The token of a relatively new decentralized exchange in the decentralized finance (DeFi) space has rallied over 1,000% so far this year as the DEX has been seeing massive trading volumes over the last few weeks.
The native token of PancakeSwap (CAKE) launched late last year and has surged recently as the exchange is now the third-largest decentralized trading platform by trading volume, with over $444 million changing hands through the platform on a daily basis.
This means PancakeSwap is moving larger amounts of money than SushiSwap, a popular competitor, which has traded nearly $430 million over the last 24 hours. PancakeSwap falls only behind Uniswap, which has a trading volume close to $1.2 billion per day.
PancakeSwap has been seeing huge trading volumes as the platform is not a decentralized finance project built on top of the Ethereum network, which is currently dealing with congestion and seeing average transaction fees go as high as $24, and is instead built on the Binance Smart Chain.
The Binance Smart Chain was launched in September of last year and is a high-performance EVM-compatible blockchain that runs in parallel to the Binance Chain (launched in April 2019); this enables smart contracts and Binance Coin (BNB) staking. Transaction fees on the Binance Smart chain, which uses BEP-20 cryptoassets, are much lower.
According to available data, the price of the CAKE token has moved up from about $0.6 at the beginning of the year to over $6.7 at press time.
As the Daily Hodl reports, cryptocurrency analyst Nicholas Merten has said he is impressed with the project’s performance, but recommended investors wait to see if the DEX’s performance is the result of hype surrounding it or here to stay.
In a video, Merten noted that it’s “really nice to see more competition come into this space,” and pointed out that the Binance Smart Chain is more affordable to the everyday user. After noting he “missed the train on this” and did not “see the Binance ecosystem picking up as much as it has,” he warned investors “not to get too caught up in a hype.”
The one thing this is shaped up for, especially in this case as everything is developing on the Binance Smart Chain, is it has served as a really big boost for the BNB token in this case as a potential reserve asset, similar to how ETH is the reserve asset for the Ethereum ecosystem
Featured image via Unsplash.