The rate of the own token of the automated market maker PancakeSwap (CAKE) protocol has been growing steadily over the past month. It renewed its highs again this morning at $ 7.22, up nearly 500% in two weeks and 1,160% in a month.
PancakeSwap launched in September 2020 on the Binance Smart Chain (BSC) blockchain. BSC is positioned by its creator – Binance exchange – as a cheaper and faster alternative to Ethereum. Unlike decentralized exchanges on the Ethereum blockchain, such as Uniswap, where ERC20 tokens are traded, PancakeSwap allows the exchange of BEP20 tokens on the Binance blockchain. In addition, PancakeSwap attracts liquidity providers with additional staking profits.
One of the consequences of the growth of fees in the Ethereum network was the search for alternative opportunities for earning money in the space of decentralized finance. As a result, PancakeSwap today for the first time came to the second place on the list of the largest decentralized exchanges, beating SushiSwap. In addition, BurgerSwap, another DeFi protocol on the Binance blockchain, came in seventh place.
“Today is a big day,” Binance CEO Changpeng Zhao tweeted. – Binance Smart Chain bypassed Ethereum in the number of transactions per day. This confirms the logic that low commissions attract users and projects. We will continue to work with the BSC community to promote low fees (even as BNB grows) and build on. ”
Today is an important day. #BSC (#BinanceSmartChain) flipped Ethereum on daily transactions.
This validates the logic that low fees attracts more users & projects. We will continue to work with the #BSC community to promote low fees (even as #BNB rises) and #build more.
🙏🙏🙏
– CZ 🔶 Binance (@cz_binance) February 10, 2021
At the same time some associate high activity on the Binance Smart Chain blockchain with fictitious transactions used solely to increase transaction volume. At least in part, this activity is due to arbitrage transactions, when a trader takes advantage of differences in the price of an asset in different markets to make a profit. The high fees of the Ethereum blockchain now limit the possibilities for carrying out such operations in it. As in the case of Uniswap, users on PancakeSwap are buying up little-known tokens, hoping to guess which one will gain popularity and be listed on Binance, potentially generating thousands of percent of profit.
“Centralized or not, if this volume persists and doesn’t turn out to be just an anomaly, that’s pretty impressive. Here’s what happens when blockchain-level transactions become too expensive for opportunity-seeking retail traders – wrote The Block analyst Larry Cermak, commenting on PancakeSwap’s performance. – I would not be surprised if some part of their transactions falls on laundering trades, but, according to some data, a huge mass of people use PancakeSwap. A bunch of completely garbage coins have added 100% + over the past few days. ”
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