What is swapping & staking? What are their benefits and drawbacks? The instructions to conduct swapping and staking on Pancakeswap Decentralized Exchanges
- What is swapping?
- Swapping is a feature usually provided by Decentralized Exchanges. With the swapping function, after connecting your wallet with the exchanges, users can easily exchange one cryptocurrency for another.
- Most DEXs now are AMM DEXs that work based on the Automatic Market Maker mechanism where transactions are conducted from a Person to a Smart Contract instead of a Person to a Person as in the original DEXs. In this trading operating mechanism, when someone exchanges 1 token for another token, there is a pool containing those tokens available to match this order, and the transaction is then solved frantically in comparison with the original DEXs which require the matching order criterion between a buyer and a seller.
- In the matter of the strength of Swapping, it makes the act of exchanging coins become much effortless with no KYC requirement. The swapping fee is used for creating other financial incentives to encourage the growth of the Dex ecosystem. For instance, in terms of swapping on Pancakeswap, 0,25 % of the total trading fee is used for three goals: rewarding liquidity providers (0,17 %), building Pancakeswap treasury (0,03 %), and buying back then burning Cake token (0,05 %) to decrease its supply then eventually increase the price of Cake Exchange token. This would therefore contribute to the overall development of Pancakeswap.
- The other strong points that make Pancake a good destination are the low swapping fees, the brilliant incentives, the high processing speed thanks to Binance Smart Chain, and the impressive creative Buyback & Burn mechanism.
- There is one thing that traders must care about when swapping is slippage. Slippage is the difference between the predicted price of an order and the price when the order executes. When slippage takes place, users are charged with the slippage fee beside the trading fee. The reasons for the slippage appearance are huge market price movement and deficient liquidity.
- To know the steps to swap on Pancake swap, please follow these following steps:
a, Go to the Pancakeswap Swapping Website
b, Connect your wallet to Pancakeswap.
c, Choose the token you want to swap.
d, Add the quantity.
e, Clicks confirm swap after checking the information of price impact (slippage) and trading fee.
f, Select confirm in your wallet.
2. What is staking?
- Staking is the act of depositing your digital tokens into a wallet or a node and this could be seen as a method to be skin-in-the-game (the idiom indicates that someone focuses on investing in something so that this investor makes a lot of efforts to understand the project very thoroughly). By doing so, users can earn an annual percentage yield or an annual percentage rate, whose quantity depends on the length of staking time and how many tokens are staked.
- Staking is run based on the Proof of Stake mechanism allowing investors to use their tokens to stake and earn more income. In the past, when Pos had not been invented, only users owning sufficiently strong computers were able to stake and make more profit. Furthermore, if more users stake their tokens into wallets or nodes, the system will become more secure because the level of decentralization increases.
- Although staking plays a role like a revolution that helps improve financial income for holders, it brings in itself several risks. The most popular risk I would like to tell you about is the situation related to staking when you want to sell your coins. It usually requires about 2 or 3 days to unlock and release your coins. As a result of this, it is possible that the price at the time when your coins are given back is possibly not the best timing for the best price.
To know the steps to stake your assets in the Syrup pools on Pancakeswap, please follow the following steps:
a, Go to the Pancakeswap Syrup Pools website.
b, Connect your wallet to Pancakeswap.
c, Choose which Syrup Pool you want to stake in.
d, Once you choose a pool, click the Enable button. Your wallet will ask you to confirm the action.
e, The Enable button should now be replaced with Stake. Click the button to bring up the staking menu.
f, Type in an amount or slide the rabbit to choose how many tokens you want to stake.
g, Click Confirm. Your wallet will ask you to confirm the action, then click confirm after checking the information again.