What Is Uniswap?
Uniswap is an Ethereum-based decentralized exchange (DEX) using the Automated Market Maker (AMM) model. It uses liquidity pools as opposed to order books. Uniswap runs its network on the original Ethereum blockchain instead of Binance Smart Chain (BSC). Because of Uniswap’s DeFi protocols success, many DEXs have adopted some of its features for their platforms.
With the AMM model, there is no need for know-your-customer (KYC) protocols when buying or selling on the platform i.e., less trading time. As a result, more people can now access decentralized token swapping with ease.
What Is PancakeSwap?
PancakeSwap is a Binance Smart Chain (BSC) powered decentralized exchange (DEX). Like Uniswap, it also uses the Automated Market Maker (AMM) model to fulfill placed orders. PancakeSwap assigns LP tokens to liquid providers when they interact with the liquidity pool.
The tokens are equivalent to the liquid provider’s share in the pool and will apply when removing their share in the liquidity pool. PancakeSwap runs on Binance Smart Chain (BSC), therefore the tokens on the platform must adhere to the BEP-20 token standards. Furthermore, the tokens differ based on the type of tokens deposited in the liquid pool.
Important Factors We Can Use to Compare Uniswap and PancakeSwap
1. Transaction Fees
Because PancakeSwap uses a BSC, a scalable network, its transaction costs are significantly lower than those of Uniswap. PancakeSwap additionally is able to provide its users faster transactions thanks to BSC. Uniswap uses Ethereum blockchain whose transaction costs are extremely high. Uniswap’s problems intensify when users look to transact smaller crypto amounts. The high gas fees potentially affect user profits.
2. Adoption
Uniswap has existed longer and has a bigger user base. However, PancakeSwap is gaining popularity, with its user base growing daily. The demand for the CAKE token and BSC has contributed greatly to its growth putting it well on the way to overtaking Uniswap. It’s still a waiting game but the rise in CAKE prices could be the sign that things have started to shift in PancakeSwap favor.
3. Liquidity
Being the older platform, Uniswap has higher liquidity than PancakeSwap. Most launchpads prefer Uniswap because new tokens are very liquid on the platform. Despite PancakeSwap offering lower transaction fees to those on Uniswap, they still encounter liquidity problems, maybe because they are a relatively young platform.
4. Community
Because of DeFi’s early adoption and its network effect, Uniswap has a solid platform that other exchanges have emulated. However, this isn’t enough to beat PancakeSwap’s intense marketing strategy. PancakeSwap has employed enticing incentives for its users such as lotteries, airdrops, competitions and PancakeSwap NFTs.
5. Security
Both PancakeSwap and Uniswap are very safe to use, thanks to their decentralized nature. However, users should always be cautious when transacting on both exchanges. PancakeSwap has some additional support from the Binance ecosystem to ensure the safety of its users.
6. Token Variety
Uniswap obviously has more tokens compared to those on PancakeSwap due to the length of time it has been around. However, thanks to Binance ecosystem, there are some tokens that are only exclusive to PancakeSwap such as BURGER, FRONT and BAKE.