If you want to buy CAKE crypto coin is because you have heard about several topics such as decentralized finance (DeFi), Automated Market Makers (AMM), liquidity pools (LP), shield farming and many others. If you didn’t hear about these topics, then do not be worried, we will go through them in this post.
There are two main ways of buying Cake crypto coin. The first way is by using the popular Binance exchange. The other way is by using decentralized finance platforms such as PancakeSwap. In the next sections, we tell you about how to buy cake crypto coin and many other things.
But first, are you new to cryptocurrency? Here is a must read material if you are: What is Cryptocurrency 101: Guide for New Investors
- What is Cake (CAKE)?
- Where to buy Cake?
- What is Binance?
- What is PancakeSwap?
- What are Automated Market Makers?
- What is Decentralized Finance (DeFi)?
What is Cake (CAKE)?
Before we start, we need to know what is CAKE and how it works. CAKE is a virtual currency that works on top of the PancakeSwap platform. CAKE holders can get access to a wide range of solutions provided by the PancakeSwap platform alongside other Decentralized Finance (DeFi) protocols.
CAKE became the proxy DeFi token of the Binance Smart Chain (BSC) ecosystem. Let’s remember that the DeFi ecosystem expanded on the Ethereum (ETH) platform but BSC provides faster and cheaper transactions – which are very useful for small investors and retail traders.
Nowadays, CAKE can be staked in pools to earn rewards in CAKE tokens or other digital assets, or it can be provided to liquidity pools in order to give liquidity to different trading pairs. Users are incentivized to deposit their coins in different pools but also to do so in liquidity pools.
If users deposit CAKE and another digital currency (for example BUSD) to a liquidity pool, they will get rewarded with CAKE tokens. Moreover, they will also receive part of the fees paid by users that transact using this pool. We will talk more about LP in future sections.
Where to buy Cake?
As we mentioned before, users have different places, exchanges and platforms where to buy CAKE. The most popular ones include Binance and Pancake swap. Users can do so in just minutes in both of these platforms.
Each of them is different to use and would require you to have some basic knowledge on virtual currencies. Binance might be the best option for those users that have never had any contact before with the cryptocurrency market. If you prefer to go with the most advanced option, then CAKE is the right thing to do.
How to buy Cake Using Binance?
Register on Binance
In order to buy CAKE using Binance you will have to open an account on this exchange. The platform is very user friendly and it would take you through all the steps you should follow to open an account. Remember that you need to verify your email address and data before you are able to deposit money and start trading on Binance.
Now that we have created an account on the Binance platform, the next thing we want to do is to deposit funds. There are many ways of doing so. Binance has been working over the last few years in making it easier for users to get access to virtual currencies and deposit funds on its platform.
You can select the method you prefer, for example, P2P, bank transfer or even credit or debit cards. It is up to you which of these options makes it easier for you to get access to the Binance platform.
Users can also deposit virtual currencies. If you have already purchased Bitcoin (BTC), Ethereum (ETH) or any other digital currency, you can send them to this platform and exchange them for CAKE or even other virtual currencies.
Select the CAKE Trading Pair
Once you have deposited funds to your Binance account, you would have to make some trades. If you deposited GBP, USDT, BUSD, BNB or BTC, you would not have to be worried about exchanging your funds for another digital asset.
Binance currently has 5 different trading pairs for CAKE, including CAKE/USDT, CAKE/BUSD, CAKE/BNB, CAKE/BTC and CAKE/GBP. Let’s say you deposited EUR to your account, then you would have to exchange these EUR for any other virtual currency that has access to CAKE pairs, for example, BTC, BUSD, BNB, BTC, USDT or even GBP.
Once you select the trading pair you want to use, you can execute your trade by choosing the parameters you consider optimal for your trade. You can, for example, use a limit order rather than a market order and wait until it gets executed.
What is Binance?
Binance is one of the largest cryptocurrency exchanges in the world. The platform was launched in 2017 and it has been offering a wide range of services to users from all over the world. Over the last years, Binance has been adding many other services, including stalking, mining, DeFi solutions and even flexible or fixed-term deposits for digital assets and fiat currencies.
At the same time, Binance is one of the favourite platforms for traders that want to trade with futures contracts. The exchange is not only offering spot trading but also perpetual and quarterly futures. These futures contracts are advanced trading tools for those advanced users that want to also use leverage on their trades.
In addition to it, Binance allows users to participate in a wide range of other activities. For example, Binance Coin (BNB) holders can easily participate in Initial Exchange Offerings (IEOs) that are conducted on the Launchpad platform on top of the Binance exchange.
There are many other exchanges in the market, but Binance became one of the largest and favourite among the top platforms to trade digital assets. This is definitely one of the best platforms if you want to buy CAKE.
How to buy Cake using PancakeSwap?
Let’s now get access to the PancakeSwap platform. This is one of the largest DeFi AMM protocols on the Binance Smart Chain. You can purchase CAKE in this exchange with Binance Coin (BNB) or any other BEP-20 token running on the Binance Smart Chain.
The main difference with Binance is that this is not a traditional centralized exchange. If you want to buy CAKE using PancakeSwap you will have to follow the next steps.
Open a MetaMask Account
This is the first step that you should follow if you want to start trading CAKE. Once you have a MetaMask account, you will have to set it up to be working on the Binance Smart Chain. Remember that if you do not do it manually, you might end up losing your funds.
Binance has created a clear article on how to connect your MetaMask to the Binance Smart Chain. This is definitely one of the most important things you should follow.
Send Funds to Your MetaMask Account
Now that you have set up your MetaMask account, you will be able to send BEP-20 tokens to this wallet. You can send Binance USD (BUSD) or Binance Coin (BNB), however, any BEP-20 tokens. This is the easiest way to start trading your coins to CAKE using PancakeSwap.
Go to PancakeSwap and Select the Trading Pair
It is now time to select the trading pair you want to use to buy your CAKE tokens. This is the same procedure that we have when we want to purchase CAKE using the other exchange (Binance). However, there are a few differences with Binance considering that PancakeSwap is an AMM (we will go into details in the next sections).
Select the Amount you Want to Purchase
Now you need to select the amount of CAKE you want to purchase. For example, you can select 10 CAKE and exchange them for BUSD, BNB or any other coin you could have. Then you should only purchase the coin, confirm the transfer through your MetaMask and the transaction will then be processed.
What is PancakeSwap?
PancakeSwap is an Automated Market Maker (AMM) protocol that runs on the Binance Smart Chain network and has been operating for several months. This project became one of the largest in terms of volume and users on the Binance Smart Chain, the network created by Binance to offer faster and more reliable services than the Ethereum blockchain.
Basically, users that want to use PancakeSwap get access to different services. The main one is related to swapping tokens. This works in a similar way as a decentralized exchange but without an order book. Users can easily exchange their coins for others in just seconds and without having to be worried about the large fees and transaction times on the ETH network.
PancakeSwap is also offering other solutions called Liquidity Pools and Pools. Basically, users can provide liquidity to different pools and be rewarded with CAKE tokens. This could also be a good way to earn CAKE tokens if you are a long-term believer in this project.
PancakeSwap is now working as a proxy of the Binance Smart Chain. Users follow the expansion of the CAKE token, the number of users and volume in order to get a clear idea of how the BSC is currently working.
What are Automated Market Makers?
Automated Market Makers are a new type of decentralized exchanges that do not work with order books. Binance, for example, and traditional exchanges, use an order book with all the buy and sell orders that are waiting to be completed. The larger the order book in terms of liquidity, the better the price of a token (it fluctuates less).
With automated market makers, investors do not have to create limit or market orders. They just need to use the liquidity present in liquidity pools. These liquidity pools replace the order book and make it possible for users to buy and sell their coins in just seconds (through swaps).
In the last months, AMM became very popular. The expansion of the DeFi market has been one of the main reasons behind this expansion. Specifically, Uniswap and PancakeSwap became some of the largest projects in the world in terms of DeFi adoption, this is why AMM became so popular.
Although there are some things that AMM should address (such as the impermanent loss when using LQ or smart contract errors), these are becoming increasingly popular not only to buy and sell virtual currencies but also to generate an extra income at the end of the month.
What are Liquidity Pools?
Liquidity pools are those pools in which users provide liquidity of two different currencies in order for traders to be able to swap between them. Liquidity providers are the investors that deposit the pair of coins (usually 50% of each coin) to earn rewards as a liquidity provider.
LPs earn rewards every single time there is a transaction processed in the exchange. The reward received depends on the share of the pool. For example, if you have a 20% share of the LP, then you should receive 20% of the total fees.
This is the main incentive of the LP providers. However, they also receive LP tokens that make it possible for individuals to earn even larger rewards. Investors are able to deposit these LP tokens on farms and receive CAKE. The LP tokens you receive will be linked to a specific liquidity pool.
For example, if you deposit CAKE and BNB (50% of each) then you will receive CAKE-BNB-LP tokens that can be deposited on the CAKE-BNB farm. This would not only provide you with the fees of the trades but also with additional CAKE tokens when you stake your LP tokens.
What is Decentralized Finance (DeFi)?
Decentralized finance is one of the latest trends in the cryptocurrency industry. There are different periods of time in which investors search for new ways of investing their funds, and DeFi is one of these places.
Rather than depending on centralized authorities and financial organizations to send and receive payments, request credits or even borrow funds, the DeFi market makes it easier and possible for users not to rely on centralized parties to get access to financial solutions.
Automated Market Makers (such as PancakeSwap or Uniswap) are just some of the examples that are currently present in the market. Nevertheless, there are many other options available that would allow you to get access to a wide range of financial services that are fully decentralized and that do not require the control or permission of a centralized authority such as a bank or financial institution.
In the future, new projects could be created using smart contracts and making it easier for individuals from all over the world to get access to financial solutions.