PancakeSwap Set to Seize a Portion of Uniswap’s Market Share

PancakeSwap (CAKE) has now joined the ranks of the largest DeFi networks. Simultaneously, CAKE’s Binance Smart Chain integration now attracts a higher liquidity level than Uniswap, SushiSwap, and other counterparts in the DeFi sector. Decentralized finance (DeFi) is no more grabbing the headlines as it used to do in the past because none fungible tokens (NFTs) have dominated the crypto space since late last year. However, the biggest DeFi platforms are still trying several creative ways to push the DeFi community back into crypto lover’s hearts.

High Ethereum transaction fees scare users away

At the moment, PancakeSwap has outranked its competitors with its Binance Smart’s automated market maker (AMM), which enables users to convert tokens and receive a fraction of fees via yield farming. Many factors have contributed to the growth of the Pancake Swap platform in the past few months. Some analysts still see CAKE as the main rival to Uniswap for market dominance. It is evident that this year, the transaction costs on the Ethereum platform have risen astronomically thanks to the high gas fees and a surge in Ethereum price. Comparing the direction of gas price with the trading volume on the PancakeSwap platform shows a direct relationship between high costs and increasing activity on the DeFi network.

As Ethereum costs keep increasing rapidly, users now find a better alternative in Binance Smart Chain courtesy of its cheaper transaction costs. As the largest and strongest DEX on the Binance Smart Chain, PancakeSwap is taking advantage of users’ exit from the Ethereum network to Binance. Observers have also seen Binance’s large user base as another force attracting users to PancakeSwap. According to Delphi digital analysts, Binance’s status as the largest crypto exchange makes it the preferred choice of retail investors. To join the BSC platform, intending users can transfer their tokens right from Binance to a BSC-supported wallet.

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PancakeSwap may dominate the market for as long as possible

Delphi digital analysts also identified Pancake Swap’s token economic variables as a major contributing factor to its increasing popularity. Compared to Uniswap’s UNI and SushiSwap’s SUSHI, PancakeSwap’s CAKE has no limit to its supply of tokens; hence the network can capitalize on that to continue launching severe “vampire attacks” on other networks to get liquidity and entice users with incentives by launching several AMM programs. At the time of writing this report, CAKE’s weekly inflation rate stands at 3.7%, far higher than UNI’s 2% annual inflation rate.

Despite several deflationary steps taken by CAKE developers, the network still records net emissions of 1 million CAKE weekly, which is equivalent to a 37% annual inflation rate or 0.7% weekly inflation rate. DeFi experts also maintain that PancakeSwap acknowledges the present inflation of its token because the CAKE management conducted a vote on changing the emission plan by either reducing it to 22.0 or 23.5 or CAKE for a block leaving it at its current rate. Now, most members prefer that the emission rate be left at 22 CAKE, a 20% reduction to offset inflation and empower CAKE to sustain its competitors’ attack.