The idea of Decentralized Finance exchange is presently booming in major parts of the world as it avoids the intermediates completely while performing any financial or crypto transactions. The market for DeFi exchange is huge and many new crypto players are directly showing their existence in this kind of platform to swap their desired virtual crypto assets.
The technology behind the DeFi exchange and cryptocurrency is a blockchain network which is a widely used technology at a rapid pace by lots of prominent industries. Besides, it is a major reason for several novelties. As per the recent stats and surveys, the total estimated value of blockchain technology will enhance beyond our expectations in the upcoming years.
Considering the various use cases, circumstances, and their importance in this digital era, the experts in the blockchain community have estimated that this technology would reach its highest peak and it would hit around the $60 billion market value in 2026. I’ve attached a statistics image for your reference.
The DeFi exchange is one of the finest use cases of the blockchain network. In fact, the DeFi exchange platform is also built using the existing or new blockchain ecosystem.
In that regard, PancakeSwap is a renowned DeFi exchange platform that gained a massive crypto audience and built a unique DeFi space in the global blockchain marketplace. This platform is completely devised over the Binance smartchain network, which is the most secure and reliable blockchain introduced by the leading crypto exchange – Binance.
Since the PancakeSwap runs on Binance smart chain, the crypto users can swap all BEP20 tokens in a stress-free way by connecting any non-custodial wallets which support BSC-based crypto tokens.
As per the analysis of LunarCrush and Social intelligence for crypto, PancakeSwap is the top DeFi exchange platform that has the highest social media engagement.
As a crypto enthusiast and an advisor, I always have a habit of exploring the blockchain market and assisting crypto startups by suggesting first-class business ideas to reap profits. While coming across various DeFi business models, the business model of PancakeSwap and its revenue methods made me compose this article.
In this article, we would see the success story of the Pancakeswap business model, how this business model works and generates revenue, and how it inspired aspiring startups to choose PancakeSwap as their DeFi exchange business model.
First, let us see…
Facts of PancakeSwap
Founders: a group of anonymous developers
Founded in: September 2020
Business model type: Decentralized Finance (DeFi) exchange
Blockchain used: Binance Smart Chain(BSC) network
Native token: CAKE
Annualized total revenue(from Jan 2022 to May 2022): $354.1 Million
Active users per day(2022): 4,00,000
Active users per month(2022): 2.3 million
The above facts which I’ve mentioned are gathered from the various trustworthy resources.
PancakeSwap timeline
Sep 2020 – PancakeSwap was launched as a DeFi solution for swapping tokens.
After the Launch – PancakeSwap introduced their native crypto token on top of the Binance smart chain network and named it CAKE
February 2021 – PancakeSwap became one of the crypto industry’s largest DeFi exchanges by trading volume.
April 2021 – CAKE token reached its all-time high of $44.1
Later 2021 – Pancakeswap created a strong branding and delivered innovative features. They experienced a meteoric rise in total value locked (TVL). Also, they are planning to expand its purview into prediction markets, lending, borrowing, and more.
Present 2022 – PancakeSwap introduced plenty of new features and functionalities to increase user engagement.
Unique Products of PancakeSwap
As per my analysis, the PancakeSwap platform currently has 7 main products, including.
- Farms
- Syrup Pools
- Initial Farm Offering (IFO).
- Lottery
- NFT marketplace
- Prediction(BETA)
- Voting
- Leaderboard
- Team battle
- Perpetual
Supported Wallets in PancakeSwap
The existing PancakeSwap business model supports multiple non-custodial wallets for swapping BEP20 tokens, minting NFTs, and participating in other events.
- Trust wallet
- Binance chain wallet
- Metamask wallet
- Coinbase wallet
- Opera wallet
- Math Wallet
- TokenPacket
- SafePal wallet
- Coin98 wallet
- Blocto wallet
How does the pancakeswap platform work in real time?
As said earlier, PancakeSwap is the best and leading DeFi exchange platform with a presence in more than 50+ crypto-friendly countries around the globe. While the United States and the United Kingdom make a major portion of PancakeSwap’s revenue and other countries are also major contributors.
In 2+ years of its operations, the PancakeSwap platform has created a huge DeFi ecosystem with its powerful business model and outstanding strategies. Now, let’s understand the workflow of the PancakeSwap business model.
- PancakeSwap targets both buyers and sellers who are interested in trading crypto in a decentralized way. Besides, they also target DeFi users.
- This platform supports only non-custodial crypto wallets. So First, the user must connect with a crypto wallet like metamask wallet, trust wallet, binance chain wallet, or any other wallet that PancakeSwap supports.
- Once the wallet is connected, the user needs to unlock the wallet and deposit a BNB coin(the native currency of Binance) for swapping & paying fees.
- The AMM module in PancakeSwap helps the user to add liquidity. However, the user can also eliminate liquidity at any time as per their wish.
- After adding liquidity, users can earn LP tokens.
- PancakeSwap has a specialized product named syrup pools. Staking LP tokens into Pools will help the users to receive $CAKE tokens as a reward.
- If the user wants to swap, they can choose the desired BEP20 token and swap them quickly without any hurdles. But for swapping, they need to pay LP fees and network fees in BNB.
This is how the PancakeSwap platform works in real time. The PancakeSwap can be accessed directly through the website or by connecting to the crypto wallet mobile app.
How does Pancakeswap make money?
Here I would like to share the major revenue streams that PancakeSwap follows for generating a lucrative amount of money.
1. Swap fees
For every swap, PancakeSwap will collect swap fees in the name of LP fees and network fees.
2. Staking
This feature helps the users to earn rewards and the platform owner can generate revenue for offering this service.
3. IFO
For conducting a token sale on the platform, PancakeSwap collects some amount of money as a fee from the token issuer.
Important Lessons that you must Learn from PancakeSwap success
Crypto startups or entrepreneurs who are planning to begin their DeFi exchange business can consider a few strategies which are effectively used by PancakeSwap. By analyzing the success story of the PancakeSwap business model, you can learn the below-mentioned important lessons.
1. Don’t rely on One Revenue Stream
Making a lucrative revenue from various sources is highly beneficial and profitable for any kind of business in the crypto sector. For instance, the major revenue stream of PancakeSwap is swapping fees or LP fees. However, they also provide other innovative services for generating revenue. Such as yield farming, IFO, lottery, syrup pools, and more.
Therefore, do not depend on one revenue module when you start a DeFi exchange business.
2. Solve the Existing issues
When PancakeSwap was launched in September 2020 and the DeFi market was already occupied by many reputed DeFI exchanges like Uniswap, Sushiswap, and 1inch. But, the PancakeSwap was the first-ever DeFi exchange created on the Binance smart chain network. So this platform divided the crypto market and ruled the DeFi ecosystem like a sovereign.
They figured out the DeFi issues that crypto traders were facing on these popular DeFi exchange platforms and PancakeSwap solved them most innovatively. From your end, all you need is a unique idea to scale and taste the success in a global DeFi market.
3. Traders Satisfaction
One of the primary reasons behind the success of every crypto business model is 100% user satisfaction. PancakeSwap offers the first-class BEP20 token swapping experience and an astounding user-friendly experience. Along with that, this platform provides different services for all active users. Besides, the various features in PancakeSwap also helped them to keep their users connected to the platform.
Closing words
The most essential reason behind PancakeSwap’s success is its revenue-generating business model and the prominence it gained among DeFi users. Thats why many startups are showing a keen interest to create a DeFi exchange like pancakeswap.
Unlike UniSwap or SushiSwap, PancakeSwap picked Binance smart chain for operation and other functionalities so it emerged as a leading platform in the DeFi space.
If you look carefully, you might notice that UniSwap and SushiSwap also provide such features on their platform with the support of the Ethereum network. But PancakeSwap runs on the Binance smart chain, so it provides more compatibility and values which pulled many crypto users.
