, as I have always said in my previous blog posts regarding crypto trading and investing, please be advised that this is not financial advice (NFA) and should not take as such. This is just an informational and an entertainment article and also I’m just sharing my personal experience on using Pancake Swap.
If you need advice on any investment, please consult a professional financial advisor and always Do Your Own Research (DYOR) as well.
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 Jess Torre on Unsplash
As Always, I DYOR/ And I Research, Research and Research
Crypto investing is risky and since I use Pancake Swap as a liquidity provider, then you may say that the risk is a bit amplified since liquidity providers are subject to Impermanent Loss.
So knowing the risks associated with my decision to become a liquidity provider in Pancake Swap, I do a lot of research regarding the crypto pairing that I will get.
I know it sounds tedious since it entails some reading, stalking Twitter accounts and forums, etc. But I feel that it’s necessary for me since I can’t afford to make uninformed decisions.
I Only Choose Crypto Pairs I’m Comfortable of Getting Stucked With
Whenever I choose crypto pairing in Pancake Swap, like for example, ADA/BNB, ATOM/BNB, IOTX/BUSD, etc, I always go for the crypto pairing that I’m comfortable getting stuck with.
The reason behind this is again is Impermanent Loss. To become a liquidity provider of a certain LP token for example ADA/BNB, you will have to provide 50% $ADA and 50% $BNB. It’s constantly being rebalanced as the price changes.
By the time you withdraw your LP, you might end up with more or less $ADA than $BNB or vice-versa.
This is the main reason why I opt to only choose crypto pairing in Pancake Swap so whichever direction it goes, then I’ll be ok with it.
The pairing though that I’m not comfortable with are often the ones that have lower APR. I noticed that newer crypto have higher APRs but I’m not really comfortable getting stuck with them.
Some people just stake $Cake in Syrup Pools to avoid Impermanent Loss and to earn another token but perhaps, it’s just not for me.
Since I’m new to this, I will try to observe if the $Cake that I will earn will be worth the Impermanent Loss that I have to encounter. If it’s not, then perhaps I will just try other ways to earn.
I Don’t Harvest $Cake Often
When I was new with Pancake Swap, I harvest my $Cake every now and then. However, almost every action in Pancake Swap has corresponding transaction fees (Swapping, Creating LP Tokens, Staking, Harvesting, etc).
As of the time of writing the fee for harvesting cost 0.001 $BNB which is equivalent to 0.64975 USD. It might look like that it’s not that much but if you have multiple farms then it easily adds up. And also, as $BNB’s price continues to go up, the transaction fee also becomes more expensive.
So now, I have decided to harvest once a farm reaches at least 1 $Cake or more to minimize the fees that I’m paying.
Increase My Earning Potential
I increase my earning potential by staking the $Cake that I have earned from my farms not in Pancake Swap but in Pancake Bunny. The reason behind this is that the interest rate is higher in Pancake Bunny and I earn two tokens – $Cake and $Bunny by staking $Cake. Please note that this might not always be the case since interest does fluctuate from time to time.
And also, please bear in mind that Pancake Bunny also has its own set of fees that you have to pay for when you stake and when you harvest your tokens.
I Don’t Participate Anymore in New Farms (With Exceptions)
With my first three farms, I went for the new ones since they have the highest APRs. However, I noticed that some of them especially the farms with new tokens, the value of the crypto depreciated real quick.
Like for example, when I swapped for $bMXX to produce bMXX/BUSD LP token, the price of $bMXX was at around US$80/1 $bMXX and it has fluctuated ever since and it’s currently at US19.21/1 bMXX (ouch!!!). I also didn’t do my due diligence with my first three farms which I’m not really proud of. Now I’m stuck with two cryptos (I’m ok with the other one that I got) that continue to depreciates LOL!
The reason behind the high price was that, whenever Pancake Swap announces a new farm, people FOMO in and drives the price up. Perhaps some people are anticipating this event and dump their crypto once the announcement has been made which drives the price down just a day or two after the farm becomes available in Pancake Swap.
Nowadays, I don’t rush into new farms except if I already have the existing crypto in my Binance account. For example, when they announce a farm for ZIL/BNB and PERL/BNB, I didn’t have to swap any of my cryptos to get $PERL and ZIL since I already have some in Binance. I just transferred them to Pancake Swap thus I wasn’t that affected by the changes in price that happened during the first few days of the farms in Pancake Swap.
I Keep Myself Updated with All the Updates and Changes
Crypto is a fast-changing environment. As I have mentioned in my previous crypto-related posts, the developments that have been going on recently are insane!
Having said that, I keep myself updated with all the changes and updates of Pancake Swap, their competitors, and as well as the entire crypto community.
Sure, Pancake Swap is a nice option for now but sooner or later, their competitors will catch up and might be a better option than Pancake Swap. No one knows what the future holds right?
I have to be ready to transition to another DEX/AMM or to close my farms if need be. But for now, I’m really happy with whatever is going on with my farms.
I also follow them on Twitter and I activated my notifications to ensure that I receive their latest updates.
I Only Invest What I Can Afford to Lose
This is the basic rule of thumb for any kind of investment – only invest what you can afford to lose. Regarding my Pancake Swap Strategy, I only transfer to Pancake Swap my earnings from Binance. And I only transfer to Pancake Bunny my earnings from Pancake Swap.
I did not shell out additional investment to farm in Pancake Swap and Pancake Bunny, I only use the gains from my short and mid-term trading activities on Binance.
So far, everything seems to be ok (except for my first three farms LOL!).
However, I’m sure that this will be very difficult during the bear market when trading becomes trickier and harder. As of now, I can say that probably, luck is beside me and I was able to fund my Pancake Swap account using my Binance earnings. It’s not that much though hahaha! I’m talking only about a small amount of money.
Hopefully, once my online selling business picks up, I can invest more in Binance so I can generate more funds for my Pancake Swap farms.
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?
As of the time of writing, I can say that I’m really happy with the result of my Pancake Swap journey. However, I’ll be naive to expect this to last forever. Competitors are leveling up and the crypto industry is fast-changing.
So far, I can see that Pancake Swap is very serious about staying on top of their game as they always offer something new to their customer base every now and then. Sure, there are some hiccups and some misses but I have not experienced anything to be worried about. I also do my part to ensure that I’m protecting my own crypto assets.
By the way, please note that this is my personal strategy as of the time being and might not be the most optimal strategy in earning on Pancake Swap. This is not meant to be a piece of financial advice (NFA) and should not be taken as such. This is just an informational/entertainment article and it’s based on my personal experience. Always Do Your Own Research (DYOR) before you jump into any form of investment to minimize the risk of losing your hard-earned money. 🙂
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