Today I'll briefly tell you about my latest cryptocurrency experience: decentralized finance with Pancakeswap. In this period Bitcoin is boring and following its trend always around the same figure is not as exciting as a few months ago. As you can see, in fact, it has been in the same price range since May and until I see bullish signals I will not open other positions but I just hold it in my spot wallet.
This made me look for new opportunities while waiting for Bitcoin to make a move. In fact, I've been wanting to start moving part of my wallet to DeFi pools for a while and this seemed like the perfect opportunity. I decided to start with a very small capital, a few hundred dollars, to start with. Over time, if I see fit, my strategy is to allocate about 10% of my portfolio to DeFi. For this demonstration, however, I used a very small amount.
Why Pancakeswap?
Pancakeswap is one of the first platforms built on the Binance Smart Chain (BSC) and for this reason the fees that are paid for each operation are very small when compared with the platforms on Ethereum. Furthermore, Pancakeswap is one of the platforms with a higher capital and for this reason I consider it a little more secure than the others.
The "how"
First of all, a brief guide on what I have done. I state that I used the mobile version of Trust Wallet. For those unfamiliar with it, it is a non-custodial wallet, which means that it does NOT keep your private keys for you but you have to keep them. I preferred this application to the others because I consider it very user-friendly and it integrates a browser with which I can connect to the Dapp (DeFi App) directly from there.
Once the funds and a small amount of BNB (smart chain) have been deposited on the Trust Wallet, Pancakeswap can be accessed from the browser. Holding BNB is important to pay transaction fees (they are very few, but you need to have some). If you want you can withdraw your BNB from Binance directly on the Smart Chain simply by selecting it during the withdrawal phase. If you don't have Binance click HERE to sign up.
Since if you use Trust Wallet and its Dapp browser, the wallet automatically connects to Pancakeswap, the first thing to do is to provide liquidity to the platform: you must then click on "add liquidity" and choose the pair of tokens to add. To add each token, it must first be present on your wallet in the form of a Smart Chain Token (withdrawn or converted on BSC) and then it must be enabled by paying a small fee.
Once the liquidity is added, the interesting things begin. We get back LP-Tokens which are proof of our coins on Pancakeswap. While our money is accruing interest, it is possible to stake the LP-Tokens in the "Farms" section and earn more interest that sometimes reaches 300% APY. Here's how to do it: you have to go to the section we talked about, choose the pair we have previously added and click on "Enable", to enable staking. You will be asked again for a very small BNB fee and then you can stake the Lp-tokens. In this case the example is with the Cake-BNB-LP token with an APY of 65.45%. My earnings will be paid in the Cake token, which I can choose to hold or stake further by earning even more Cake.
In fact, if you go to the "Syrup" section there are many staking possibilities: you can stake your cakes to earn others or earn other tokens. Here too, once you have chosen the pool, you will be asked to enable it and then put your Cake tokens.
As you can see, I have staked a small amount of Cake on the TRX pool, which gives me an APY that currently exceeds 90% in TRX. Pancakeswap offers a lot of options but you have to be careful because the APYs are variable and must be checked often. Sometimes it is advisable to move your tokens from one pool to another to have an ever greater profit.
Final thoughts and considerations
In conclusion, I have several points that I would like to emphasize. The first is a further caveat: DYOR (= do your own researches) when using DeFi. It is an unsafe high yield investment. Secondly, I want to clarify that this is my experience and that Pancakeswap was chosen for the reasons I indicated above. I know well that there are other platforms with interesting returns but I wanted to start from here. In the future I will probably experiment with others and keep you updated. My consideration on Pancakeswap is certainly positive with the premises made previously. Transaction speed, low fees and the high income it guarantees are attractive to everyone and I certainly don't want to give them up. This is why I believe that those in the crypto world should experience as I did, with a low capital, and learn how to use it. I am convinced that, if it does not make any missteps, DeFi has all the prerequisites to almost completely overturn traditional finance.
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