What is Pancakeswap?
PancakeSwap is a decentralized exchange, also known as a DEX. Uniswap, on the other hand, is based on the Ethereum network, whilst PancakeSwap is based on the Binance Smart Chain. The latter is a Binance innovation that promises significantly higher transaction throughput and minimal transaction costs.
Binance Smart Chain has been a popular alternative for many new projects due to its better speed and decreased expenses. But it’s worth noting that PancakeSwap offers various technological features that help consumers have a more efficient investment experience.
So, to summarize, PancakeSwap is a decentralized exchange that allows for cheaper and quicker trading without the use of a centralized system. It, just like the other current exchanges, is an automated market maker (AMM). That makes advantage of liquidity pools while paying liquidity suppliers for their contributions.
How does it work?
PancakeSwap is built on an Automated Market Maker (AMM) model, which means it doesn’t employ an order book system (common on centralized exchanges) to match traders.
Users trade against a liquidity pool comprised of monies pooled by multiple other users in an AMM model. Users get liquidity provider (LP) tokens in return for depositing their supported crypto tokens into liquidity pools, which reflect their share of that specific liquidity pool.
These LP tokens may be used to regain their share as well as earn trading fees on other people’s transactions.
When users contribute tokens in certain pairings, such as BUSD-DEPO, BUSD-BNB, CAKE-DEPO, and others, LP tokens are created. CAKE is a BEP-20 token on the BNB chain that encourages PancakeSwap to provide liquidity.
A user receives BUSD-BNB LP tokens in return for adding BUSD and BNB crypto tokens to the BUSD-BNB pool. Users are compensated in CAKE when they lock up their deposited tokens.
How to swap BUSD to DEPO?
Step 1: Create a cryptocurrency wallet. Metamask or Trust Wallet is recommended!
Step 2: Add fund. Purchase BUSD and a small amount of BNB for a trading fee.
Step 3: Head over to PancakeSwap. Then connect your wallet.
Step 4: Choose BUSD – DEPO to trade by adding its contract: 0x7d99eda556388Ad7743A1B658b9C4FC67D7A9d74
Step 5: Choose suitable slippage (default 0.5%) and swap.
Why you should swap BUSD to DEPO instead of using other cryptocurrencies?
in theory, you can swap any tokens that have liquidity on PancakeSwap to DEPO. But the fee it takes when using tokens is different. If you swap BUSD to DEPO, it will be the pair that takes the least fee. That is because the provided liquidity is for the BUSD – DEPO pair.
On the other hand, if you swap other tokens to DEPO, the process is to swap those tokens to BUSD at first then swap BUSD to DEPO. As a result, the total fee you have to pay is the sum of 2 different processes. That makes it significantly higher than using BUSD.
In conclusion, you should use BUSD to buy DEPO in order to minimize the trading fee on PancakeSwap!
Follow Depocket Learn for further information!