PancakeSwap has been in the DeFi space for a while now. They are the first of their kind on Binance Smart Chain and are a low-cost, efficient way to start wrapping your head around farming and staking.
First we need to go over a couple terms so you know what they mean. You can see on the left there are “Farms” and “Pools”. Farming refer to combining two assets like CAKE & BNB in a smart contract and receiving Liquidity Pool or LP tokens in order to provide liquidity to the protocol and receive tokens for doing so. In the case of PancakeSwap, the user earns CAKE for providing liquidity.
In this article we will cover staking and farming will be talked about in a future article. Of course, you’ll need the CAKE token to make all this happen so if you don’t know how to get CAKE you need to take a step back from this article to figure out how to do that first. We recommend using Binance exchange, or if you already have BSC tokens you can use PancakeSwap’s “Trade” page to swap to CAKE.
Staking refers to providing liquidity to the protocol using one token. In order to do this you need to click on “Pools” in the sidebar. PancakeSwap calls them Syrup Pools and this page is where all the single-asset staking happens.
In the top right you’ll see a button that says “Connect”. This is how you interact with the platform and once selected, you’ll have to connect your digital crypto wallet. We suggest using MetaMask and have covered how to set this up in an earlier article.
Connect your wallet and make sure Binance Smart Chain is the network you’re hooked into. Once connected, choose which Syrup Pool you want to provide liquidity to. You’ll see several options however for this tutorial we’ll use the “Auto CAKE” pool.
Auto CAKE compounds your rewards for you so you don’t have to. Manual CAKE does not and in order to benefit from compounding interest you have to click “Collect” in order to harvest your tokens and then compound them yourself by adding them back to the pool.
Enable whichever pool you’ve decided on — PancakeSwap also offers the opportunity to earn other tokens by adding your CAKE tokens to other pools.
You’ll need to confirm the actions once choosing “Enable” and the wallet plugin will popup. The “Enable” button will be replaced with the word “Stake”. Click this button and input the amount of CAKE you want to stake, choose “Confirm” and again you’ll be asked to confirm the actions.
Choosing the Auto CAKE pool won’t require your to collect your earning as it does this automatically for you. If you choose a different pool, you’ll need to collect your tokens manually.
Adding or removing tokens is easy. Simply click either “+” or “-” and follow the prompts. Please take note that there is a fee for unstaking in the first 72 hours when choosing the Auto CAKE pool.
Once you’ve completed all these steps you’ll start seeing the tokens rolling in. That’s it, you’re done. Now sit back and enjoy the passive income!
Remember there are always risks in DeFi and only use what you can afford to use — this means no lunch or rent money is to be used for crypto. Be smart and enjoy this exciting new space.