PancakeSwap Review

There is a sea of decentralized exchanges (DEX) out there, and finding the best one to cater to all your trading needs can be a bit complicated. But don’t worry! In this PancakeSwap review, I’ll introduce you to one of the leading players in the DeFi space that offers a wide range of innovative services in one interface.

Initially, PancakeSwap primarily focused on token swapping. However, it has since expanded to various trading and gamified services with potential rewards. Nonetheless, the platform's decentralized nature does come with a bit more risk compared to centralized exchanges like Binance, Bybit, or Kraken.

Naturally, this raises key questions like, "Is PancakeSwap safe?". Let's find out the answers and break down the pros and cons of using the platform.

Verdict at a Glance: PancakeSwap is a decentralized exchange that facilitates user trade using Automated Market Maker (AMM) and liquidity pools. While it might not be user-friendly for beginner traders, the platform provides comprehensive educational resources to help others navigate its features.

What is PancakeSwap?

So, what is PancakeSwap? It’s a DEX launched in September 2020 by a team of anonymous developers. Since its conception, it has undergone several significant updates and evolved from a simple exchange to a comprehensive DeFi platform.

First, there was PancakeSwap V1 or the original version (now defunct), which only offered BEP-20 token swapping. Then, in April 2021, PancakeSwap V2 launched and introduced services like new liquidity pools, staking, improved yield farming, limit orders, and a lottery feature.

In May 2023, PancakeSwap V3 went live and introduced features such as customizable price ranges for liquidity provision and more efficient trading via a Smart Router.

Most recently, in 2024, PancakeSwapX came forward with better execution prices for swaps. It now offers the ability to trade with zero gas fees by optimizing off-chain and on-chain orders between the user and external liquidity provider.

Primarily, PancakeSwap operates on the BNB Chain (formerly Binance Smart Chain). That said, over time, the platform has expanded its support to multiple blockchains, including Ethereum, Arbitrum, and Aptos.

Furthermore, as a DEX, PancakeSwap operates without an intermediary, so users have complete control over their funds and transactions. But if there is no central authority to facilitate the trades, how does PancakeSwap work? The answer lies in its use of the Automated Market Maker (AMM) model.

Unlike its centralized counterparts, which use an order book model to match buyers and sellers, AMM allows users to trade directly against liquidity pools. To put it simply, liquidity pools are collections of funds locked in smart contracts. Users, known as liquidity providers (LPs), put their digital assets into the pools, and in return, they receive liquidity tokens representing their shares.^[1]

PancakeSwap Review: PROS

Now, let’s get onto the next topic of this PancakeSwap review: how good is this DEX, really, in terms of trading options, staking opportunities, gamified features, and more? Is Pancakeswap legit, security-wise?

Users’ Safety as the Top Priority

In an effort to build trust with the user community, PancakeSwap emphasizes transparency in its operations and governance. This is shown by the open-source nature of its code, which allows anyone to view and verify the smart contracts themselves.

PancakeSwap itself has gone through security audits by multiple Web3 platforms. At the time of writing, it has at least 18 security audits covering nearly all its features, including liquidity pools, staking, prediction market, and lottery.

As for giving users’ digital assets an extra layer of security, PancakeSwap brings multi-signature (multi-sig) into play. With this technology, transactions on the treasury must have multiple approvals from different private keys before authorization. It ensures that no single individual can access or make any changes alone.

To understand how the concept works, let’s imagine the platform's treasury as a safe deposit box that requires two keys to open. The keys are the PancakeSwap team approvals, which are needed to unlock the box. When a decision needs to be made, like moving funds or implementing changes, the team members must come together and approve it.

Additionally, PancakeSwap enables a time-lock feature to ensure safety and transparency. It prevents a transaction or any change to smart contracts from being executed until a certain amount of time has passed.

So, even if a transaction is already signed, it still can’t be processed until the time-lock expires. During this time, the community can review the proposed transactions or changes and raise concerns or object to them if necessary. So, if you're asking, is PancakeSwap safe? The time-lock feature proves that it indeed is.

As you can see, PancakeSwap is all about involving its community. While we're on that note, it's also worth noting the platform's bug bounty program, where users are encouraged to identify and report security issues. Below is a table showcasing the amount you get rewarded for finding a bug with smart contracts or the blockchain.

Table: smart contracts and blockchain bug rewards

Here, you can see the amount you get awarded for reporting a website or an app bug.

Table: website an app bug rewards

As you can see, when it comes to smart contracts and blockchains, there are four levels of vulnerability, each offering different reward tiers. If a member successfully reports and demonstrates how the weakness can be exploited, they can be awarded $1 million, payable in CAKE or BUSD.

So, is PancakeSwap legit in terms of security? Well, we can see how the DEX prioritizes security and transparency in its operations, making it a reliable option in the DeFi space.

Get More Perks With the CAKE Token

At the core of PancakeSwap's entire ecosystem is CAKE, the platform's own native token. It's not just another cryptocurrency. CAKE holds a pivotal role in facilitating many activities on the platform and fostering community engagement.

Whether it's trading, staking, yield farming, voting on platforms’s decisions, or participating in gamification, the token is integral to the platform experience.

Since PancakeSwap is a DEX, all of the decisions affecting the platform are decided by the community. This is where CAKE, specifically veCAKE (vote-escrowed CAKE), comes into play. Holders can participate in governance by voting on proposals that will affect the exchange. It's also worth mentioning that the only way to earn veCAKE is by staking your CAKE tokens.

Furthermore, CAKE tokens have several other uses. They can be used to participate in liquidity pools with lower trading fees. It can also be used to purchase lottery tickets or participate in the prediction market to potentially earn more of the tokens. In addition to that, they can also give users up to a 5% discount on perpetual trading fees.

Growing List of Supported Tokens

Perhaps one of the biggest things this DEX has going for itself, as often raved about on user PancakeSwap reviews, is its broad variety of supported cryptocurrencies.

As it's primarily built on the BNB Chain, of course, the platform supports all BEP-20 tokens. Aside from those, PancakeSwap also supports cross-chain tokens. So, you can bring digital assets from various networks into your portfolio.

In total, there are actually 2,900+ cryptocurrencies supported by PancakeSwap's ecosystem. To give you some examples, here are a few of them:

• BNB
• USDT
• FLOKI
• ETH
• SUSHI

The number of tokens supported by PancakeSwap is constantly growing due to the platform's permissionless nature. In other words, the process for listing new tokens becomes rather streamlined (including the niche ones) as long as the liquidity pool is provided by the users. Not only does this bring visibility to new and emerging projects, but it also fosters innovation in the crypto space.

While we’re on the topic of prospective niche tokens, did you know that PancakeSwap can get you in front of up-and-coming projects early, especially if you're interested in them? Through its Initial Farm Offering (IFO), users can use their CAKE tokens to get early access and invest in new tokens launched on the BNB chain.

That said, do note that most IFOs that occur are limited-time events, usually lasting for one to two hours. So, you need to be prepared to commit your CAKE tokens as soon as the project goes live.

Abundant Trading and Earning Features

Moving on, let’s take a look at the variety of trading and earning options offered by the platform.

Multi-Purpose Trading

Remember the AMM model I mentioned in the "What is PancakeSwap" chapter? Other DEXs, such as Uniswap, also use it. It can be said that this model is the backbone of trading on decentralized platforms.

With AMMs, users are directly trading against liquidity pools. The setup eliminates the need for order books typically used in centralized exchanges, making your trades more efficient and cost-effective.

Let’s first explore how an AMM facilitates token swapping on PancakeSwap. This mechanism simplifies the token-swapping process, making it straightforward and user-friendly. For instance, say you want to swap Token A for Token B.

Simply specify how much Token A you want to swap in the liquidity pool. Afterward, the AMM mathematical formula will automatically determine how much Token B you will receive based on the current quantity in the pool.

The DEX supports thousands of tokens for the swapping feature, as I've covered in this PancakeSwap review. These include popular options such as CAKE, BNB, BUSD, and USDT.

Alternatively, if you’re a more experienced trader, PancakeSwap has a perpetual trading feature that might appeal to you. It is a type of derivative contract that allows you to speculate on the future price of a digital asset with no expiration date.^[2]

In addition to that, PancakeSwap enables leveraged perpetual trading, so you can trade with more money than you actually have. For example, you use 10x leverage to control $1,000 worth of digital assets with only $100 that you have.

If the price of the digital assets goes up 10%, you’d make $100 (instead of just $10 without leverage). But if the price drops by the same amount, you could lose your entire investment, so take caution.

Beyond token swapping and perpetual trading, PancakeSwap has also expanded into the NFT marketplace, adding a layer of versatility to the platform.

As you can see, this DEX offers comprehensive trading features that both beginner and experienced traders can enjoy. Now, let’s take a look at the tools that allow you to put your assets to work and potentially earn more.

Robust Earning Features

One of the most popular features the exchange offers is yield farming. This tool is closely related to the liquidity pools I've already mentioned in this PancakeSwap review. By providing liquidity to a chosen trading pair on the exchange, you can gain potential returns.

By providing liquidity to a chosen trading pair in exchange, you will receive Liquidity Provider (LP) tokens, representing your share of the pool. You then can stake them to start receiving CAKE rewards. The longer you do it, the more you'll gradually earn. It will be proportional to your share of the total liquidity and the annual percentage rate (APR).

Yield farming is not the only way to put your assets to work on PancakeSwap. The DEX also comes with a token staking functionality. It’s a simpler way to earn free tokens through a feature called Syrup Pools. You can choose between flexible or fixed-term staking, in which you can either withdraw anytime or lock your CAKE for a set duration for higher yields.

In retrospect, PancakeSwap is a decentralized platform that centralizes a diverse range of earning and trading features. In other words, you can partake in several programs or try out different functionalities in one go.

Gamified Features Beyond Trading

Next up, what really sets this platform apart from other exchanges, and is often praised in several user PancakeSwap reviews, is its gamified tools.

Starting off with the innovative Loterry feature. Users can participate in a lottery system to buy tickets and potentially win CAKE tokens and other rewards. To win, you need to have tickets that match the winning combination from left to right.

The lottery mechanism is quite simple. First, you simply buy tickets with 6-digit combinations. Each lottery round lasts between 12 to 36 hours, after which a random 6-digit winning combination is generated.

The closer your ticket is to the winning combination, the bigger the rewards you’ll receive. For example, if the winning combination generated is 1-2-3-4-5-6, and your ticket is 1-2-3-6-7-8, then you would qualify for a "match-three" prize.

However, if your ticket is 8-9-7-4-5-6, you wouldn’t win even if the last five digits match, as winning combinations are determined strictly from left to right. But, if the Lottery round ends with no participant matching all 6 digits, the unclaimed prize “rolls over” to the next round’s prize pool, accumulating bigger incentives.

Each Lottery ticket costs about $5, which you can pay with CAKE tokens. That said, the exact price is always determined at the start of each lottery round.

That covers the Lottery feature. If you’re looking to test your market analysis skills and potentially earn rewards, you can explore PancakeSwap’s AI-powered prediction market, launched earlier in 2024.

As its name suggests, this feature allows you to predict the future price movements of cryptocurrencies, such as Ethereum, in 10-minute intervals. It was launched in collaboration with Allora Network’s advanced machine learning models, which have been in development for the past three years.

Here’s how the prediction market works: the AI models from Allora predict the digital assets' price movements. Then, you can place bets, either supporting or opposing the AI’s predictions. The payouts you’ll receive are based on the AI’s performance, with adjusted structures over time to maintain fairness and challenges.

At the time of writing this PancakeSwap review, the prediction market still focuses on cryptocurrency prices, but the platform claims to have plans to expand to other assets in the future.

Did you know?

Compare Crypto Exchanges Side by Side With Others

All Crypto Exchanges may look similar to you but they're NOT all the same!

Yes! Show me the Comparison Chart

PancakeSwap Review: CONS

Now, we made sure that PancakeSwap is legit and explored its gamified features and tools for trading and staking. Therefore, it's time to take a look at some of the platform's drawbacks.

Complexity for Beginners

With all the features available on the platform, beginner traders reading this PancakeSwap review might wonder if they can navigate the exchange.

Well, PancakeSwap can present a certain level of complexity for new users.

For example, the staking process can be intricate and may introduce obstacles for beginners. Understanding the basic concepts of staking and liquidity management is necessary, which some might find overwhelming.

Similarly, perpetual and leverage trading can be particularly challenging for beginners. These methods require detailed market analysis, and using the latter adds significant risk.

Furthermore, to use the features on PancakeSwap, a bit of understanding of how to use cold wallets and manage private keys is required. Admittedly, these are the standards that most traders have to go through, especially for those concerned about security.

However, it's important to understand that trading on DEXs isn't quite the same as doing it on CEXs. On Bybit, for example, you simply set up an account to deposit funds, and you can start purchasing Bitcoin or other cryptocurrencies instantly. In contrast, the process on PancakeSwap involves more steps and is generally more time-consuming.

That said, there’s no need to worry too much, though. PancakeSwap offers a wealth of educational resources that cover topics such as guides, tutorials, and even the underlying concepts of DeFi.

Lack of Traditional Customer Support

Another drawback of the platform often discussed in several user PancakeSwap reviews is its lack of customer support. Since PancakeSwap operates as DEX with no central authority, there is no traditional customer service to assist you if you ever encounter a problem.

There are no dedicated phone lines, email support, or even live chat options that are typically found on centralized exchanges like Bybit or Binance.

	BINANCE	BYBIT
Overall Score	8.1	8.0
Best For	Advanced Users & Beginners	More Advanced Users
Operating Countries	Turkey, Argentina, Vietnam, Ukraine, + 100 more	South Korea, United Kingdom, Ukraine, Turkey, +160 more
Latest Coupons	SECURE $600 BONUS All Binance Coupons	See All Coupons of Best Exchanges
Verdict	One of the leading crypto exchange platforms in the industry.	A popular crypto derivatives exchange with some super-low trading fees.
	See TOP10 Brands Read review	See TOP10 Brands Read review

Table: Bybit VS Binance comparison

However, as one of the leading DEX platforms, PancakeSwap benefits from a large and active community to help its users out. You can reach out for help on Telegram and Discord channels. Don’t be afraid to ask questions and or share your experiences.

If you’re not satisfied with the answer or the responses are not timely enough, PancakeSwap's website features a troubleshooting page. It addresses common issues one might encounter, such as transaction errors or price impact notifications.

PancakeSwap Fee Structure

So far, in this PancakeSwap review, I have covered its innovative features and drawbacks. However, another key factor that needs to be considered when using this platform is the structure of PancakeSwap fees.

PancakeSwap V2 charges a fixed 0.25% fee on all trades executed through the liquidity pools. From that fee, 0.17% is returned to liquidity providers based on their share and trading volume, while 0.03% is sent to PancakeSwap Treasury to help fund the platform’s continuous development and operational costs.

An additional 0.05% is allocated for CAKE token buybacks and burns, helping to reduce the total supply and potentially increase its value over time. Compared to other DEX platforms, PancakeSwap fees are relatively low and competitive.

Whereas on PancakeSwap V3, fee tiers are introduced for liquidity pools. They're comprised of four tiers:

Table: PancakeSwap V3 fee tiers

As for perpetual trading on V3, the fees are divided into a maker fee of 0.02% and a taker fee of 0.07%. But before executing any kind of trade, be sure to review the PancakeSwap fees thoroughly to avoid unexpected costs.

How about PancakeSwapX fees? Traders can sign and submit off-chain orders and enjoy zero gas fees. That said, approving or wrapping native tokens may incur gas fees, so you need to check the final price quotes to confirm.

How to Use PancakeSwap

Since we have explored the features and fee structure in this PancakeSwap review, it’s time to look at how you can start using the DEX. However, it’s important to note that there is no mobile app yet, so for this guide, I’ll be showing you how to use PancakeSwap on a PC.

How to Connect a Wallet to PancakeSwap

Since PancakeSwap is a DEX, there’s no need to sign up for an account or go through a KYC verification. All you need to do is connect your wallet to PancakeSwap. Follow this step-by-step guide to get started.

Step 1: Go to the official PancakeSwap website.

Step 2: Click the “Connect Wallet” button in the top-right corner of the PancakeSwap homepage. PancakeSwap supports a variety of hot and cold wallets, such as Coinbase Wallet and Ledger Flex. In this PancakeSwap review, I'll use the former as an example for the tutorial.

Step 3: Once you’ve chosen the wallet provider, follow the instructions to authorize the connection. Be ready to confirm the connection to your wallet.

That’s it! Straightforward and easy.

How to Swap Tokens on PancakeSwap

Now that your wallet is connected to PancakeSwap, let’s see how you can start trading on the platform. That said, below you can see how to swap tokens.

Step 1: On the PancakeSwap homepage, hover over the “Trade” button on the top menu and select “Swap”. If the token you want is not listed, manually enter the token contract address.

Step 2: In the “From” field, select the token you want to trade, and in the “To” field, select the token you want to receive.

Step 3: If needed, you can adjust the slippage tolerance by clicking the gear button.

Step 4: Once you’re satisfied with the details of your trade, click “Swap” to initiate the transaction. Approve it via your connected wallet and your swap is completed!

Remember to always double-check the token addresses and transaction details before approving any swaps to ensure you’re protected.

Pros

• Secure and reliable
• Low fees
• A good amount of fiat currencies accepted

Main Features

• Reputable exchange
• Multiple fiat currencies are accepted
• Relatively low trading fees

See All Coupons of Best Exchanges

Pros

• Fiat currencies - accepted
• Simple to use
• Accepts only the most trustworthy cryptocurrencies

Main Features

• A leading cryptocurrency exchange platform
• Best for beginner investors
• Accepts fiat currencies

See All Coupons of Best Exchanges

Pros

• Fully reserved and transparent
• Multiple tradable asset classes
• Early new token support

Main Features

• 265 supports cryptocurrencies
• Secure & transparent
• Fully reserved

See All Coupons of Best Exchanges

Conclusions

After reading this PancakeSwap review, we can see why the DEX became one of the favorites among DeFi traders. It's all thanks to its comprehensive trading options, yield farming opportunities, and potential to earn rewards through staking and other features. On top of those, lotteries and the prediction market keep users engaged.

While it takes a bit of experience to navigate the platform, and there’s a lack of traditional customer support, PancakeSwap compensates for all these with a solid and large community, troubleshooting pages, and educational resources. Users, beginner or experienced, are able to use the platform and resolve their issues with ease.

All in all, is PancakeSwap safe? The platform operates securely through its decentralized technology and offers transparency in its processes. Mind that trading on a DEX may not always be as tamper-proof as the experience on a CEX, as you're practically on your own. So, if you require more safeguarding in place, try out Bybit, Kraken, or Binance instead.

The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.

Scientific References

1. Mohan V.: ‘Automated market makers and decentralized exchanges: a DeFi primer’;

2. Hossinzadeh J.: ‘The Concept, Structure and validity of the Perpetual Futures Contract in the Cryptocurrency Market’.