The decentralised finance or De-Fi economy is disrupting the financial status quo in an unprecedented fashion. In every new dispensation, there are always the stars of the show. Accordingly, PancakeSwap (CAKE) and Uniswap (UNI) have emerged as the leading decentralised exchanges.
Online gambling enthusiasts on portals like BC.GAME need to know the leading names in the exchange business. These are marketplaces for crypto. Decentralised exchanges are even more fascinating because they take out centralised control of the process. Instead, these exchanges use liquidity providers who allow the public to exchange various crypto tokens seamlessly.
What Is Uniswap (UNI)?
Uniswap (UNI) is the most prominent Ethereum DEX and utilises the Automated Market Maker (AMM) model.
This exchange employs liquidity pools in a place of order books that centralised exchanges use. Additionally, Uniswap has LP tokens for liquidity providers. Its success as a DEX provided the blueprint for subsequent DEXes to borrow similar features in running their platforms.
The AMM model eliminates the need for a partner on the other side for a trade to go through. Accordingly, the exchange does not get the classic barter trade problem of needing to match the needs of buyers and sellers. Instead, the platforms use liquidity pools to match transaction orders and make the process faster. Accordingly, this solved one of the long-standing problems DEXes faced before the AMM innovation. Earlier versions, such as Bancor and Ox Protocol, had trouble with liquidity, persistently coming short, subsequently forcing users to centralised exchanges.
Because of the AMM innovation, Uniswap has enjoyed tremendous success with hundreds of billions of dollars worth of crypto transactions daily. This protocol enjoys millions of users who make the platform tick, making it one of the most liquid with the benefit of being non-custodial, operating from Ethereum.
What is PancakeSwap(CAKE)?
This DEX has emerged as a potential competitor to Uniswap. Instead of using the Ethereum blockchain, PancakeSwap runs on the Binance Smart Chain (BSC). This platform also utilises the AMM model to fill orders and replaces the order book with liquidity pools.
PancakeSwap is one of the most popular decentralised exchanges. It has millions of users with over $10 billion in total locked value (TVL). An anonymous group of developers founded PancakeSwap, and their curious choice of name should not distract from the serious business this platform conducts.
Liquidity is a vital aspect of any DEX. The liquidity providers in PancakeSwap interact with the platform’s Syrup Pools and receive LP tokens called FLIP to represent their share in the liquidity pool. Two additional tokens, CAKE and SYRUP, also adhere to the BEP-20 standard.
The platform spices up its scene by offering on-chain games. Users predict the prices of BNB or a lottery to win prizes.
PancakeSwap (CAKE) and Uniswap (UNI): There Is a Growing Rivalry
Uniswap had an explosive 2020, where it rewrote the exchange business rules. This period brought about an unprecedented boom cycle for DeFi as a whole. Uniswap just happened to be the exchange that broke the ice and set things in motion for DEXes.
In crypto circles, pioneer status is usually an advantage. One only needs to look at Bitcoin. Despite the valiant effort of the likes of Ethereum, it is still the top draw.
That is not the case between PancakeSwap (CAKE) and Uniswap (UNI). The latter came out swinging and now competes favourably with Uniswap. Its trading volumes skyrocketed in 2020, with liquidity significantly higher.
As it turns out, the innovative Ethereum blockchain has held Uniswap back in some respects. The Ethereum blockchain suffers from scalability issues as a legacy of its founding on the Proof-of-Work consensus algorithm. These scalability issues result in congestion. Accordingly, there have been cases of ridiculous ETH transaction fees that make transactions on related platforms frustrating.
These issues have provided an opening for PancakeSwap. Ethereum is doing the most to try and place a lid on its transaction fee problems. However, there is still work ahead to gain the efficiency that will make platforms like Uniswap unbeatable.
PancakeSwap (CAKE) or Uniswap (UNI)?
Their different blockchains and transaction fees give consumers and developers things to ponder.
Uniswap and Ethereum developers urgently need to complete the transition to Serenity and finally solve the transaction fee nightmare.
PancakeSwap also has to maintain a competitive advantage. This jostling is ultimately convenient for consumers who want efficient DeFi platforms that offer competitive rates.
Liquidity providers will also look at both exchanges’ terms to determine which is best to stake. This choice is the essence of a free market that improves with innovation.
Uniswap may have had an advantage initially, but PancakeSwap has all but erased it. Their TVL are now neck-to-neck, meaning that both exchanges are doing incredibly well. PancakeSwap already has better daily transaction volumes because of its better transaction fees. However, many liquidity providers still prefer Uniswap because they may get higher yields from this platform.
Ultimately, this competition will benefit the entire decentralised exchange sector. Uniswap played a vital role in laying down the marker. PancakeSwap has come in to take the relay baton and take things a notch higher. The ordinary trader will be the beneficiary of all this.
Uniswap and PancakeSwap are relatively young yet have become notable names within the crypto sector, finding support at the top De-Fi crypto casino BC.GAME.
This era is a unique moment in the history of the financial industry, with all the disrupting innovations in motion. These DEXes have a front seat in bringing this decentralised and digital future to the fore.
Early on, Uniswap was the dominant decentralised exchange in this industry. However, PancakeSwap is proving to be more than an upstart. The difference in transaction fees is the most significant reason it closed the gap so fast. These two are crucial to developing decentralised exchanges in the distant future.