Following my first guide on PancakeSwap, here is an additional set of precious information I gathered while making my way through this application.
Warning: Only invest what you can afford to loose in Cryptocurrencies.
In this advanced guide, we will cover the following topics:
- Quick summary on the why / how it works
- How to harvest your rewards
- How to withdraw your LP token and get your token pair back
- Some tips
- How to choose the correct pair to invest on / what the indicator to follow
I followed your guide, but I still don’t understand how it works =/
Let’s say you want to exchange USD for EUR: you take your USD, you go to a bank, hand over your bills, and get EUR instead. This works because the bank (a centralized finance company which in this case acts as a centralized exchange) has a stock of EUR (a USD-EUR liquidity pool) that is available for exchange.
How does a Decentralized Exchange (DEX) works?
In a DEX, there is no counter with a guy that has a pile of EUR & USD bills available for exchange. Instead, it relies on users that are willing to provide their liquidity (say, the pair BNB-HGET) into a pool that will be used for exchange. When you provide such liquidity, the exchange marketplace (in this case, PancakeSwap) rewards you with their own token, CAKE.
Harvesting your reward
Go to pancakeswap farms with your MetaMask enabled browser (you should be already connected, and your wallet address should be displayed in the top right) and select “Staked only” to easily find your pool. Then, click on “Harvest”, validate the MetaMask notification, and it’s done.
Note: if your MetaMask wallet is showing “ETH” instead of BNB, just re-select the Binance Smart Chain in the network list.
Withdraw your LP tokens
Go to pancakeswap farms and click on the minus sign (“-”) in front of your LP staked tokens.
Click on “MAX” and confirm the MetaMask confirmation. You’ll have to wait for approval before getting your LP token back.
At this point, you’ll get your LP token back, but not your SWGb token & your BNB token. For that, you’ll have to go in Liquidity, and “remove” your LP tokens.
Note: The amount of BNB & SWGb tokens you’ll get back may differ from your first investment, but it’s normal: let’s say you provided 1 BNB and 10 SWGb in a pool for exchange, when “removing” the token, you may get 0.7 BNB and 13 SWGb (the ratio will still be the same).
After clicking “remove”, you indicate how much you want to retrieve (100%), then again, “Approve” / “Remove” / MetaMask confirmation window, and your tokens will be back in your wallet.
Tips
- If you want to add new LP token in a pair / pool you are already in, harvest first before adding new token
- Harvest every 1–2 days
- When the profit (APY) is too low, just withdraw your token and re-provide them in another pool
- Compound (=harvest your reward and re-invest them in your LP pool for more profit)
How to choose a token pair?
This question is not an easy one, because it depends a lot on your approach (safe vs risky) and on your beliefs, but I believe there are elements that you should take into account in any cases:
- Check the APR percentage: the higher, the better
- Check the “details” to know how much money is in this pool, and compare to others. For instance, SWGb-BNB has 4.8M$, while CAKE-BNB has 552M$ (!!). The higher the number, the more the pool is being backed by the users.
- Select one project that has “growth” potential. For example, SWGb & HGET are potential 10x coins, making them very interesting for you
- Check the projects, read the white papers, make your own research and follow / invest on the project you believe in :)
I hope this guide helped you understand more about the Liquidity pool and DEX system. If you have any question, feel free to drop me a message.
Clap if you liked it, subs if you loved it!
My BNB Address (if you want to deposit some coins XD): 0x0451864cdd0cb179893EB91057dA7746B5b1973B
My Binance referral link: https://www.binance.com/en/register?ref=RUERPAKG
PancakeSwap: https://pancakeswap.finance/
SWGb project: https://swirgepay.com/
