Uniswap vs. PancakeSwap: Explore the Power of DeFi

Introduction

Traditional finance operates in a centralized manner, where a third party or intermediary takes a cut of your transaction or a central authority controls your funds and account. Even in crypto trading, you are typically required to create an account and submit docs to centralized exchanges or CEXs. Then these exchanges will fulfil your order by matching it with other users’ orders to buy or sell, or vice versa. That’s where Decentralised Finance (DeFi) emerged, empowering users to have full control over their transactions and funds while ensuring anonymity. In this article, we will explore two popular DeFi Exchanges, Uniswap and PancakeSwap, their working, what makes them unique, a comparison of Uniswap vs. PancakeSwap, and more.

What is Uniswap?

Uniswap is a decentralized exchange(DEX) built on the Ethereum network that allows users to exchange or trade their crypto assets without any third-party involvement. It was launched in 2018 by Ethereum developer Hayden Adams with the aim of introducing AMMs to Ethereum users. 

Unlike traditional exchanges that match buyer and seller orders through order books to execute trades, Uniswap employs an Automated Market Maker model(AMM) that uses liquidity pools and smart contracts to fulfil these orders. Orders placed on the Uniswap platform are processed via self-executing smart contracts through liquidity pools, and in return, users are required to pay a minimal platform fee. The price of assets in a liquidity pool is determined by a unique pricing mechanism known as Constant Product Market Maker(CPMM) model. 

Users can also earn incentives by depositing equivalent quantities of token pairs to provide liquidity to these liquidity pools. Uniswap is the fifth largest DeFi protocol, according to DeFiLlama, with a TVL(Total Value locked) of over $3.88 billion as of June 2023.

Read More: Uniswap vs Avalanche

Key features of Uniswap

• Uniswap’s AMM model resolves liquidity concerns of centralized exchanges, offering more efficiency and convenience to users. 
• As Uniswap works in a decentralized, permissionless manner, users do not need to register or complete KYC. That means one can trade on the platform while securing their data and privacy.
• Unlike centralized exchanges that control and store private keys or passwords of users, Uniswap operates on a non-custodial model. So users can hold their private keys and funds in their own wallets.
• The Uniswap platform has its native token called UNI, which allows its holders to participate in decentralized governance by voting and submitting proposals for platform development. 
• Uniswap v3, in 2021, brought various improvements to the platform, including Three fee tiers that allow liquidity providers to adjust their profit margins during volatility times. And has enabled layer 2 scaling solutions to lower fees and increase transaction throughput.

Latest news on Uniswap

• On June 13, 2023, Uniswap announced its next upgrade, Uniswap v4. This version aims to improve platform architecture with “hooks” feature that will allow developers to create Time-weighted average market marker (TWAMM), on-chain limit orders and more. Additionally, v4 pools will live through a single contract, reducing pool creation costs on the platform.

1/ Today, we’re announcing our vision for Uniswap v4 🦄

We see Uniswap as core financial infrastructure & think it should be built in public with space for community feedback and contribution.

An early implementation of the code can be found here:https://t.co/toy3k7plnU pic.twitter.com/9vGJElba2x

— Uniswap Labs 🦄 (@Uniswap) June 13, 2023

What is PancakeSwap?(150)

PancakeSwap, based on the BNB chain, is a decentralized Automated Market Maker(AMM) that lets users swap or exchange their BEP-20 tokens. It was built and launched by anonymous developers in September 2020. Pancakeswap works similarly to Uniswap, it uses the AMM system to execute swaps through liquidity pools, eliminating intermediaries and order books.

Users can lock their funds in liquidity pools through smart contracts to provide liquidity and receive LP Tokens (called FLIP). These LP tokens can be used to reclaim deposited tokens with a share of earned trading fee. The users who trade tokens through these pools are required to pay a platform fee, which is then distributed to platform treasury and LP token holders. 

Apart from regular liquidity pools, PancakeSwap also has high-yield Syrup pools, where users can stake their CAKE (PancakeSwap native token) to earn more rewards. CAKE is based on Binance Chain, BEP-20 token standard, used for governance and utility purposes in the PancakeSwap ecosystem.

PancakeSwap stands first among DeFi protocols built on the BNB chain with a TVL of more than $1.55 billion and a unique user base of over 1.5 million, according to DeFi Llama.

Key features of PancakeSwap

• PancakeSwap is a decentralized crypto exchange, enabling users to trade BEP-20 tokens directly from their wallets anytime at their convenience.  
• It offers various products for users to earn rewards, including decentralized exchange, yield farming protocol, special Syrup Pools, Lottery, and more.
• The Initial Farm Offering program by PancakeSwap, allows projects to launch their tokens leveraging a user base and decentralized platform.
• PancakeSwap products have an in-built deflationary mechanism to control the circulation and inflation of CAKE tokens.
• Like Uniswap, users are not required to create accounts or submit their documents to trade and utilize the PancakeSwap platform.
• Anyone can participate in PancakeSwap governance easily by submitting proposals and voting on the changes and improvements of the platform.
• It also has an NFT Marketplace, where users can buy and sell PancakeSwap and other BNB collectibles. Users can also create their personalized NFT profiles and share them with friends, join other teams etc.

Latest news on PancakeSwap

• PancakeSwap announced its version 3 on Ethereum and BNB chain in April 2023 to enhance the performance and capital efficiency of the platform. It aims to lower trading fees by 25 times than its previous v2 and introduce a new VIP trading reward program and position manager feature. 
• In the recent, PancakeSwap has also announced the launch of a new tower defence game, Pancake Protectors, paving its way to GameFi. The game is based on BNB GameFi protocol Mobox and will allow players to earn in-game rewards with CAKE, PancakeSwap’s native token.

🎉 The official launch of Pancake Protectors has arrived! 🛡 Unite your heroes, protect your territories, and claim victory! 🦸
🎮 Immerse yourself in the captivating world of tower defense gameplay now: https://t.co/gq5947psCe

🐰 Holders of PancakeSwap Bunnies & Squads gain… pic.twitter.com/D0hAwPcWQB

— PancakeSwap🥞Ev3ryone’s Favourite D3X (@PancakeSwap) May 29, 2023

Comparing PancakeSwap vs Uniswap

Here’s a brief comparison of Uniswap and PancakeSwap DEXs:

	Uniswap	PancakeSwap
Launch Date	November 2018	September 2020
Founder	Hayden Adams	Anonymous
Blockchain Protocol	Ethereum	BNB Chain
Native Token	UNI	CAKE
Market Cap	$2 billion	$280 million
Token Type	Governance	Utility
Circulating Supply	577.5 million	204 million
Max Supply	1 billion	750 million
Consensus Method	Proof of Stake (PoS)	Proof of Staked Authority (PoSA)

Key Differences between Uniswap vs PancakeSwap

• One basic difference between Uniswap and PancakeSwap is the blockchain they are built on. Uniswap is built on the Ethereum blockchain, while PancakeSwap runs on the BNB chain or Binance Smart Chain.
• Transaction fees and times on BNB chain-based PancakeSwap are much lower than Uniswap, which runs on the Ethereum network.
• PancakeSwap offers a range of services other than trading, such as yield farming protocol, Syrup Pools, IFO, Lottery etc., while Uniswap provides trading and swapping only.
• The number of listed tokens and trading pairs on Uniswap are around 937 and 1875, respectively. On the other hand, PancakeSwap has around 2503 listed tokens and 3937 trading pairs available for users in June 2023, as per Coingecko Data.
• Both DEXs support browser wallet extensions. However, to use MetaMask(a popular wallet) with PancakeSwap, you will need to add the Binance Smart Chain network in it, while MetaMask has out-of-the-box support for Uniswap.

Additional Read: Uniswap vs Aave

Uniswap (UNI) Price Prediction

• UNI price today is trading at $1.41, with a 24-hour trading volume of $95,783,861. In the last 24 hours, The UNI price has risen by about 7.79%. The market cap of UNI is standing at $2,653,817,611 as of June 14, 2023.
• UNI price has been in bearish mode since rejection from the resistance level of $6.49
• It is currently trading in a range of $4.93-$3.60, with a bullish divergence in the RSI-14 indicator.  
• If the price continues the bullish movement, it might soon recover and reach the $5.42 mark. 

Read On: Uniswap Price Prediction

PancakeSwap (CAKE) Price Prediction

• CAKE price today is trading at $1.41, with a 24-hour trading volume of $19,957,050. In the last 24 hours, The CAKE price has risen by about 2.88%. The market cap of CAKE is standing at $288,289,739 as of June 14, 2023.
• CAKE price displayed recovery at the beginning of this year. However, it soon started following a downward trend and is currently below its 50-day Exponential Moving Average.
• It has also passed down its current support level of $1.50, though it has made a bullish divergence from the oversold zone of RSI-14 below the 30 level.
• If the CAKE price and market sentiment strengthen, there is a possibility of the CAKE price touching $2 soon.

Know More: Pancake Price Prediction

Should you buy Uniswap(UNI) or PancakeSwap(CAKE)?

2022 has been a bit tough for both Uniswap and PancakeSwap amid weak crypto markets. Uniswap even reached an all-time high trading volume of around $13.33 billion in March 2023 after Circle’s USD Coin depeg. Uniswap’s recent announcement on open source version 4 launch has created curiosity in the crypto community for project development and upcoming applications. One of the new features, the “flash accounting” system, is expected to take platform performance and efficiency to the next level through additional gas fee savings.  

PancakeSwap is newer than Uniswap, it has managed to gather inventors and user attention in a shorter period of time with a higher active user base. Furthermore, transaction costs on PancakeSwap are much cheaper than Uniswap, which makes it an attractive platform. Both platforms are among the top DEXs with their own advantages and features. While Uniswap is continuously working to overcome gas costs and improve performance, Pancakeswap has shown considerable growth in a shorter period. As an investor, which one is best to invest depends on your preference and risk appetite. So, do your research and analysis before investing, as well as apply risk management strategies.

How to invest in Uniswap (UNI) and PancakeSwap (CAKE)?

Investing in Uniswap UNI or PancakeSwap CAKE is extremely simple, fast and secure with the CoinDCX App. All you have to do is register on the platform. To register, follow the below-mentioned steps:

• Download CoinDCX App
• Register by entering your details.
• Complete KYC and verify your mobile and email.
• Once your profile is validated, add funds to your wallet.
•  Buy UNI or Buy CAKE.