The cryptocurrency sector has been transformed by decentralized finance (DeFi). Before the advent of DeFi, investors depended significantly on centralized systems and institutions for trading and profit booking.
Several decentralized platforms are available for purchasing, trading, and storing cryptocurrency to make residual income via yield farming.
Uniswap, the world’s largest decentralized exchange for exchanging altcoins on the Ethereum blockchain, is the most famous DeFi application. Sushi, Pangolin, and Quickswap have all mimicked its now-iconic swap interface.
PancakeSwap is another Uniswap knockoff that is based on the Binance Smart Chain. Uniswap’s closest competitor, the PancakeSwap DEX, now has billions of dollars in trade volume and liquidity.
Using Ethereum vs. Binance Smart Chain
Before discussing the characteristics of Uniswap and PancakeSwap, it’s critical to understand the distinctions between Ether and Binance Smart Chain.
Why? Because, ultimately, Ethereum and BSC provide radically different customer experiences and allow the development of DeFi apps with unique capabilities.
Ethereum is a decentralized innovative contract cryptocurrency platform that supports the majority of today’s decentralized financial protocols. Ethereum cleared transactions totaling more than $1.5 trillion in Q1 alone.
Due to this high level of liquidity, when you exchange on Uniswap, your Ethereum-based ERC-20 tokens are compatible with additional protocols like Compound and Aave.
The disadvantage of Ethereum’s popularity is that the network is congested. The existing architecture of Ethereum was not designed to manage the massive amount of transactions created by Uniswap and others. Uniswap transactions use the great majority of gas on any given day, outpacing the combined usage of the majority of other DeFi programs.
Binance Smart Chain is an innovative contract platform developed by Binance, the biggest cryptocurrency exchange in the world. Although the BSC community has grown dramatically in recent months, it remains a long way behind Ethereum in consumers and developer mindshare.
PancakeSwap is the most frequently used DeFi application at BSC. After implementing a liquidity mining operation, the exchange saw parabolic growth that diverted huge cash away from Uniswap and into its reserves.
In comparison to Ethereum, Binance Smart Chain is more inexpensive and straightforward to use, making PancakeSwap transactions less costly than Uniswap.
While the cheap cost and speed of BSC are attractive, the additional rate is due to Binance Smart Chain’s centralization. Binance Exchange has amassed a sizable holding of the BNB coins required to vote for the network’s 21 governing nodes.
Uniswap is the largest decentralized exchange in the world. It is built on the Ethereum platform and executes deals through ground-breaking Automatic Futures Market technology. Uniswap made headlines in 2020 when it infamously inverted Coinbase’s total trading volume. The event was a milestone point in the progression of DEX technology from novelty to financial futures.
How Uniswap executes deals has a lot to do with liquidity. Uniswap now has over $6 billion in crypto assets locked up in the exchange’s liquidity pools. This sum is down from a height of over $8 billion, yet it provides more than ample liquidity for any deal.
Uniswap trading does not need counterparties or buyers and sellers.
Rather than that, you trade assets through the exchange’s swap interface with the Uniswap liquidity pools.
Anyone may contribute liquidity to the pools and trade in them. This beautiful but straightforward exchange format has grown in popularity to the point that Uniswap’s structure is duplicated on a near-daily basis.
PancakeSwap is a decentralized marketplace and yield farming network built on top of the Binance Smart Chain. To quickly grasp PancakeSwap, keep the following in mind:
As with Ethereum’s Uniswap, PancakeSwap is to Binance Smart Chain as it is to the latter.
Why use PancakeSwap when Uniswap already exists? There are various causes for this, but trading costs, yield farming, and transaction speed are the most important.
To begin, PancakeSwap exchanges tokens based on the BEP-20 Binance token standard. So, if you want to trade Ethereum tokens on PancakeSwap, you must first convert your ERC-20 tokens to BEP-20 counterparts via the Binance Bridge. Once completed, you will be a part of the BSC ecosystem and will be able to take advantage of the reduced costs made possible by the network’s high throughput capabilities.
If changing your tokens only to utilize PancakeSwap sounds like a chore, consider the massive number of yield farming chances the exchange provides. PancakeSwap farms and Syrup pools provide 200 percent or more returns in the exchange’s native CAKE coin.
In addition to farm income, staking your CAKE tokens enables you to split revenue from trading fees.
Because of the high DeFi returns and the revenue-sharing functionality of the CAKE token, PancakeSwap has attracted total wealth locked onto its platform than Uniswap.
Comparing Uniswap and PancakeSwap
Trading volume & fees
During the spring, traders sought alternatives to popular programs like Uniswap. BSC had spent months promoting itself as a low-cost rival, so PancakeSwap was ready when the Ethereum app exodus started.
In April, PancakeSwap processed almost 2 million transactions. Uniswap and Ethereum together only achieved 1.5 million transactions in the same time.
PancakeSwap trade volume surpassed Uniswap for a while, becoming the world’s biggest decentralized exchange by trading volume.
PancakeSwap’s trade has slowed recently. Transacting in Ethereum has become cheaper. Furthermore, the Ethereum DeFi ecosystem includes 218 projects vs. 36 created on BSC, allowing for considerably higher ERC-20 token volume on Uniswap.
PancakeSwap and Uniswap both provide swap interfaces. Uniswap and PancakeSwap swap interfaces vary in clutter and color.
Uniswap values simplicity and focuses on the exchange process. PancakeSwap features brighter colors and a complex menu.
The two exchanges have comparable swapping. Each one requires a Web3 wallet like MetaMask. Uniswap wins here because MetaMask works natively with Ethereum. To utilize MetaMask with PancakeSwap, you must manually enter Binance Smart Chain values.
Uniswap outperforms PancakeSwap in terms of appearance and method, but not in terms of trading speed. PancakeSwap can execute deals faster than Ethereum because of Binance Smart Chain.
Uniswap currently does not provide yield farming. Uniswap exclusively earns returns on trading fees collected from liquidity pool tokens.
But PancakeSwap has a massive selection of DeFi cropping alternatives. Just look at the many PancakeSwap Farms accessible today.
There are Syrup Pools as well as PancakeSwap Farms. These pools enable you to stake CAKE tokens in exchange for BSC project tokens.
UNI and CAKE tokens
UNI is a governance token intended to assist the direction of the Uniswap system. You can influence Uniswap’s future by holding UNI tokens.
For many, the UNI token’s present usefulness is limited to governance.
Null-staking and no-yielding tokens aren’t supported.
CAKE, or PancakeSwap token, is a dynamic cryptocurrency that may be utilized in various ways. CAKE, like UNI, is being used for governance in PancakeSwap since it is a decentralized swap protocol.
Pros vs. Cons
- Swap UI with a dark mode option that’s easy on the eyes
- Tokens ERC-20 on Ethereum have the most liquidity.
- The benefit of the doubt
- A perfect track record of security
- The UNI token is nothing more than an administrative tool.
- Non-cash-mining or yield-farming activities
- Using it may be both time-consuming and costly.
- Slippage is an issue with Uniswap V3.
- Liquidity pools are overflowing with funds.
- Using Binance Bridge, it is simple to utilize
- Uniswap is much more expensive and time-consuming.
- Infinite alternatives for farming.
- Difficult-to-use UI
- You’ll have to use assets from Ethereum since the amount of trading there has decreased.
- BSC has recently been subjected to a slew of attacks.