YieldFarming on PancakeSwap is a popular source of passive income. At a time when banks are giving out negative interests, crypto projects have been luring investors with high returns. Depending on your risk appetite, projects have been giving out massive returns.
Most DeFi apps need liquidity to function. Yield Farming is the process of providing the said liquidity and receiving an interest in return.
PancakeSwap is a Decentralised Exchange that runs on Binance Chain where users can buy and sell BEP-20 tokens. You can check out our guide on buying PancakeSwap’s native currency, CAKE.
PancakeSwap is similar to Uniswap and SushiSwap that run on Ethereum Chain. It has been gaining popularity as Binance Chain has incredibly low fees and fast transaction speeds.
There are two major ways of Yield Farming on PancakeSwap: Liquidity Pools and Syrup Pools. But before that, you need to set up MetaMask for Binance Chain and load it with some money.
MetaMask for PancakeSwap
1. Download MetaMask for Google Chrome.
2. The initial setup is straightforward like any other wallet. Set a password and make a note of your backup phrase. Now it is ready to be used with Ethereum Chain. We need to configure it for Binance Chain.
3. On MetaMask, click on your wallet and then settings. Scroll down to Networks, and select “Add Network.”
4. Fill in the following details:
Network Name: Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
Block Explorer URL: https://bscscan.com
You can now load it with any BSC20 token from supported cryptocurrency exchanges such as Binance. Check out our guide on buying CAKE from Binance.
While withdrawing from Binance, select BSC-20 as the network and paste your Metamask wallet address.
Yield Farming on PancakeSwap Farms
Since PancakeSwap is an exchange, you can make money by providing liquidity for trading.
Once you’re logged into PancakeSwap, click on farms on the left. Over here, you get a list of the farms you can participate in and the annual interest rate.
Let’s take the first Liquidity Pool, “CAKE-BNB.” This is usually the most popular pool in PancakeSwap as it has the highest trading volume. At the time of writing, it has more than $1.2 Billion locked up. You’d have to provide liquidity of both CAKE and BNB to participate in this pool.
Also, there is no lock-in period. You can withdraw at any time. You can click on the APR interest rate to know how much you can make for the short term. For this guide, we’re going to go ahead with CAKE-BNB.
First, you’ll need an equal value of both CAKE and BNB. While I have BNB in my wallet, I don’t have CAKE.
1. Click on trade on the left and select exchange. I want to stake 0.02 BNB, and I’d need the same amount of CAKE in value.
2. Set the first currency to BNB and the second currency to CAKE. Once I fill in 0.02 BNB, it automatically calculates that I can exchange it for 0.38 CAKE at the time of writing this article.
3. Hit swap and approve the transaction on Metamask. It takes a few seconds for your wallet to update.
Staking the Liquidity
Once you have an equal amount of both BNB and CAKE, you’re set to provide the liquidity.
1. Hit liquidity on the side and select Add Liquidity.
2. Once again, select BNB and CAKE as the two currencies and type in the amount you want to stake.
3. Hit Supply and authenticate the pop-ups from Metamask.
4. You’ll have CAKE-LP token once the transactions are confirmed. This token is the confirmation of the liquidity that you’ve provided. But you don’t get any interest with just this yet. You need to go back to Pools on the left to claim it.
5. Select CAKE-BNB to enable it. Once it has been enabled, select harvest and stake the max amount of CAKE-LP tokens you have.
While this might seem like a lot of steps reading, it is a straightforward process. Since Binance Chain has low transaction cost, it is very easy for beginners to try it out with small amounts.
Your interest is given in CAKE which can be harvested at any time. Also, the staked tokens can be removed, and doing the above process in reverse would get your capital back.
Alternatively, there’s another, a much simpler process that you can do: Pools.
Yield Farming on PancakeSwap Pools
Syrup Pools are very simple to use compared to Farms. You can stake CAKE to earn a number of different cryptocurrencies.
1. Select Pools on the left.
2. Over here, you can choose from the different pools available. While all pools require you to stake CAKE, the interest percentage and the currency it is paid out in is different for each pool.
3. Once you’ve selected a pool, click Enable and approve the transaction on MetaMask.
4. After it is enabled, click on Stake and select the amount of CAKE you want to lock up. Approve on metamask once again.
That’s it! You’ll start earning interest immediately. Just like Farms, there is no lock-in period, and you can withdraw your CAKE at any time.
While Pools might seem easier than Farms, both are very different. Pools let you only stake CAKE. However, Farms let you stake a number of different cryptocurrencies in pairs. You can even minimize your risks by Farming pairs such as BUSD and BNB.