Pancake Swap is a newer decentralized exchange (DEX) that has been gaining popularity due to its low fees, simple interface, and added security features. Uniswap is the original DEX built on Ethereum and is still one of the most popular options. Pancake Swap vs Uniswap – Both exchanges allow users to trade ERC20 tokens, but there are some key differences to be aware of.
In this blog post, we will compare the two platforms and see which one comes out on top.
- The swap interface is sleek and clear, with a handy dark mode setting.
- The most liquidity exists for Ethereum ERC-20 coins.
- Advantage to the first-mover
- History of flawless security
- UNI is merely a governance symbol.
- There will be no liquidity mining or yield farming with Uniswap Farming.
- It can be time-consuming and costly to utilize.
- Uniswap V3 has slipping issues.
- Pools have a lot of liquidity.
- Binance Bridge makes it simple to utilize.
- Much less expensive and faster than Uniswap
- Farming options with infinite yield.
- a jumbled user interface
- You must connect Ethereum assets.
- The trading volume has been decreasing.
- BSC has recently been subjected to a slew of exploits.
What is Uniswap (UNI)?
Uniswap (UNI) is a prominent decentralized trading system for supporting the automated swapping of Defi tokens. It is also an automated market maker that was released in 2018 and has garnered a lot of interest since then. It acquired a lot of popularity, especially in 2021, when the crypto industry saw the Defi explosion.
What makes Uniswap Unique?
Uniswap’s purpose is not only to make token trading automated but also to maintain token trading open to everyone who owns tokens. It also aims to improve trade efficiency as compared to traditional trading exchanges. Uniswap improves efficiency by resolving liquidity difficulties with automated methods and avoiding Uniswap issues that harmed earlier decentralized exchanges.
In 2020, Uniswap went a step further by creating and awarding its own governance token, UNI, to past users. This was done to improve the users’ ability and profitability to control its future. Uniswap intends to address difficulties that have plagued platforms such as EtherDelta. It decreases risks and expenses for all participants by automating the market-making process. This technique also eliminates the need for users to provide their identities and allows anyone to construct a liquidity pool for any pair of tokens.
In November 2018, Uniswap released a second version with new features such as ERC-20 pairings, flash swaps, price oracles, and so on. The most recent version, Uniswap V3, was released in May 2021 and has increased capital efficiency for liquidity providers. The infrastructure for this version has also been improved and strengthened.
What is PancakeSwap (CAKE)?
PancakeSwap is an AMM (automated market maker) that allows users to trade tokens while still earning fees. Despite its amusing moniker, PancakeSwap is no laughing matter in the decentralized finance (Defi) field. It has a daily trade volume of more than $100 million and is one of the top decentralized applications (DApps) to date.
What makes PancakeSwap unique?
PancakeSwap, which debuted in September 2020, is one of the leading cryptocurrency decentralized exchanges (DEX) for exchanging BEP20 tokens on BSC (Binance Smart Chain). PancakeSwap employs an automated market maker (AMM) mechanism, letting users trade against the liquidity pool. Users deposit funds in these pools in exchange for liquidity provider (LP) tokens.
These tokens are then used by users to reclaim their pool share as well as a portion of the trading costs. These LP tokens are known as FLIP. Users can also farm other tokens such as SYRUP and CAKE. Users receive CAKE tokens for depositing LP tokens on the farm. Users can even stake the tokens to acquire more CAKE tokens or tokens from other projects.
CAKE, the native token of PancakeSwap Decentralized Exchange, is a BEP20 coin that was originally introduced on BSC. The fundamental purpose of the CAKE coin is to promote liquidity provision. It provides customers with the possibility to expand and invest their returns in the future, but it comes with additional dangers. The current PancakeSwap token price (as of December 28, 2021) is $12.67. CAKE coin reached an all-time high of $44.18 in April 2021.
Pancake Swap vs Uniswap
Trading volume & fees
During the spring, high Ethereum transaction fees prompted traders to explore alternatives to popular programs like Uniswap. BSC had previously spent months marketing itself as a low-cost competitor, so when the exodus from Ethereum apps began, PancakeSwap was ready.
PancakeSwap processed over 2 million transactions on one busy day in April. During the same time period, Ethereum as a whole, including Uniswap, was only able to process 1.5 million transactions.
PancakeSwap trading volume surged to the point where it temporarily surpassed Uniswap as the world’s largest decentralized exchange by trading volume.
However, PancakeSwap’s business has dwindled in recent months. Ethereum transaction fees have fallen, making Uniswap trading more affordable. Furthermore, because the Ethereum Defi ecosystem contains 218 projects versus 36 developed on BSC, there is considerably more ERC-20 token volume available for trade on Uniswap.
Uniswap has recovered the first spot in the DEX standings by a significant margin over PancakeSwap. With Ethereum’s EIP 1559 upgrade slated for July, Uniswap gas fees are projected to fall even further. To remain competitive, PancakeSwap will need to reinvent itself in order to attract traders away from Uniswap.
PancakeSwap and Uniswap provide different yet similar swap interfaces.
The primary distinctions between the PancakeSwap and Uniswap swap interfaces are clutter and color.
Uniswap promotes minimalist purity, with a significant emphasis on the exchange mechanism itself. PancakeSwap features lighter colors and has a comical vibe with animal figures and a crowded menu.
Swapping feels similar in both transactions. You must connect a Web3 wallet such as MetaMask to each one. However, points go to Uniswap on this score because MetaMask works natively with Ethereum out of the box. To link MetaMask to PancakeSwap, you must manually enter the Binance Smart Chain specifications.
While Uniswap outperforms PancakeSwap in terms of appearance and method, the latter wins in terms of trading speed. Binance Smart Chain performs more transactions per second than Ethereum, allowing PancakeSwap to move trades quickly.
Uniswap deals can sometimes take up to five minutes, depending on the amount of gas used. As a result, each exchange has advantages that balance the disadvantages of the other, resulting in a wash between Uniswap and PancakeSwap.
Uniswap does not now provide yield farming in the traditional sense. The only way to make yields on Uniswap is to collect trading fees from liquidity pool tokens.
PancakeSwap, on the other hand, provides a vast selection of Defi farming alternatives. If you need proof, simply look at the plethora of PancakeSwap Farms that are currently accessible.
In addition to PancakeSwap Farms, there are Syrup Pools. These are pools with high payouts that allow you to stake CAKE tokens in exchange for tokens from BSC projects.
Finally, you can supply liquidity to PancakeSwap in the same way that you would on Uniswap if you’re keeping track. Those are three key methods to earn yields on PancakeSwap vs. one on Uniswap.
Safety and Community
Although both PancakeSwap and Uniswap are decentralized, PancakeSwap benefits from Binance‘s support; Uniswap, on the other hand, has a sizable community due to its early entry into the Defi market.
PancakeSwap is seeking to close the user gap left by its late debut on the Defi market by developing a loyal following through lotteries, competitions, and other similar incentives.
Rate of Adoption
It’s difficult to estimate the top two DEXs on this one. While PancakeSwap is gaining popularity, Uniswap is older and has a large user base. It’s one of the few projects that brought Defi out of the shadows by delivering AMM functionalities that no other project has previously done satisfactorily.
However, because of the increased usage of both the Binance Smart Chain and the CAKE token, PancakeSwap appears to be on its approach to overtaking Uniswap. The price of a digital asset, as is usual in the crypto realm, responds to acceptance or, at the very least, demand.
PancakeSwap has more active users than Uniswap, but Uniswap has a bigger trading volume, implying that Uniswap users trade in larger denominations.
At the moment, Ethereum has definitely lost the war on transaction costs, leaving the door open for more efficient platforms with smart contract capacity. With Uniswap running on the second-largest blockchain, gas fees have skyrocketed.
The issue is exacerbated for Uniswap users who can only exchange small quantities because petrol costs eat into their profits. PancakeSwap is able to offer significantly cheaper transaction costs by utilizing a scalable network such as BSC.
Transaction prices on BSC are peanuts compared to Ethereum, where fees can reach hundreds of dollars. BSC not only saves consumers money on gas but also allows for speedier transactions.
UNI and CAKE Tokens
Both Uniswap and PancakeSwap have native tokens: UNI and CAKE. That’s where the similarities end. Let’s take a short look at what each token performs.
The Uniswap token, or UNI, is a governance token that is intended to assist shape the direction of the Uniswap system. By owning UNI tokens, you can propose, participate in, and reject initiatives that shape Uniswap now and in the future.
For many, the UNI token’s current functionality is limited to governance. You cannot bet it, receive network fees, or exchange it for a yield-bearing token.
PancakeSwap token, or CAKE, is a dynamic cryptocurrency that may be utilized in a variety of ways. CAKE, like UNI, is utilized for governance because PancakeSwap is a decentralized swap protocol.
Where CAKE really shines is in how you can utilize it to gain additional CAKE and other tokens. Staking CAKE tokens allow you to gain a percentage of the revenue generated by PancakeSwap trading fees. CAKE is comparable to the Sushi xSUSHI symbol in this regard.
As you acquire more CAKE, you can keep staking to earn additional fees, or you can use it as part of a liquidity pool pair in PancakeSwap Farms. You’ll make even more CAKE this way, giving you more tokens to deposit in Syrup Pools, where you can earn extra BEP-20 tokens.
Uniswap vs PancakeSwap: Top Decentralized Exchanges’ Key Takeaways
The Uniswap (UNI) has the following distinguishing features:
- The purpose of Uniswap is to generate liquidity.
- It tries to address the liquidity difficulties that plagued prior DEXs, such as the EtherDelta platform.
- Because the entire process is automated, the protocol incentivizes market making by lowering costs and limiting risks for all parties.
- The PancakeSwap (CAKE) coin has the following distinguishing features:
- It is an automated market maker (AMM) that allows users to swap tokens, offer liquidity via farming, and earn fees in exchange.
- It is a DEX that allows you to trade BEP20 tokens on the Binance Smart Chain.
- The CAKE token’s primary function is to reward the PancakeSwap platform’s liquidity provision.
The Primary Distinctions Between PancakeSwap and Uniswap
- Uniswap exchange has more than $7.6 billion TVL in its exchange, much exceeding PancakeSwap or any other exchange type, although PancakeSwap is still growing and has roughly $6.5 billion TVL.
- Because Uniswap is built on the Ethereum blockchain, each transaction costs ETH, commonly known as the gas fee, which is only increasing with each passing day. As a result, the transaction costs in Uniswap are higher than in PancakeSwap.
- When it comes to the number of tokens listed on the exchanges in PancakeSwap and Uniswap, Uniswap clearly outnumbers PancakeSwap with over 1600 crypto tokens, whereas PancakeSwap has roughly 200 crypto tokens.
- PancakeSwap is built on the Binance Smart Chain, whereas Uniswap is built on Ethereum blockchains.
- Uniswap was introduced on November 2, 2018, whilst PancakeSwap was launched on September 20, 2020. Thus, Uniswap was two years ahead of PancakeSwap in terms of expansion.
How much is the fee in PancakeSwap?
It’s a 0.25%. When you make a token swap (trade) on the exchange, you will pay a 0.25% trading fee, which is broken down as follows: 0.17% – Returned to Liquidity Pools in the form of a fee reward for liquidity providers. 0.03% – Sent to the PancakeSwap Treasury.
Is there an alternative to PancakeSwap?
BakerySwap is a PancakeSwap alternative. BakerySwap is the best AMM crypto exchange on Binance Smart Chain. Launch your project with BakerySwap; BakerySwap is a decentralized trading platform that uses the automatic market maker (AMM) model. At the same time, BakerySwap is the 1st AMM+NFT exchange on Binance Smart Chain.
Is PancakeSwap cheaper than Uniswap?
The PancakeSwap platform fee is 0.25% per trade, which is slightly better than the average fee on Uniswap. The biggest advantage that PancakeSwap has over Uniswap at the moment is lower gas fees.
There is no clear winner when comparing PancakeSwap and UniSwap. Both protocols have their own advantages and disadvantages.
PancakeSwap is a newer protocol with a more user-friendly interface. It also offers lower fees and faster transaction times. However, UniSwap has a larger selection of tokens and a more established reputation. PancakeSwap is certainly a Uniswap alternative.
Covemarkets hope this article will be useful for you. Thanks for reading!
Disclaimer: The information provided in this article is not investment advice from Cove Markets. Cryptocurrency investment activities are yet to be recognized and protected by the laws in some countries. Cryptocurrencies always contain financial risks.