Guide to Using PancakeSwap to Yield Farm

Yield Farming with PancakeSwap can be a great source of passive income. Crypto projects are attracting investors at a time when banks offer negative interest. Projects can offer huge returns depending on your risk tolerance.

Before diving into the mechanics, it helps to understand exactly what yield farming involves at a conceptual level. This detailed breakdown of yield farming concepts covers the foundational ideas that make this strategy work — from how liquidity pools function to how rewards are calculated and distributed. Getting a firm grasp on those fundamentals makes it much easier to evaluate whether yield farming fits your investment goals and risk tolerance.

Liquidity is essential for most DeFi apps to function. Yield Farming refers to the act of providing liquidity and earning interest.

PancakeSwap, a Decentralised Exchange, runs on Binance Chain. Users can trade and buy BEP-20 tokens. Check out our guide to buying PancakeSwap’s native currency, CAKE.

PancakeSwap runs on Ethereum Chain and is similar to Uniswap or SushiSwap. Because Binance Chain is extremely low in fees and has fast transaction speeds, it has gained popularity.

Before you can start farming yields on PancakeSwap, though, you’ll need a wallet that actually connects to Binance Smart Chain — and that’s where MetaMask comes in. It’s not a plug-and-play setup out of the box, since MetaMask defaults to the Ethereum network, so you’ll have to configure it manually to point at BSC. Our Pancake Swap MetaMask wallet setup guide walks you through every step of that configuration, so your wallet is ready to go well before you touch a single liquidity pool.

Two main ways to Yield Farm on PancakeSwap are Syrup Pools or Liquidity Pools. Before you can do that, however, you will need to create MetaMasks for Binance Chains and load them with money.

Connecting & Using MetaMask on PancakeSwap

One of the most popular options for a web3 wallet is MetaMask, not only is it versatile (it runs on chrome, so you can also use it on your mobile), but it is relatively simple and easy to get started with. 

To begin, follow these steps:

1. Download MetaMask extension and install it on Google Chrome

2. As with any wallet, the initial setup is simple. Make a password and a note of the backup phrase. It is now ready to use with Ethereum Chain. It needs to be configured for Binance Chain.

3. Click on MetaMask to open your wallet. Next, select Settings. Scroll down to Networks and click on “Add Network.”

4. Fill in the following information to add Binance Smart Chain Mainnet to your networks:

• Name of the network: Binance Smart Chain
• New RPC URL: https://bsc-dataseed.binance.org/
• ChainID: 56
• BNB is the symbol
• Block Explorer URL: https://bscscan.com

You can load your wallet with any BSC20 token through transferring from supported cryptocurrency exchanges, like Binance. We touched on how to do this in a previous article about MetaMask and PancakeSwap.

When withdrawing your tokens/coins from Binance, ensure that you select the BSC-20 network and copy your Metamask wallet address exactly.

Using PancakeSwap to Farms for Yield Farming

PancakeSwap can be used to make money by trading liquidity.

After logging into PancakeSwap click on farms to the left. Here you will see a list with the farms that you can join and the annual interest rate.

Let’s start with the first Liquidity Pool, “CAKE-BNB”. This pool is the most popular in PancakeSwap because it has the largest trading volume. It has more than $1.2 billion in liquid assets at the time of writing. To participate in this pool, you would need to have liquidity of CAKE and BNB.

There is also no lock-in period. You can withdraw at any time. To see how much you can earn in the short-term, click on the APR interest rates. We’ll use CAKE-BNB as our guide.

Purchasing liquidity

First, both CAKE AND BNB must be equal in value. Although I have BNB in my pocket, I don’t have CAKE.

1. Click on Trade on the left which will allow you to then select the exchange option. I would like to stake 0.04BNB and the same amount CAKE in value.

2. Set the first currency to BNB, and the second to CAKE. It automatically calculates that 0.02 BNB can be exchanged for 0.72 CAKE at the time of writing this article.

3. Hit switch and confirm the transaction on Metamask. Your wallet will update in a few seconds.

Staking Liquidity

In order to provide liquidity, you first need to make sure you have equal amounts of CAKE and BNB.

1. Hit liquidity on the side menu, and then select Add Liquidity.

2. Again, choose CAKE and BNB as the currencies and enter the stake amount.

3. Hit Supply to authenticate pop-ups by Metamask.

4. Once the transactions have been confirmed, you will receive the CAKE-LP token. This token confirms that you have provided liquidity. You don’t yet get any interest. To claim this, you will need to return to Pools on your left.

5. To enable it, select CAKE-BNB. After it is enabled, you can harvest the tokens and stake as many CAKE-LP tokens as you want.

Although it may seem complicated, there are only a few steps involved. Binance Chain is easy to use for beginners because of its low transaction costs.

CAKE can be used to harvest your interest. You can also remove staked tokens and get your capital back by doing the reverse.

Once you’ve collected your CAKE rewards and understand how withdrawals work, it’s worth knowing that CAKE itself can be put back to work rather than sitting idle in your wallet. Staking your CAKE tokens is one of the most straightforward ways to keep compounding your earnings on PancakeSwap, and our step-by-step CAKE token staking guide walks you through the entire process from start to finish. This sets the stage perfectly for understanding Syrup Pools, which offer a similarly accessible staking experience with a few key differences worth exploring.

At its core, the process of earning yield in PancakeSwap’s liquidity pools revolves around one central asset: CAKE. Understanding what CAKE farming actually involves helps clarify why you’d want to harvest and reinvest your rewards rather than simply let them accumulate. Once you have a solid grasp of how CAKE is earned through liquidity provision, it becomes much easier to compare that approach against simpler options — like Syrup Pools — where you can put your CAKE to work without managing a full liquidity pair.

You can also opt for a simpler alternative: pools.

Read more: What is pancake swap?

Utilizing PancakeSwap Pools for Yield Farming

Syrup Pools can be used in a much simpler way than Farms. To earn many different cryptocurrencies, you can stake CAKE.

1. Click on the links to select pools

2. You can select from the various pools here. All pools require that you stake CAKE. However, each pool has a different interest percentage and currency.

3. After you have selected a pool click Enable to approve the transaction in MetaMask.

4. Once it has been enabled, click Stake to select the amount you wish to lock up. Once again, approve metamask.

That’s it! The interest will start immediately. You can withdraw your CAKE at anytime, just like Farms.

Although Pools may seem simpler than Farms, they are quite different. You can only stake CAKE in Pools. Farms allow you to stake multiple cryptocurrencies in pairs. Farming pairs like BUSD or BNB can help reduce your risk.