What is Algorand? They are a scalable, secure, and decentralized cryptocurrency and smart contract platform. They’ve developed their own consensus mechanism that is a variant of proof of stake called pure proof of stake(TM). The main benefit of this is that Algorand technology finalizes blocks in seconds and provides immediate transaction finality. While preventing forks. Furthermore, Algorand offers highly customizable smart contracts as asset tokenization and atomic transfers built directly in layer 1. I’ll come back to all of this tech in a bit.
The company is based in Boston and was founded by a turning award-winning MIT Professor called Silvio Micali. He has also assembled a pretty strong team from MIT and other academic institutions, given the star power behind this project.
Silvio Mikali, founder of Algorand.
They were able to raise a pretty large amount of money through 2 private sales and one public sale over 120 million dollars. Those backing them in the private sale included the likes of Union Square Ventures and Brainchild among many others.
So that’s the quick overview of the project. However, in order to best understand what they’re trying to build, you have to know what problem they are trying to solve. This is essentially the Blockchain Trilemma.
So, what the hell is that? Well, when it comes to blockchain technology, there are three ideal qualities that we’re all in search of, these are;
1- Decentralized control of the network should be appropriately distributed so that there are no points of centralized control.
2- Secure, blockchains have to be resistant to attacks and must be censorship-resistant too.
3- Scalable, They should be able to grow in size and capacity without impacting the underlying efficiency.
Now, these are all great targets in themselves, but the only problem is they’re highly related and intertwined. You cannot easily scale while at the same time increasing decentralization. You cannot scale in a decentralized way without impacting on the broader security of the network in some way or another. So, you’re left with this problem where you cannot scale in a decentralized and secure manner the blockchain trilemma. This is something that’s so many other projects have encountered not least of which the most popular smart contract blockchain of all ETH. So, why do we have this trilemma? Well, it comes down to the nature of current consensus mechanisms.
When it comes to blockchain consensus, there are a number of different options. However, two of the primary ones are proof of stake (POS) and proof of work (POW).
Now most of you are no doubt familiar with good old proof-of-work. It’s the consensus mechanism that’s used by the likes of Bitcoin, Etherium, and a number of other protocols. However, as we’ve come to realize, the trilemma is quite acute when it comes to proof-of-work systems. There is a lot of centralization where most of the hashing power is controlled by large mining farms. They’re also not the most secure as there are a number of blockchains that have been attacked through Double Spending Attacks.
The most recent of these is an ETH Classic for example. They’re also not very scalable. Of course, you need to look no further than ETH here. Transaction times are slow as hell and those gas fees sometimes have us screaming at the sky. This is perhaps one of the primary reasons why everyone is so excited about ETH 2.0 and the transition towards proof of stake. However, despite being more favorable than a proof of work, there are challenges with proof of stake as well. So, let’s take a look at the delegated proof of stake (DPOS). For example or DPOS under this mechanism, the community will empower a number of users the delegates to choose the next block. This is a mechanism that is used by blockchains such as EOS etc. Now, the only problem is that this does create concerns around centralization. There is a fixed number of delegates and these delegates can be viewed as having centralized control. In the adipose blockchain, the delegates may own a tiny fraction of the total money in the system. Yet, the whole blockchain is secure, If and only if the majority of delegates are honest. Now, even if we were to assume that all of these nodes were honest, these nodes can easily be identified and attacked. They can run denial-of-service attacks that stop consensus and hence bring down the blockchain itself.
Another variant of the proof of stake system is of course Bonded Proof of Stake. This is your more typical model where the users were bond tokens at state in order to vote on blocks. The thinking goes that they will never vote against their own interests as they could lose that stake. The only problem with this is that it allows a well-heeled adversary to overtake the network. There are many occasions where an attacker could get more value from bringing down a network then they could lose with money bonded in stake. So, quite clearly the current message of consensus means that it’s hard to scale a blockchain insecure and decentralized way, and that is exactly why Algorand has developed its secure proof of stake mechanism. So let’s slide into that now.
The Algorand consensus mechanism is called pure proof of stake. And it operates on this simple principle. It makes cheating by a minority of the money impossible and cheating by the majority stupid. So what do I mean by that? Well unlike with other bonded proof of state mechanisms that rely on punishing bad actors, but the fun staked. They developed a mechanism so that those with small stakes cannot cheat, moreover those that have a large stake in the network won’t cheat. It will completely devalue their holdings and make no economic sense. So, basically as long as 2/3 of the majority are honest, the protocol will work just fine. It also differs from other mechanisms in that the money does not have to be bonded for a particular period of time. Money is always in users’ wallets ready to be spent and used in other ways on the network. On the other hand, blocks are constructed into two phases through lotteries known as cryptographic sortition. And if that sounds like mumbo-jumbo to you, don’t worry, it’s basically just a mechanism where consensus on blocks is established through two stages a proposal stage and a voting round.
Who does what in the is completely random and hence impossible to manipulate. By the way, I have linked to the docks below if you want to do a bit more reading but what this basically means for the ecosystem is that you have fast finality. For example, Algorand smart contracts operate at over 1,000 transactions per second, which is considerably higher than the number of other smart contract blockchains. Moreover, the random nature of the sortition that I mentioned above means that It is immediately decentralized, and given that there’s no way for adversaries to know who is voting on the next blog. It’s also secure.
Okay, so the underlying blockchain layer of Algorand is able to attack that scalability problem. I know I want to move on to the next most important component of the tech stack and that is their smart contract functionality. This is particularly relevant given their recent DeFi pivot.
Algorand 2.0
Last year Algorand released Algorand 2.0 which was a much-needed update to its protocol. This would see the introduction of three key features these include the following the Algorand Standard Assets,the Algorand Atomic Transfer, and The Smart Contracts. If you want to read about those first two, then I encourage you to look at the docs. The one that I’m most interested in covering now, is that concerning those stateful smart contracts. Algorand’s smart contracts are integrated into Algorand Layer 1, which means that they inherit the same speed, scale, finality, and security as the Algorand platform itself. Moreover, they are cost-effective and error-free in order to get a sense of just how compelling they’re smart contracts are.
I’d like to direct you to this handy guide over here. As you can see there are a number of benefits that come with the Algorand smart contracts. They’re energy-efficient, fast, have immediate transaction finality, easy to develop on they support Java, JavaScript Python Go, and of course, they’re cheap to send on. The applications for smart contracts like this in the DeFi space are immense. I want to direct your attention to their post on smart contracts in DeFi. It takes you through all these use cases including Escrow, Synthetics, stable coins, credit, exchanges, margin trading, etc. the list goes on. So there are clearly a lot of use cases for these smart contracts in DeFi and it’s also not completely theoretical there have been a number of projects that have started developing on Algorand. I also mentioned stable coin applications there. Well, it was recently announced that Coinbase’s USDC would be migrating over to Algorand The main reason for this was of course the high fees and transaction blown on the ETH network. In fact, even back in June of this year, the center consortium announced its intention of diversifying away from the ETH blockchain. It’s pretty telling that Algorand was one of the first blockchains that they decided to move on to. So, all-round, it seems that our grant has the cutting-edge tech most investors and developers consider when scouting for opportunities, and this does not even factor in the star power behind the project.
Team
As mentioned the founder of Algorand is an MIT cryptography Professor called Silvio Micali to say that he’s accomplished in the field of cryptography is an understatement. He’s won three different international academic awards for his work. He’s one hell of a bring a chap. Oh and here’s a fun fact those Zero-Knowledge Proof that you often hear about those were first conceived back in the day by Silvio and two other professors.
Silvio Micali is the founder of Algorand. He is an expert in cryptography, secure protocols, and pseudo-random generation and he oversees all of the research and security involved with Algorand. He is the co-inventor of a large number of protocols, including Verifiable Random Functions, Zero-Knowledge Proofs, and Probabilistic Encryption.
Steve Kokinos serves as the CEO at Algorand. He was previously the CEO at the global enterprise communication platform Fuze, and he brings a wealth of business and entrepreneurial experience to Algorand.
W. Sean Ford is the COO at Algorand, and he also brings a wealth of business experience, having previously been the CMO at LogMeIn.
Silvio is only one component of the team. I encourage you to take a look at their team page and see some of the other names and credentials that are behind this project. And this is just their human capital. They have a lot of financial capital behind them as well. As mentioned they managed to raise over 120 million dollars in a number of token sales and heck they even completed a separate fundraise for their own Venture Capital Arm. This was originally called Algo Capital and was recently renamed to Borderless Capital. They raised over 200 million dollars in order to invest in those projects that are building on the Algorand blockchain. If that does not spur development activity. I don’t know what will. So, I’ve been writing a lot about the benefits of Algorand and how great the tech team and use cases all are. However, this all brings us to a very important question. Why is the token still underperforming?
Tokenomics
I think this has to come down to its tokenomics. So let’s take a look at those now shall we as mentioned the native token on the algorithm blockchain is there an ALGO token? This is a utility token and there are two main functions that I can see. Firstly, it can be used in order to steak and earn those ecosystem rewards, and secondly, it can be used in order to pay for transaction fees and dap computations.
There were a total of 10 billion tokens that were minted in the Genesis block. Now while that may seem like a lot the circulating supply is only about 1 billion and right here, you can see the token release schedule now something that you should note about. This is the fact that there are still token sales ongoing. As they state they set a sales target of 150 million ALGOs for this year. However, with a 1 billion circulating supply that implies protocol inflation of close to %15 which is pretty damn high and these are just the token cell components. There are additional ALGO hitting the market as a combination of not only participation rewards but also a staking rewards component. Here you can see the total ALGO that’s being dispersed through the standard rewards, and here you can see the ALGO just coming onto the market as a result of the staking participation program by my calculations. That’s an additional 165 million ALGO there would be hitting the market in 2020.
If we add that to the proposed token cells that’s quite a hell of a lot of inflation. Now, I should also point out that 5 million ALGO were burned in an auction by a back this year more on that in a bit. However, this is just not enough to counteract the millions of the coming on to the market, as we know increased supply without a counteracting increase in demand results in a price fall.
Let’s pull up that price chart of ALGO. Shall we as you can see? They hit the market at over 3,20 and fell immediately. In fact, they were one of the worst-performing new listings on Binance as the tokens felt almost 50 cents within a month of hitting the market.
1 month later, after listed on Binance, worth was almost 50 cent.
Now, there are a number of other factors that were external to Algorand that led to this fall. Of course, they launched in the soft market last year as there was little appetite for all coins. It could also have been down to the lack of any sort of excitement prior to the listing. Given that Algorand raised most of their funds through a private sale. Not many people knew about it. However, I think a great deal of that was just a flood of tokens hitting the market the moment trading went live. For example, just prior to the listings ALGO sold tokens to the public through a Dutch Auction process. This saw them issue 25 million tokens at a price of 2.40 USD per ALGO. So the moment The training went live a flood of ALGO hit the market and subsequently tanked the price. So bad was the fall the Algorand Foundation actually implemented a token by back for some of those Auction buyers that would see them receive 90% of the original purchase price in return. In fact, I have to say that is pretty commendable. I mean how many other projects have you heard of that offered to buy back tokens that have created after listing. Either way, some people took advantage of it and some didn’t. If they did then the tokens that they sent over would be burned which would, of course, reduce the supply. However, that was not enough to slow the rate of inflation that I mentioned above. The trading history since the buyback was really quite lackluster. It culminated with ALGO dropping to an all-time low of just above 10 cents in March of this year (2020).
In March 2020. ALGO felt down to almost 10 cents
This no doubt spurred those Algorand chaps to conduct their second by back in July. However, July did renew some hope in the price of our go. After it was listed on Coinbase. Now, we all know the impact that the coin based system had not only on the price of an asset but also on the broader liquidity this did spur a much-needed rally in August that saw ALGO reach its highest level since listing and over 60 cents. This was unfortunately short-lived as the price has subsequently retraced. So this of course brings us on to the most important question of all, where does the price go from here?
Price Potential
It’s a tricky question despite how impressive Algorand is from a tech and team perspective. The current economics are still quite challenging. Yes, there is a max supply that cannot be increased. However, this is quite high and inflation is currently only impacted by what is coming on to the circulating supply. The ALGO hitting the market through the combination of those two reward programs is likely to still be a bit of a drag. The something else that you have to factor in here, too.
Because there is no bond as it is required to be put up for a period in order to stake. There are no counteracting supply-side mechanisms restricting circulating supply. This is something that bonded proof of stake mechanisms require, which does bring down those supply numbers.
The final question then has to come down to that utility demand. Is there likely to be a lot of demand from the protocol to use ALGO for Dapps or transactions? Well, given the benefits of the tech that I’ve taken you through I do happen to think so. Algorand is trying to expand the use case of its blockchain to the burgeoning DeFİ space. Prices with fast finality and low transaction fees. Indeed the move by coin basis with their USDC stable coin is Testament to that.
Did you know that a country is actually building its own digital currency on the Algorand blockchain? Yes, The Marchall Islands are issuing their own sovereign SOV that will be built on Algorand so that could be another strong utility demand-side factor right there.
Moreover, it’s pretty clear that Algorand is focused on growing its ecosystem. Let’s not forget about those 200 million dollars in funds that they have to invest in projects that are built on Algorand. However, the real question is whether the eventual demand that’s created can outstrip all that supply that’s currently hitting the market. At current levels. It doesn’t seem so but if demand does drastically pickup and more defy projects build on or migrate to ALGO then it could be a different story.
Conclusion
It’s time to start wrapping things up. What do I really think of Algorand? One can’t deny that their tech stack is impressive true. They’re unique and ingenious pure proof of state consensus mechanism. They are much closer than other projects to attacking that blockchain trilemma. We all know that scaling is one of the most important things in everyone’s mind. It’s also one of the reasons why I cannot wait for the launch of ETH 2.0. Perhaps this really could be that scaling Holy Grail that everyone is talking about.
However, delays to the launch of the beacon chain mean that people are in search of the best alternatives given the recent launch of a ground state for smart contracts the applications that can be built on the network are immense as we’ve seen there is potential for defy projects that are looking for a more scalable alternative to build on. Moreover, I have to go out on a limb here and say that the team behind the Algorand project are some of the most accomplished that I have seen, not only do they have the academic star power, they also have hundreds of millions of dollars of capital backing the project. Despite all this so things have not fared so well for the ALGO tokens. As I’ve pointed out, there are a number of supply-side pressures that are keeping the price down. As we approach that supply cap, these emissions are likely to continue. The only thing that can counter these supply-side pressures is an equal or greater demand from users building and transacting on the Algorand Network. At current levels of network use, it does not appear, as if this demand-side driver is strong enough. However, that may be about to change with their recent expansion into the field of DeFi. Theirs also dedicated to support projects building on Algorand and have a lot of coin in the kitty to do that. So, it will be interesting to see how things play out in the next couple of months. It’s no doubt a project that I will be keeping a very close eye on.
You might be forgiven for thinking that food-themed cryptocurrencies were just a ‘flash in the pan’, so to speak. To an extent, you may have even been correct. The yield farming frenzy during Summer 2020 produced several food-based yield farming protocols and tokens. PancakeSwap is a decentralized cryptocurrency exchange (DEX) built on Binance Smart Chain (BSC), powered by the BEP-20 Pancake token (CAKE). The CAKE token is one of several tokens used within the PancakeSwap protocol and made available for token swaps. Similar to Uniswap, PancakeSwap is an automated market maker (AMM) and decentralized application (dApp) that features liquidity pools where users can earn fees from staking, lending, and yield farming.
In this article, we’re going to explore the PancakeSwap platform and the seamless yield farming experience it creates for users. Also, we’re going to look at the CAKE token and the other tokens used with the platform. Furthermore, we’re going to look at how Binance Smart Chain (BSC) has bootstrapped the PancakeSwap platform to create a secure and user-friendly environment for decentralized finance (DeFi) and yield farming.
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What is DeFi?
Decentralized finance, or ‘DeFi’ is a term used to describe a decentralized network of blockchain-based financial applications. Sometimes described as ‘money legos’, DeFi protocols are often open-source. This means that anyone can build on top of them to create new variations and amalgamations. DeFi is disrupting the legacy financial system by removing unnecessary third parties and providing a compelling alternative as a solution.
Until recently, DeFi was considered by most to be a relatively risky endeavor, and there are undoubtedly still risks involved. However, DeFi has gained substantial adoption throughout 2020 and into 2021. Not only has the perceived technical barrier for entry been lowered for DeFi, but the industry itself has become an important part of the future of global finance. However, DeFi is still a relatively new industry. Therefore, DeFi should still be approached with caution. The technology is in its infancy, with many projects being tested during production, totally unaudited.
There are many sub-categories of DeFi, including, decentralized exchanges (DEXs), derivatives, asset management, lending protocols, and yield optimization. Decentralized exchanges (DEXs) such as Uniswap are peer-to-peer cryptocurrency exchanges that use smart contracts, rather than third-party intermediaries and order books. Furthermore, DeFi can be used for yield aggregation and automation with platforms such as Yearn Finance and Reef.
Popular DeFi lending protocols such as Aave, Compound Finance, and MakerDAO are great examples of how DeFi lending money-markets work. You can learn exactly how to get to grips with these protocols and much more with the DeFi 101 course at Ivan on Tech Academy!
What is Yield Farming?
Yield farming, or liquidity mining, is a term used in DeFi to describe the process of strategizing the movement of funds between multiple smart contract-based DeFi lending protocols to maximize returns. Returns come from annual percentage yield (APY) made from lending and trading fees. Also, DeFi implements an element of game theory by rewarding governance tokens to incentivize users of the protocol.
These governance token rewards combined with high levels of APY and effective yield maximization are the essence of yield farming. Users lock up crypto as collateral within a DeFi protocol, which then enables them to take out a crypto loan. This loan can then be used across multiple DeFi platforms to ‘harvest’ the best yields available.
Users must maintain collateralized debt positions (CDPs) to stay in the game. If token prices fluctuate, interest rates change, or a pool encounters an issue, users are at risk of liquidation. This essentially means that your funds are gone. To cover losses created by such volatility, CDPs are automatically liquidated if the collateral backing them falls below a certain threshold.
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What is PancakeSwap?
PancakeSwap is a decentralized cryptocurrency exchange for swapping BEP-20 tokens. If you’re familiar with Uniswap or SushiSwap, then you’ll know how PancakeSwap works. Each works in almost exactly the same manner.
The PancakeSwap exchange doesn’t use order books like traditional exchanges. Instead, it uses an automated market maker (AMM) model which matches buy and sell orders directly with others in a liquidity pool. User deposits maintain liquidity pools. By providing liquidity to such a pool, users can earn trading fees and liquidity provider (LP) tokens. LP tokes are redeemable for the initial capital deposited, plus any fees earned, minus any impermanent loss. Furthermore, LP tokens can then be staked, farmed, and traded!
Cloning or copying open source code from a popular decentralized application (dApp) is not uncommon. Particularly in DeFi, many new projects are based on existing protocols, with tweaks made to the original code. Simply make a few adjustments to a popular open-source code, create a new token, name it after your favorite snack, and presto – you’ve got yourself a freshly baked DeFi clone!
Regardless of whether you think cloning is a good thing or a bad thing, it happens a lot in crypto. For example, SushiSwap is a clone of Uniswap. Therefore, it should come as no surprise that PancakeSwap appears to work in a very similar way to SushiSwap, with a familiar layout and user interface.
However, PancakeSwap is flipping the yield farming model on its head, introducing a range of new features that provide an all-in-one yield optimization platform built around the Pancake token (CAKE). Furthermore, PancakeSwap benefits from the security of Binance Smart Chain (BSC), which could help convert some DeFi skeptics.
How to Use PancakeSwap and the CAKE Token
PancakeSwap makes yield farming simple and fun. To use PancakeSwap, you’ll first need to connect your MetaMask browser wallet or WalletConnect. Although MetaMask is an Ethereum wallet, the design of Binance Smart Chain (BSC) works in a way that makes decentralized applications (dApps) interoperable with Ethereum wallets such as MetaMask.
If you’re familiar with the Uniswap decentralized exchange (DEX) then PancakeSwap should be straightforward. The ‘exchange’ section is used for token swaps, while the ‘pools’ section is where fees are earned for liquidity provision. Finally, the ‘farming’ section is where the yield farming takes place.
To farm the Pancake token (CAKE), you’ll need to add liquidity to the PancakeSwap exchange pool. After selecting the token pair you wish to deposit, you can begin farming CAKE tokens. As with the movement of ERC-20 tokens in the Metamask wallet, withdrawals must be approved for BEP-20 tokens before PanckeSwap can withdraw them on your behalf. From here, you’ll be prompted with a popup displaying the transaction amount and any fees. Then, to stake CAKE, you’ll need to transfer some Binance Coin (BNB) to your Binance Smart Chain (BSC) BEP-20 address for future transaction fees.
Upon the confirmation of your transaction, select how much you want to stake, and confirm the transaction. You can check at any point to see how much CAKE rewards you have earned and harvest any newly awarded tokens. This means CAKE tokens can then be staked to earn more CAKE!
Also, check out the ‘farm’ page to find which pool offers the greatest rewards based on your risk tolerance. Liquidity providers (LPs) earn 0.17% of all PancakeSwap transaction fees. Plus, PancakeSwap LPs also earn FLIP tokens, which can be staked too!
The Pancake Token
In September 2020, the Pancake token (CAKE) was launched on Binance Smart Chain (BSC). CAKE is a BSC-native BEP-20 token. The CAKE token has performed extremely well in 2021, showing an incredible price rally throughout February. The primary function of CAKE is to incentivize liquidity provision to the PancakeSwap platform.
At the time of writing, the Pancake token (CAKE) has a market cap of $335,680,356, selling at $3.03 per Pancake token, with a circulating supply of 111,566,950 according to CoinGecko. Also, CAKE has no max supply, which means it is a deflationary token, with tokens burned regularly to reduce the supply.
Yield Farming with PancakeSwap
As an early adopter of smart contracts, the network effect of the Ethereum blockchain gave rise to hundreds of decentralized applications (dApps) and yield farming protocols. However, many of these protocols are unaudited, and some outright scams.
Since then, advancements in the blockchain industry and DeFi have facilitated improved security measures by allowing the coming together of centralized finance (CeFi), and decentralized finance (DeFi). A great example of this is Binance Smart Chain. Binance Smart Chain is an ecosystem of decentralized applications that harness the power and security of Binance while offering many of the services that appeal to DeFi users, such as yield farming.
Yield farming allows users to stake funds in return for staking rewards. Rewards can be compounded and used across multiple protocols, allowing users to grow yield by chasing the highest interest rates across various parts of the DeFi ecosystem.
Services for yield optimization are now a common feature among many centralized crypto platforms. However, it was DeFi that truly popularized the idea of maximizing yield in crypto. Decentralized applications (dApps) have furthered the development and adoption of blockchain technology and cryptocurrency. DeFi Pulse is a website that displays the current rankings and analytics of DeFi protocols. According to DeFi Pulse, the total value locked (TVL) in DeFi has grown from around $1 billion to over $34 billion in less than a year.
The technology behind many yield farming protocols is unaudited and can be risky. Although these projects often offer high returns, the rates of these returns are extremely volatile. Yield farming protocols are ten-a-penny these days. However, the risk presented by many weird DeFi platforms should always be considered when participating in new technologies.
Providing Liquidity to PancakeSwap
PancakeSwap liquidity provider (LP) tokens are suitably named ‘FLIP’ tokens. FLIP tokens come in different varieties depending upon the token pair provided to a pool. PancakeSwap farmers can lock up their LP tokens and earn further rewards in the process.
After depositing funds into a PancakeSwap liquidity pool, earning LP rewards, and using them to farm the Pancake token (CAKE), users could stake their CAKE tokens by locking them up to receive SYRUP tokes. However, SYRUP was discontinued and rendered useless after a smart contract issue. Instead, users can now stake CAKE, to earn more CAKE!
PancakeSwap Fees
PancakeSwap fees work just like other decentralized exchanges (DEXs) and automated market makers (AMMs) such as Uniswap, 1inch Exchange, and SushiSwap. Anyone that provides liquidity to PancakeSwap pools will receive ‘FLIP’ liquidity provider (LP) tokens along with any trading fees accrued. When using PancakeSwap, traders pay a 0.2% fee. Of this fee, 0.17% is allocated to liquidity providers (LPs) while the remaining 0.03% are burned by PancakeSwap Treasury.
Based on 30,000 blocks per day, the emission for fees on PancakeSwap amounts to approximately 750,000 daily Pancake token (CAKE) rewards. Of this, 60% goes to farmers. Holders of the CAKE token receive 40% of the rewards per block. With future governance proposals, however, these rates could change.
Why Build on Binance Smart Chain (BSC)?
Ethereum has been the go-to blockchain for smart contract-based decentralized applications (dApps) for several years. This is due to the early adoption of Ethereum which gave the second-largest blockchain a head-start against any competition. As this technology was only coming into development, the network effect of Ethereum-based decentralized finance (DeFi) protocols has resulted in phenomenal growth and continued development and adoption.
However, there are concerns for some developers building on Ethereum regarding high gas fees, speed, and network congestion. Many believe this could hinder the mass adoption of crypto. However, several measures are being taken to address this issue through scaling and interoperability in Ethereum 2.0.
Regardless, many crypto projects are opting to build on other blockchains due to lower transaction fees and less saturation. One such blockchain is Binance Smart Chain (BSC). BEP tokens are a token standard native to the Binance Smart Chain and the focus asset of the PancakeSwap protocol. BSC has considerably lower fees than Ethereum, lowering the barrier of entry for adoption while creating a cost-effective and secure platform for building dApps!
Additional Features
As if the team at PancakeSwap didn’t have enough on their plates, the project also boasts several other features that bring further utility to the platform. These include a platform for Initial Farm Offerings (IFOs) and a marketplace for non-fungible tokens (NFTs). Here, you can trade tokenized assets including Tesla, Google, and Netflix shares!
Also, PancakeSwap holds several community incentives to encourage participation, such as the lottery whereby holders of the Pancake token (CAKE) can buy tickets for a chance to win prizes. Furthermore, CAKE token holders oversee the proposal process for adding new token pools to the PancakeSwap protocol.
If you’re already partial to a bit of CAKE, follow us on Twitter @Academy_IOT and let us know what you think about PancakeSwap!
PancakeSwap Summary
As with any other DeFi protocol, PancakeSwap comes with inherent risks. However, the security afforded by Binance Smart Chain (BSC) is winning the hearts and minds of both CeFi and DeFi users. PancakeSwap brings all the functionality of Uniswap to Binance Smart Chain (BSC), without the fees. Transaction fees are paid using the BNB token, but these fees are extremely low compared to Ethereum-based DeFi protocols.
DeFi protocols are generating an incredible amount of revenue. Furthermore, almost all of these platforms are less than two years old. Binance Smart Chain (BSC) is an exciting new platform for DeFi. PancakeSwap is one of many successful projects to emerge from BSC. As the industry develops, we can expect to see a further crossover between DeFi and CeFi and more high-quality projects integrating the best of both worlds!
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所谓otc，字面意思是Over the counter（非柜台交易），大家更习惯称之为场外交易。这也是来自传统金融市场的概念，因为早期的股票交易市场，是需要大家拿着条子和电话在柜台上进行交易的，后来才有了电脑、互联网等概念，但这个叫法被传承了下来。实际上现在的otc交易已经分成了两大类别，一种是以平台（交易所、场外交易平台等）为载体的法币交易通道，另一种是传统的场外交易，由买方、卖方和（担保人）构成，主要在微信群、QQ群等。微信、QQ群的场外交易，好处是很明显的。首先是不会对二级市场的K线造成影响就能私下完成了筹码的交换，打比方说你需要买1000个btc，如果在交易所直接买的话，你会遇到两种情况，要么是在价格波动不大的情况下吃货时间特别长，要么就是在很短时间内能吃到货，但是成本会飙升不少。场外就能完美满足这两点，你找到靠谱的大宗，找好担保人，商量好价格，线下交易，整个市场的币价不会受到一丝一毫的影响。其次就是方便了很多不太会使用交易所的人，相比于注册交易所而且要完成复杂的认证步骤，在微信群、QQ群的场外交易，只需要进行钱币交易即可，根本不需要做kyc，流程简单许多。第三就是方便黑钱的进出，其实我们国家对于洗钱一直是严厉打击的，原则上是黑钱流到哪就冻结到哪。但是由于数字货币的特殊性，加上微信群、QQ群的场外交易的便利性和隐蔽性，越来越多的人选择用数字货币来洗钱。
