DEFInitely Daunting
I have always thought that DEFI was too complicated for me. My crypto knowledge seemed to have been stunted and my brain simply wouldn't process this DEFI thingy.
DEFI: “decentralized finance,” an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.
But does that mean I really do not have to dip my toes into it? It's apparent that the crypto-sphere is growing and DEFI is a big part of it especially this bull season.
Hence, no matter how daunting, I tried to touch this very alien tech - - (1) for knowledge purposes, and (2) for profits (crossing fingers here).
PancakeSwap
Since ETH gas fees are unbelievable, these defi's on the Binance Smart Chain(BSC) are getting a lot of attention. One of them, PancakeSwap, is the one that I tried getting acquainted to.
Boy, it was not easy! My brain literally throbbed from information overload.
Few terms to note:
BEP20 - a token standard on Binance Smart Chain that extends ERC-20, the most common Ethereum token standard. Source.
Liquidity Pool - a collection of funds locked in a smart contract. Liquidity pools are used to facilitate decentralized trading, lending, and many more functions we’ll explore later. Source.
Farming - allows you to earn CAKE tokens as you stake your LP coins.
Setting Up Metamask For Binance Smart Chain
When you decide to dive into this syrupy and cakey defi platform, you will have to link your wallet. At the right, you will find the wallets that support BEP20 tokens.
I already have Metamask, so I decided to use it. The first I had to do was link my Ledger Nano to my metamask account. This is not required, but I wanted to do this to twist my brain and to get that added sense of security since I will be signing all transactions using my device.
Here's a tutorial that came in handy for this task:
Connecting Ledger Wallet to Metamask
Once this was done, I had to set up the Binance Smart Chain on Metamask, following this guide:
Use MetaMask For Binance Smart Chain
Just note, I performed the above using Metamask Chrome extension on desktop and the setup does not reflect on Metamask mobile app.
I have the wallet set up, now what?
The above already gave me enough headache, now we get to another crucial part -- getting the BNB tokens. Well, we all know now that BNB is having a rally and I got mine at $185. Naah, not looking good. Oh well, who knew I'd need BNB tokens and who knew its price would explode like this? LOL.
Nonetheless, I am already ankle-deep into the process and the water feels good, I was compelled to proceed further.
There are two networks you can withdraw your BNB tokens into but for this purpose, choose BEP20 address.
Since I have just recently created my BSC compatible wallet on Metamask, I tried to transfer only the minimum amount just in case I did something wrong and the funds get lost somewhere.😅 Only when the test amount reached then I transferred the full amount.
Finally, linking Metamask to PancakeSwap
Once I completed this essential part, the process got even more daunting, and honestly, I was not sure what I was doing. I tried to read several tutorials but I still got lost. Now I am neck-deep. This is sink or swim.
I chose "farm" option - where I can stake LP tokens to earn CAKE.
There's a whole lot of pairs to choose from, but I went for CAKE-BNB. This is where I got stuck (again). How do I do this?!
Here's what I did, if there's any easier way or anything wrong I did, please advise.
- Using "exchange" I split my BNB and got CAKE using half the amount. Now I have 50% value in BNB and 50% in CAKE.
- Add liquidity.
The third and final step would have been to stake LP but I miscalculated and did not have enough BNB for gas fees. I needed 0.002 BNB for the fees whilst I only had 0.001 left!
I only wanted a piece of CAKE...
Now my CAKE is not "baking". I had to check my wallets, which one I can put on Binance to buy the now very expensive BNB ($300 as of posting). The fees on USDT is very high at $54! That is insane. In the end, I transferred LTC and now I am waiting for a good buy opportunity for BNB.
The DEFI game is very new to me. The high gas fees on the ETH network was the main reason I kept away from it, but since the Binance Smart Chain has changed the landscape, I had to try.
It is indeed a learning experience, and hopefully, it would be a profitable one. But before that, I need to get this thing to get started first. Last step. Last step... Gotta get this done.
How about you? Have you explored DEFI yet? Any tips are welcome!
❤️Arlyn