Cover Product Spotlight: PancakeSwap

6 min read

A spotlight article on PancakeSwap with its features, financials, & security record.

Cover policies for PancakeSwap users are available in the BNB Smart Chain in our marketplace. You can navigate to BNB Smart ChainDiversified PoolPopular DeFi AppsPancakeSwap V2 to purchase cover for your funds in the PancakeSwap exchange.

Edward Ryall, one of the co-founders of Neptune Mutual, said,

PancakeSwap has the largest trading volume of any DEX on the Binance smart chain, and it is important that users have the option to mitigate smart contract risk, one of the biggest risks in the crypto space. Our cover policies payout 8 days after an incident, and this is a real breakthrough in increasing brand resilience, and we are pleased that a cover product is available for the PancakeSwap community.

About PancakeSwap#

PancakeSwap is a popular decentralized exchange (DEX) built on the BNB Smart Chain (BSC) that allows users to swap tokens without disclosing their identities or personal information.

The protocol’s liquidity pools work with the Automated Market Maker (AMM) algorithm, which adjusts the price of tokens automatically according to the assets and activities in the pools.

Since PancakeSwap is built on the BNB Smart Chain, it focuses on BEP20 tokens, the standard developed for BNB Smart Chain tokens. It offers comparatively lower gas fees and faster transaction speeds as compared to DEXes like Uniswap or SushiSwap built on Ethereum. Moreover, PancakeSwap has been expanded to the Ethereum and Aptos chains as well.

Besides trading, PancakeSwap allows users to deposit in liquidity pools and receive liquidity provider (LP) tokens. These LP tokens not only serve as proof of your deposit but also earn you a portion of trading fees as rewards. You can also earn $CAKE, PancakeSwap’s native token, by locking your LP tokens into a smart contract.

What Makes PancakeSwap Unique?#

PancakeSwap is one of the most popular DEXes overall and the top DEX that runs on BSC. Some reasons for its popularity are the low gas fees and faster transactions facilitated by BSC.

There’s more to PancakeSwap. It offers several opportunities to invest, optimize returns, participate in the ecosystem, and features to make your experience in the PancakeSwap ecosystem better. Let’s see them briefly.

Staking: PancakeSwap offers several ways to collect revenue passively and get rewards. Investing your tokens into the liquidity pools, yield farming by staking LP tokens, and further staking CAKE tokens received from yield farming in the Syrup Pools are some ways you can maximize your income from PancakeSwap.

Lottery: You can participate in the PancakeSwap Lottery and win huge prizes. A lottery ticket costs around $5 (in CAKE), and you can purchase up to 100 tickets at a time. The system will randomly generate and assign a 6-digit number to each ticket, which should be matched against the winning number to win the prize. Even matching the first single digit will be eligible for a small reward. The more digits matched (from left to right), the more reward you’ll receive.

PotteryPottery is similar to the Lottery program but combined with the CAKE lock-staking feature. It improves your chances of a larger yield on the CAKE deposit. By staking in pottery, you’ll safely receive your deposit back along with some staking rewards even if you don’t win anything on the lottery.

Prediction: The prediction program allows you to win rewards by predicting if the BNB or CAKE price will rise or fall. You’ll have to “commit” a number of tokens for your prediction. Each prediction round lasts 5 minutes, and you’ll have to put in your guess before the round goes live. If you win, you’ll receive a multiple of your committed amount, depending on the total number of predictions made in that round.

Perpetual TradingPerpetual trading in PancakeSwap is a special type of futures contract that allows you to hold a position as long as you want. It also offers leveraging capital, meaning you can borrow funds in multiples of your initial capital. Perpetual trading allows you to swap tokens with the borrowed funds; thus, you’ll receive multiplied tokens in return. You can hold on to these tokens for a long time without actually owning them.

Governance: PancakeSwap allows its community to participate in governance. The users can propose ideas or vote on the ideas proposed by the protocol. The amount of CAKE you hold will determine your voting power. You can also stake your CAKE for a fixed time to receive vCAKE, which is boosted voting power.

PancakeSwap Financials#

PancakeSwap has raised a total of $4 million in two funding rounds from investors Binance Labs and Platinum Capital. The investment is very small compared to other DEXes like Uniswap. Despite that, it’s one of the top DEXes, with around $100 million of daily trading volume. This demonstrates the strong financial position of the protocol.

CAKE is the native governance token of PancakeSwap. The token emission takes place every day, distributing tokens proportionally to users engaged in trading, staking, and other activities.

The protocol burns the tokens collected from lottery ticket purchases, predictions, farm auctions, etc. It helps regulateCAKE’s price by reducing the tokens’ availability.

Social Media#

PancakeSwap has utilized several social media platforms to capture users’ attention and share information about the protocol. Its official Twitter (X) account has over 1.7 million followers, and it’s the go-to source for receiving updates, announcements, and events about the protocol.

Besides, it has also diversified its presence on TelegramDiscordReddit, and Instagram to engage with users and keep its community informed. The Telegram channel is available in 15 languages to connect and relay information to users from different parts of the world.

Its YouTube channel is full of engaging tutorial videos, development updates, and announcements.

Cyber Security Track Record#

PancakeSwap is dedicated to making the protocol secure for its users. It has applied best security practices like multisig for contracts, time locks, and more.

It has gone through multiple security audits for its different products individually since its launch.

Having said that, the protocol suffered a loss of $1.8 million due to a compromised administrator account. The attacker who maliciously gained access to the admin account used it to steal 59,765 CAKE from the lottery pool over time, starting in April 2021. As soon as the exploit was identified, the account was banned.

The protocol has an active bug bounty program, an initiative to prevent further exploits like this in the future. It incentivizes researchers who identify vulnerabilities in its smart contracts, websites, and apps. The reward prize ranges from $1,000 to a whopping $1 million, depending on the level of vulnerability.

You can check out its code on the Github repository. Most of the code is made public so that you can review it, submit issues, and submit pull requests.

Final Words#

Even the strongest DeFi protocols are prone to attacks. Although PancakeSwap had gone through several audits and enforced strong security measures, it was exploited, and some funds were lost.

That’s why we, at Neptune Mutual, offer coverage for PancakeSwap users to protect your funds in case of such exploits in the future.

Neptune Mutual is a parametric insurance protocol dedicated to protecting your digital assets and distributing payouts easily and quickly in case of hacks or exploits.

You can visit our marketplace on EthereumArbitrum, and BNB Smart Chain and purchase coverage for your funds in different protocols.

If you have a project in DeFi, CeFi, or Metaverse and want to protect your users from threats, then you should consider creating a cover pool in our marketplace. Reach out to us, and we’ll help you create a cover pool for your project.