PancakeSwap is a decentralized exchange for swapping BEP-20 tokens. BEP-20 is a token standard on Binance Smart Chain that extends ERC-20, the most common Ethereum token standard. Binance Smart Chain is the name of a blockchain network launched by the popular Binance exchange, it is one of Ethereum’s top competitors. Decentralized exchanges let you trade tokens directly with other users. There’s also the fact that many centralized exchanges require KYC authentication, which means you’ve got to provide proof of ID such as a driving license or passport (which, again, means trusting that the exchange won’t be hacked, potentially exposing you to identity theft).and your identity details stolen.
PancakeSwap platform is designed to allow users to securely trade Binance Coin (BNB) and a massive variety of BEP-20 tokens without relying on centralized services or losing control over their private keys. As a decentralized exchange (DEX), all trades on PancakeSwap are automatically executed via smart contracts — completely eliminating counterparty risks. The DEX lets you swap tokens without an intermediary, as well as earn liquidity pool and staking rewards, enter a lottery, and other options.
Many such DEXs are based on Ethereum, where the bulk of the decentralized finance (DeFi) action takes place.
PancakeSwap vs. Uniswap vs. SushiSwap
In today’s cryptocurrency landscape, there are three major decentralized exchanges ruling the roost.
Uniswap: The original DeFi liquidity protocol built on Ethereum. Today’s standard for easy cryptocurrency trading using ERC-20 tokens and mostly ETH pairs.
SushiSwap: A community-governed Uniswap fork that has evolved into a DeFi hub offering token swaps, farming, and crypto lending/borrowing.
PancakeSwap: Uniswap clone built on BSC to deliver fast and inexpensive trades using BEP-20 tokens and the BSC←→ETH bridge.
While all three enable decentralized exchange, community governance, yield farming, and LP (liquidity provider) opportunities, only Sushi and PancakeSwap pay rewards back to token holders who stake their tokens.
How to use PancakeSwap exchange
You’ll notice if you visit https://pancakeswap.finance that many features are inaccessible until you click on Connect Wallet. Click on it, and you’ll be met with a few options: MetaMask, Trust Wallet, WalletConnect, Binance Chain Wallet, and other options.
But wait, isn’t MetaMask an Ethereum wallet?
Yes, at first, MetaMask won’t work with Binance Smart Chain Dapps, but the architecture of Binance Smart Chain is such that you can use MetaMask to interact with BSC-based DApps. If you choose to use MetaMask, we suggest you check out our Connecting MetaMask with Binance Smart Chain guide.
To use BSC, you will need to purchase a small amount of Binance Coin (BNB) to use for gas fees. This is as easy as purchasing BNB on an exchange like Binance and sending it to your MetaMask BSC wallet address.
On the left menu, select “Trade” and then “Exchange”. From the drop-down menus available in the “from” (what you’re selling) and “to” (what you’re buying) section, select the respective token pair. You can search through this list by typing.
Review settings. Once the amounts for each coin have been inputted, users can adjust the details of their trade, such as slippage tolerance and the transaction deadline.
Slippage tolerance is an important term that you need to understand before executing a trade on DEX. Slippage is a general term that you would encounter when using a platform like PancakeSwap, Uniswap, or similar platforms.
PancakeSwap default slippage tolerance between 0,5%-1% To adjust your slippage tolerance, click on the Settings icon located at the top right-hand corner on the PancakeSwap browser. You need to research the coin you will trade well. Example: If a coin has set the transaction fee as 10%, you must adjust the slippage rate higher than 10%.
Finally, press the “approve” button to confirm the transaction.