Yield farming on Pancake Swap is a Piece of Cake.
So yes! You are probably rolling your eyes right now. Or you are trying to stay on your guard. I mean, Is anything that is profitable within the Decentralised Finance ecosystem really a walk in the park? You probably don’t think it will be as easy as that title makes it look. Well, you are right. Yield farming requires some effort on your part. You need to do your own research and look into the features of any yield farm before you start to invest your funds. But, before we get into the process of farming on Pancake Swap, and earning interest on your staked assets, we need to really understand what yield farming is.
What is Yield Farming?
Of course, you won’t be doing some back-breaking farm work or getting plants to grow with Yield farming. Yield farming allows you as an investor to stake your coins by depositing them into a lending protocol through decentralized apps, popularly known as dApps. On these same dApps, other asset speculators and investors can borrow these coins for trading, investing and other speculatory actions that they believe will fetch them some profits. When these coins are returned by the borrowers or the dApps mechanism, you, as the investor receives interest or rewards as predetermined by the lending protocol you use.
Important Yield Farming Terms to Know
Liquidity Pool: A liquidity pool is a crowdsourced pool of cryptocurrencies that facilitate the trading of assets on a decentralized exchange.
LP Tokens: These are the tokens you receive when you contribute cryptocurrencies to the liquidity pool.
Farm: A farm allows you to earn rewards by staking your LP tokens.
Stake: This is the process of actually committing your LP tokens to a farm
APR: Yield farmers (like you!) calculate their expected returns in terms of APR which is short for Annual Percentage Rate.
Harvest: This is the process of withdrawing your accumulated rewards after a period of staking your LP tokens.
Yield Farming on PancakeSwap.
PancakeSwap is a Decentralized Exchange (DEX) that is built on the BNB chain. PancakeSwap boasts of a unique ecosystem of diverse products that provides its users with opportunities to earn and interact with the world of Decentralized Finance. Liquidity Pools, Swapping and Yield Farming are a few of the numerous Defi products that PancakeSwap presents to its users. A look at other features of the PancakeSwap ecosystem such as an NFT profile system, Syrup Pools, Automated Market Maker, and an Initial Farm Offering (IFO) makes it clear that PancakeSwap was built to provide users with the much-needed platform to put their cryptocurrencies to good use and expand their earnings. Since you are here, this is a good time to learn about how you can start expanding your earnings by yield farming on Pancake swap.
Step-by-Step Guide to staking assets in a Yield Farm on Pancake Swap
So you are ready to begin farming some yields? Let’s go:
Visit PancakeSwap.
Visit https://pancakeswap.finance/ . Be careful and ensure that you are on the correct site. You do not want to be a victim of phishing attacks. Your window should look like the image below. Click on the connect wallet button to connect your wallet.
Connect Wallet.
You have many options when it comes to the choice of a wallet and this is mostly based on your preference. For the purpose of this guide, we’ll be using Trust Wallet. So Choose Trust Wallet. Trust Wallet works like an extension for Desktops and Laptops, but you can always install the app on mobile. Proceed to fund your wallet and your funds will be available for use on PancakeSwap as long as you have connected it. Here is a full guide on how you can connect your trust wallet to dApps like PancakeSwap on PC.
N.B: You will need to give Trust wallet permission to do a lot of things. This is to ensure the security of your funds, so don't feel irritated.
Swap your funds.
Not everyone will need to do this, but that depends on the funds available in your Trust Wallet. You will need BNB to complete transactions on the BNB chain, during the process of Farming. This makes it necessary for you to swap some of your cryptocurrency for the ones you do not have. In this example, I have some BUSD, which I swapped for BNB. In the process below:
Of course, you will need to give Trust Wallet permission to complete this swap. So if your transaction ever fails, check your trust wallet to see if you have given the necessary permission.
Visit the Farm.
To do this hover on the Earn button beside the Trade button. You should see a drop-down menu with the Farm or Pool option. Click on the Farm button. Your window should look like the image below:
Choose your preferred Farm.
As you can see from the image above, there are many farms where you can stake your LP tokens for rewards. There is a “Sort By” filter that allows you to search for farms based on their APR, multiplier, total reward earned, and popularity. For the purpose of this guide, I will select the CAKE-BNB farm. Click on your preferred farm and more details pop out below it. Click on the “Get CAKE-BNB LP” link to get your LP tokens.
Get your LP tokens.
As we previously discussed, before you can get LP tokens, you must supply liquidity to a liquidity pool that allows PancakeSwap to facilitate trades between two cryptocurrencies. In this case, you will need to supply both BNB and CAKE to a liquidity pool. This process is illustrated in the image below. Ensure your wallet is connected and click on “Add Liquidity”, and follow the process.
N.B: In the images above. Notice, how some of my BNB is automatically converted into CAKE to ensure that I can supply the liquidity pool, even though I had no CAKE. You can always get the cryptocurrency you want to supply manually, but if you don’t, the Liquidity pool will do some conversions to make the process easier and faster.
Once you successfully provide liquidity, the amount of LP tokens you have received pops out at the bottom of the page. You can now proceed to stake your LP tokens in the farm you provided liquidity for.
Stake your LP tokens.
Now you need to stake your received LP tokens in the CAKE-BNB farm, to generate CAKE rewards. To stake your cake tokens follow the process depicted in the images below:
7a. Enable
7b. Stake LP.
7c. Confirm Staking.
Congratulations! You have successfully staked your LP tokens! Now farm those yields to the moon!
You might decide to increase or reduce the amount of LP tokens you have staked in a Farm. To do this simply click on the farm and details should pop out beneath it.
Select the “+” sign to increase your total LP tokens staked, or click the “-” sign to reduce the amount of LP tokens staked. The process is very similar to the process of adding liquidity so it should be relatively easy.
Harvesting your Farm Yields.
After Staking your LP tokens for a while, You might decide to withdraw your CAKE rewards. In yield farming, this process is known as Harvesting. To harvest your token, click on the Harvest button in the image below, and provide the necessary permissions in your wallet. The CAKE rewards will be transferred to your wallet and you can do as you please with them.
Conclusion.
So, there you have it. Yield Farming is one of the most popular innovations that are driven by the Blockchain. The idea of a future where decentralized finance is the order of the financial world would be mostly impossible if Liquidity pools cannot find a sustainable working model. It is therefore important that you get in on all the fun, and get your coins or in this case, LP tokens to do the work for you. While excitement runs high, do not throw caution to the wind. Before staking your tokens on a farm, make sure you look into features such as the APR, total liquidity, Multiplier etc. These will give you a good understanding of the risk and opportunity costs of your farming. Always DYOR and do not FOMO into any farm. There you have it! Farm those yields to the moon!
