PancakeSwap is a Binance Smart Chain-based DEX. It was launched by anonymous developers who had a fondness for breakfast foods and rabbits.
It just looks a bit like Ethereum’s Sushi Swap, community governance, which is the ability to farm liquidity provider tokens, but it also incorporates several other features which allows you to earn rewards.
These rewards can be sold at market price or users can use these rewards to enter into PancakeSwap lotteries. The following are the steps to enter in to Pancakeswap lotteries:
The first step will be to open an online account. To buy CAKE tokens, users should create an account with Binance. Then, they need to buy or download a wallet. Then, they need to make their purchase.
There is a long list of coins supported by Pancakeswap, which includes, but is not limited to: ZEE, ZEC, YFI, WBNB, XVS, VAI, USDC, UNI, UNFI, UMB, TWT, XTZ, USDT, TLOS, SXP, SWINGBY, SUTER, STAX, SRK, and many more.
What does farming liquidity provider tokens mean? Liquidity provider tokens are proof of the fact that you have invested your value in a liquidity pool. This means you have staked your crypto assets in a particular liquidity pool. When you want your value back you have to take these tokens back from the pool (redeem the tokens) and sell it. Until you sell the value stored in crypto assets, you can use the Liquidity Pool tokens to yield farm.
The liquidity pool tokens represent the value of crypto assets you have invested in the liquidity pool. The name of the LP token is usually not the same as your digital asset. Any time you want you can give back the LP token and get the original token you invested in the pool. The LP token is a lot like the acknowledgement for your investment.
The LP tokens have a market. These tokens are used to provide liquidity for the exchange. The profits in this case are made by the differentials in token value and also by charging fees. The fees is a percentage value of assets which are bought and sold by traders.
To make a good return, it is important to choose the right liquidity pool. The LP token value will increase if the token you invested for the liquidity pool is bought more form your liquidity pool. The more liquidity from your pool is used, the more money you will earn.
In short, yield farming is about locking up cryptocurrencies to get reward tokens and you further deposit these reward tokens in other liquidity pools.
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