Many cryptocurrency enthusiasts talk about Decentralized Finance (DeFi) technology as being the future of banking. Some will go as far as saying the DeFi solutions will one day becoming viable replacements for the traditional banking system. Before all this can happen, DeFi projects need to prove their worth in terms of supporting liquidity pools, and there is one particular project that is doing quite well in this regard.

PancakeSwap is a DeFi blockchain application that runs on the Binance Smart Chain. As can be expected, this project has its own token, which trades under the CAKE symbol, and which has generated plenty of discussion among digital currency traders. In essence, PancakeSwap is a market maker that can automate various processes and transactions that normally take place on the Ethereum network; however, it can do so at a fraction of the normal cost.

Since most of the competing alt coins on the cryptocurrency market are powered by the Ethereum blockchain, it only makes sense for DeFi developers to tap into this market. One problem that token development and governance teams have run into in recent months is that Ethereum transaction costs are getting more and more expensive, thus making options such as PancakeSwap very enticing.

Binance Smart Chain is an integration platform provides an easy way to access funds from the various branches of the Binance cryptocurrency exchange. This integration also allows the management of funds from third-party blockchain applications. PancakeSwap is an example of a third-party blockchain app running on Smart Chain. The way PancakeSwap takes advantage of market conditions is by attracting cryptocurrency miners with freshly minted CAKE tokens; this in turn provides more processing power to the DeFi platform, which results in decent liquidity at very reasonable fees.

It should not be surprising to learn that CAKE is trading around the $15 level as we come to the final week of March. In late February, CAKE was barely reaching $9, but overall trading volumes on the digital currency markets have pushed the price of this token considerably higher. This situation could repeat itself if Bitcoin and other prominent tokens continue to go on rally mode.