How to stake Crypto on Pancakeswap — Decentralized Passive Income
If you are reading this post, chances are you want to know how to stake your crypto on Pancakeswap for some serious returns. Lucky for you, I’ve been busy on Pancakeswap for some time. In this post, we are going to go into the details of how to earn some passive income on Pancakeswap by staking your crypto, specifically staking some CAKE tokens.
Stake $CAKE & Earn TSUD$$
What is Pancakeswap (CAKE)?
CAKE is the ticker for the native token of the Pancakeswap Exchange. Pancakeswap is Decentralised Exchanged (DEX) that runs on the Binance Smart Chain (BSC) network. According to The Block, Pancakeswap currently operates at a trading volume of between $11–57B per month. Binance is the largest crypto exchange in the world and subsequently, the Binance utility token (BNB) has cemented itself among the top 10 most valuable cryptocurrencies of 2021. According to coingecko, BNB is currently ranked 4th with a market cap of $46B.
The CAKE token is currently ranked at #39 on coingecko, with a market cap of approximately $2,5B. Pancakeswap is the biggest Automated Market Maker (AMM) based exchange on BSC. The CAKE token is currently trading at $13.49 as of this writing. CAKE is used all over the Pancakeswap DEX, whether for staking or earning, as it is the native token of the exchange.
How to get started with Pancakeswap
First of all, we need to connect a BSC wallet to the Pancakeswap DEX. In this case, I’m using Metamask. Quick note, we are also going to need some BNB in our Metamask wallet since BNB is the native token of the BSC network and we need to approve and pay for our transactions with BNB. Luckily I already have a small amount of BNB in my wallet. If you are new to Metamask, please make sure to check out our full Metamask how-to before you continue with Pancakeswap.
Secondly, I am going to need some CAKE tokens for the staking that I want to do. For this, I am going to head on over to my Binance account, where I have some USDT (Tether) lying around with which I can buy/trade some CAKE.
Binance — Trading USDT for CAKE
If you are unsure how to do that, please check out our full Binance for Beginners post before you continue. Next we have to withdraw our CAKE tokens from Binance to our Metamask wallet.
CAKE withdraw — Binance
PLEASE TAKE NOTE, that you need to have the BSC network configured on your Metamask wallet for this to work. I urge you to check out this Metamask how-to review if you still need to configure that.
Metamask Wallet before and after CAKE received
How to stake Crypto (CAKE) on Pancakeswap
Pancakeswap Home
Head on over to the pancakeswap website and connect your Metamask wallet or any other BSC wallet. I want you to connect your wallet by clicking “connect” in the top right-hand corner. Next, choose the Metamask wallet from the popup. Authorise the Metamask wallet to connect and BOOM, you are now connected.
Connecting Metamask to Pancakeswap
Next, I would like you to click on the “POOLS” tab on the left. In my case, I have already been staking some CAKE for a while, so I’m just going to click on “staked only” as per the screenshot so that I can get my staked items all on one screen.
Staked POOLS — Pancakeswap
As you can see from the screenshot above, I currently have about 23.16 CAKE staked in the Auto CAKE Pool, at a 106% APY (Annual Percentage Yield). The Auto CAKE pool basically just means that you are staking CAKE to earn more CAKE. I’m thinking we can withdraw those funds and stake them for something more reliable, like a stable coin. For the purpose of this tutorial, I’m going to show you how to stake some CAKE on Pancakeswap and earn True USD (TUSD) stable coin in the process.
Unstaking in the Pancakeswap Pool
First, we need to click “unstake” and select 100%, since we are going to unstake all of our CAKE tokens in this pool. Next, confirm the unstaking after which Metamask will also ask you to confirm the transaction, seeing that the CAKE tokens will now be returned to your Metamask wallet. And success. As you can see, we now have a total of 108.86 CAKE tokens in our wallet. 23 More than when we started out.
CAKE Tokens Unstaked and in Metamask Wallet
Next, to stake the CAKE tokens for USD stable coins (TUSD in this case) we need to search USD in the search bar. This will automatically bring you to the TUSD staking pool. Then, we need to click on “Enable” pool. Once again, you will need to confirm on your Metamask Wallet.
TUSD Pool Enable
Transaction Fees only 6cents on Pancakswap
Next, we need to click on Stake. We will then be greeted with a popup, asking how much we would like to skate and to confirm. We are going to select “all” in this case and hit confirm. The Metamask wallet will also want us to confirm again. Naturally, we will confirm.
Confirm Stake in TUSD Pool
As you can see, the APR (Annual Percentage Rate) on the pool, is a cool 74.75%. Now, keep in mind that this number is fluid and will change from time to time as the price or value of the cake token changes. As the price of Cake goes up, the APR will come down and as the price of Cake goes down, the APR might go up.
APR — TUSD Pool
You can click on the little calculator icon next to the APR value and that will bring up another popup. This time displaying the ROI of your investment, based on $1,000. So, in 1 day, we should make just about $2, or 0.20%. Let’s see how it performs over the long term.
ROI Calculator
In terms of the life span of your current investment, yes there is a deadline. If you click on the “alarm” icon next to “Ends in xxxxx blocks” you will be redirected to a page on the BSC network scanner showing you the number of Days, Hours, Minutes and seconds that the pool is still going to be active for. You will always be eligible to claim your staked tokens and rewards even after the staking timer has elapsed. note, that you can also unstake at any time before the timer runs out as there is no lock-in period.
Staking POOL Ends
Harvest on Pancakeswap
As you can see, I have been farming some FORM tokens in the meantime. I’m relatively bullish on Formation Finance (FORM) and will be putting out a review on the platform as soon as possible. But for now, they are still at a very early stage project and their product hasn’t launched yet. As the early adoption program for FROM is starting soon, I would like to harvest these farmed tokens and place them in my wallet.
Harvesting FORM tokens from Pancakeswap
Once again you will need to confirm the Harvest or add tokens to your Metamask wallet.
After Harvest of FORM Tokens
Metamask with extra FORM Tokens after Harvest
Increase Stake of FORM
To increase our stake in the FORM pool, we will need to click on the little “+” icon within the pool window. In this case, I am going to select 100% or Max of the currently available CAKE tokens.
Staking CAKE to earn FORM
As you can see we now have about 77 CAKE Tokens (±$1,040 worth) staked in the FORM pool. So, according to the yield calculator, we should be earning about $2 per day in FORM tokens.
EXTRAS
Once on the POOL tab, you will be able to see some options like, see token info, view project site, view contract, as well as add to Metamask. The latter option giving you the ability to Add, the specific token to your Metamask wallet.
TUSD info — TUSD Stake Pool (Pancakeswap)
As you can see, the liquidity in this pool is just over $40M and daily volume about $768K. Over on the TUSD website, we can see some of the use cases and reasons you would want to hold TUSD, such as hedging against the volatility of the market for example. This is why I am doing this, just as a bit of a hedge against all the other altcoins, I hold.
Results
As mentioned previously, staking CAKE for TUSD should yield you approximately 70% return per annum. After about 19hours of staking, we have made about $1,73 or a return of 0.166%. So, it seems that we should get our 0.2% for the day and in theory 73% ROI for the year.
TUSD Results after staking for 1 Day — (0.2% ROI)
Risks
With any investment, there is always a risk. More so even in the unregulated world of crypto and DeFi. However, with higher risk comes higher reward. As far as staking and farming go, staking CAKE on Pancakeswap is definitely one of the safer options. However, we must address the risks involved in order to make a well-informed decision on how to stake Crypto on Pancakeswap.
Impermanent Loss
Impermanent loss is when a yield farmer stands to lose money in comparison to holding the asset. In our case, this would be if the value of the CAKE token drops significantly, thereby creating an impermanent loss. That is why I try and avoid staking unknown tokens (or shit-coins as commonly referred to in the industry) at extravagantly high yields of +10,000%. This is probably the most common risk involved in yield farming.
Rug Pull
What is a Rug pull? According to Coinmarketcap, a rug pull is a malicious manoeuvre in the cryptocurrency industry where crypto developers abandon a project and run away with investors’ funds. Rug pulls usually happen in the decentralized finance (DeFi) ecosystem, especially on decentralized exchanges (DEXs).
Smart Contract Risk
All of the DeFi environment operates via smart contracts on the blockchain. The contract automatically determines the use of the funds supplied by a set of pre-determined rules and terms within the contract. Poorly written or unaudited code can have vulnerabilities or be exploited by hackers, thereby resulting in loss of funds.
Final Thoughts
Would I recommend trying out staking on Pancakeswap? Yes, absolutely. In terms of earning passive income by yield farming, staking on pancakeswap is probably one of the safest options. The returns are awesome and the risk low as long as you stick to solid coins and pools that have high liquidity.
I’ll update this post within the month to see what the outcome is in terms of APY and whether or not staking CAKE on the Pancakeswap DEX is worth the effort (which it surely seems like at this point!). I trust that you now have a better understanding of how to stake Crypto on Pancakeswap.
Pancakeswap is really just another notch in the old DeFi belt. With Decentralized Finance and especially Yield Farming taking off over the last few months, it’s really no surprise that Pancakeswap is one of the leading Decentralized exchanges at this point. I got this one down as another win for the DeFi ecosystem vs the old centralized banking industry. Now you can enjoy 70% APY instead of just 2%.
At the end of the day, our goal is the get more people into the crypto space but especially into the DeFi ecosystem. We firmly believe that the DeFi space over the coming months and years will pave the way for most people to migrate from the old traditional banking industry to the new decentralized “Unbank yourself” industry of DeFi.
