PancakeSwap – low-fee swaps and DeFi features on BNB Chain.

PancakeSwap is a popular AMM-based DEX originally built on BNB Chain. It offers token swaps, liquidity pools and additional DeFi options such as farms and staking. This page gives a neutral, educational overview of how it works and related risks.

AMM DEX on BNB Chain

Low network fees (compared to L1 Ethereum)

Extra DeFi features

⬇ View key facts Open official app

Network

BNB Chain

Low gas fees

Transactions are paid in BNB. Fees are typically lower than mainnet Ethereum, but still vary with network congestion.

Usage

Swaps & DeFi

DEX + farms

Beyond simple swaps, users may find yield farming, staking and other DeFi products. These come with additional smart-contract and market risk.

PancakeSwap – key facts

Snapshot of what this DEX offers and how users normally interact with it.

Core product

Token swaps

The main feature is swapping BEP-20 tokens via liquidity pools. Prices are set by the AMM formula, not a traditional order book.

DeFi extras

Farms & pools

The interface may also show farms, staking pools, lotteries or other gamified DeFi features, each with its own risk profile.

Wallet needed

Self-custody

You typically use a self-custody wallet such as MetaMask or a BNB Chain compatible wallet. Private keys are your responsibility.

How PancakeSwap works in practice

Mechanisms behind swaps, liquidity provision and yield-style products.

Swapping tokens

AMM pools

Users connect a wallet, choose a pair (for example CAKE/BNB), review the quoted rate and slippage, then sign a transaction on BNB Chain.

Behind the scenes, the pool contract adjusts balances and updates prices based on the AMM curve.

Liquidity & “yield”

LP & farms

Adding liquidity or joining a farm is not the same as a guaranteed interest account. Returns depend on token prices, pool volumes, rewards rules and market conditions.

Impermanent loss and smart-contract vulnerabilities are major risk factors users should understand before depositing funds.

Potential benefits and main risks

Neutral view of why people use PancakeSwap – and what can go wrong.

Why some users like it

Pros

Lower fees vs mainnet Ethereum for many transactions.
Wide choice of BEP-20 tokens and DeFi products in one interface.
Non-custodial: funds remain in user-controlled wallets.
On-chain transparency for pool balances and transactions.

Key risk points

Risks

Smart contract bugs or exploits in pools, farms or external integrations.
High volatility of many s