CAKE jumps after a key investment. Worth a new look?

Posted: 8 June 2022 1:16 pm
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PancakeSwap just got an endorsement of sorts from Binance Lab, but its token is still down 62% year-to-date.

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PancakeSwap (CAKE), a popular decentralized finance (DeFi) platform on the Binance Smart Chain (BNB), got a boost on its native token as Binance announced it will invest in it.

CAKE jumped as high as 10% on the day following the news. It did drop back yesterday, but it’s up 4% again today.

Does the new investment make CAKE worth keeping your eye on?

What is CAKE?

CAKE is PancakeSwap’s native token, built on the BNB Smart Chain (BEP20). Earn CAKE from farms and liquidity pools, buy it on exchanges or win it in the PancakeSwap’s lottery.

Once you have CAKE, stake it — i.e. lock it for a limited time — to earn more tokens, or buy lottery tickets in the PancakeSwap Lottery. You can also mint NFTs, vote on the platform’s governance proposals and more.

Despite the boost, CAKE has underperformed

When CAKE started trading in September 2020, it sold for pennies. Following the crypto bull market of 2021, CAKE reached a peak at $42.59 in April 2020, marking a 9,800% gain in less than a year.

After reaching its peak, CAKE entered bear market territory and worse, losing 90% of its value. It now trades at around $4.50.

Can Binance’s investment change this?

Binance Labs is the venture capital and incubation arm of Binance, the largest crypto exchange globally. The announcement didn’t disclose the amount invested in CAKE. According to Binance’s press release, Binance Labs aims to “facilitate the next wave of global blockchain adoption by providing technology development, marketing and community support, and enterprise solutions for Web3 transformation.”

PancakeSwap is already the biggest decentralized app (dApp) on BNB Chain with daily active users of over 400,000. It has a $4.73 billion of total value locked (TVL) on the platform, which is the highest on the BNB chain, according to Defi Llama.

Biswap (BSW) is one of the most popular competitors on the BNB blockchain. However, its TVL at $515 million is no match for PancakeSwap.

Trying to get a handle on the markets? Explore strategies for how to trade crypto or see if there's a better platform for you with our guide to the best crypto exchanges.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Kliment Dukovski owns cryptocurrencies as of the publishing date.

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