What Is CAKE?
PancakeSwap or CAKE is nothing but a Binance Smart Chain-powered DEX and AMM, which makes it possible for anyone to exchange BEP-20 coins safely and effectively. The project is considered to have endless potential. The platform`s native token was launched in September 2020 and performed very well in 2021, so many people started figuring out CAKE to FTM and other exchange rates connected with this coin. The main function of this digital asset, though, is to enhance liquidity provision to its native platform. Now, let`s see what you can do with this coin.
How To Make Money By Investing in CAKE?
You can go for three options to earn money when investing in CAKE. The first one is to buy the tokens on exchanges, such as https://alligat0r.com/, and store them. The profit will come as the price rises.
The main beauty, though, comes from the use of the digital asset. You can use a digital wallet to swap between BEP-2 and BEP 20 CAKE. They are equivalent, but the latter one utilizes smart contracts, which are self-executing agreements. These are triggered as soon as specific conditions are met.
Here comes the second layer of returns. You are allowed to connect your wallet and stake the token on PancakSwap. This way, you will earn over 60 percent a year in the form of rewards. The earnings should come from:
- A CAKE lottery.
- Payments performed by blockchain developers to advertise or list their digital assets on the platform.
- Fees for CAKA validation when performing transactions.
- The issuance of new coins.
You should mind that yields will not always be high because they can be lower when other blockchain developers connected with CAKE gain enough traction. In this case, they will stop issuing marketing rewards. Furthermore, the rate of the digital coin`s emission happens to be approximately 100 million annually, while the total circulation makes up around 221.8 million coins. Thus, the supply rate is relatively high. Let`s assume that the interest rate on USD deposits was 80 percent, while the rate of inflation was 50 percent. In this case, the adjusted return should be significantly lower compared to the nominal rate.
In addition to that, you can pledge your CAKE to provide liquidity for crypto-to-crypto trading on the platform. This way, you will turn yourself to one of the market markers for probable triple-digit percentage yields.
If the trading volume for an asset is low, then the spread between the ask prices and the bid is high. In this case, you can earn more in potential commissions by contributing to liquidity. Currently, there are 9,152 trading pairs and 1,647 coins listed on PancakeSwap, and the number is more impressive compared to competitors.
The last way is automatic restaking enabled by PancakeSwap`s smart contract. It implies that each coin you earn can be returned to the staking pool, which should result in further “interest.” The process is not too different from how investors receive compounded returns by means of reinvesting their coupon payments back. In this case, you can benefit from yields of 83 percent instead of the usual 65 percent.
Conclusion
If you are a CAKE holder, then you can receive compound returns during bull runs. However, you are not subjected to sell-offs when there are bear runs. The worst thing that may happen is that you can lose your CAKE principal.
Since the yields are this high, then the margin of safety is there because the passive income you get from staking is able to offset short-term reverses on the market. Consequently, CAKE is a worthy option to check out.