Uniswap vs Pancakeswap

Discussion in 'Crypto Assets' started by Daal, Apr 21, 2021.

  1. Daal


    So Pancakeswap is this uniswap copy on the Binance Smart Chain, which is a centralized copy of Ethereum. I want to ask the Pancakeswap fans out there, especially @johnarb. How do you justify staying on this investment when:

    -Uniswap V3 is coming out, which will lower fees dramatically
    -Uniswap has a first mover advantage. Or "Increasing Returns" according to your buddy Brian Arthur, whose book I'm reading
    -CAKE finances its high APY returns by printing new CAKE tokens, even if you account for their token burns. Its a inflationary currency, the way to 'profit' in a inflationary currency, is to earn it and sell it for hard currency, not hoard it. If they 'solve' inflation, APYs will plummet. That might just be what stops drawning more buyers to this ecosystem
    -Both BSC and CAKE dont have long-term stories, but rather only short-term based on ETH fees. But ETH fees are being worked on by people that know how to innovate (rather than copy). There are L2s, EIP 1559, ETH 2, etc
    -It has already mooned
  2. johnarb


    The issue is the very high fees and the slow transactions on Ethereum

    I would prefer Ethereum over BSC, would prefer Uniswap over Pancakeswap, except, I literally spend thousands of $ when using Uniswap when trading and that's unsustainable for many including myself. It's killing the growth of defi on Ethereum

    -Uniswap V3, will revisit when it's out, but I think the fees will require some kind of lock-in/deposit for another token to lower the fees, until it's out, hard to judge the project

    -Uniswap first mover, yea, I love Uniswap, I was yield farming had many uniswap LP tokens, my issues and others have the same issues are the high transaction fees and slow transactions

    Yes, BNB and CAKE on BSC are not ideal, but the defi ecosystem on BSC is booming, because of very low fees and very fast transactions. The market is rewarding CAKE and BNB by the fact that CAKE is doing more volume than Uniswap and CAKE has more TVL than Uniswap. That's a market voting with $$$

    Yes, Eth 2 and other solutions are being planned, but the question back to you is when? Once it's out, everyone will be looking if the problems are resolved, if not, then the growth of defi on BSC and the growth of CAKE will continue
    zenlot likes this.
  3. johnarb


    Sorry forgot to address the issue of inflation on CAKE which is a big one since there is no stop to that inflation

    The whole PanCakeSwap ecosystem, and you've seen their website, they lottery, they have IFO, and the big ones are swap dex, which as I mentioned before, is bigger than Uniswap in volume, that has to be financed with incentives which is the CAKE tokens

    The market is rewarding the ecosystem by valuing CAKE tokens very high, per your moon comment

    The market believes with the continued growth of the CAKE ecosystem businesses, that they will be able to return via share buyback, what you call burning of tokens, and there have been some big ones recently

    Let's put things into perspective, the circulating supply of CAKE is 157M while the circulating supplies of Uniswap tokens is 523M, that's a big ouchie on Uniswap, when will the number of tokens ever catch up to Uniswap? and Maximum supplies of Uniswap is 1B

    Uniswap has much higher market cap than PanCakeSwap when it has less volume on its dex, and it has less total value locked (aka assets under management) entrusted to its platform. Just looked I'm mistaken on this, Uniswap has a higher TVL

    Let me be perfectly clear, i do not think Uniswap is overvalued, quite the opposite when compared to Coinbase, I think Uniswap is undervalued

    However, I think PanCakeSwap is undervalued and I continue to hodl it and I'm rewarded with a high APY along with others who are doing the same
    Last edited: Apr 22, 2021
    zenlot and AbbotAle like this.
  4. johnarb


    Glad to hear you're reading the Brian Arthur book, but not sure if you're reading his actual book Increasing Returns and Path Dependence.... or the Complexity book.

    I'm ordering Increasing Returns on Amazon right after this post, I was exposed to his ideas, he's a featured character on the Complexity book
    zenlot likes this.
  5. Daal


    Those APYs are phony because they dont take into account that you are being paid by inflation. Correct if I'm wrong but the daily issuance is 750K CAKE a day. That's 270M CAKE a year! (with 157M CAKE being outstanding). This is very similar to stocks that pay dividends not in cash but by issuing new shares (so called stock dividends), its a form of stock splits, just done gradually instead all that once.
    It does not signal that there is some high risk premium to be extracted there (not by itself), but its just a partial return of the loss from inflation. I mean, inflation is well over 14% a month, those rates dont even keep up with that
  6. Daal


    Uni has already delivered twice, there is not reason to think they wont deliver again. Especially when the theoritical framework that they are using (Optimism) has been developed for so long

    On the issue of fees, another way to look at it is that this is a sign of great product market fit. The only reason fees are so high is because people's demand for the service is so high.
    But more importantly, once the layer 2 is out, people will pay fees to join L2, trade all that they want (perhaps over multiple days, weeks) and then pay the fees to exit. So instead of 10/20/30 transactions, they will pay 2. This will not only decrease the amount of transactions but it will significantly decrease the bidding wars for transactions. That's what I think is driving gas up. People will pay anything to buy the next shitcoin they think will moon. And Uniswap is like 20-25% of transactions on ETH, more when you consider the bidding war economic effect. Once that is gone, I think fees will disproportionally come down
    johnarb likes this.
  7. Daal


    Sorry I meant the Complexity book, maybe I buy his own when I'm finished
    johnarb likes this.
  8. johnarb


    Yes, you are correct the inflation is how the APY is paid, but that's how crypto tokenomics work. Aligned incentives for all players. Skin in the game

    [14% inflation per year becomes a smaller percent with more cake tokens circulating if the 750K /day is a constant number and it will lower the rewards for for everyone as the business matures everyone is willing to take a lower APY for an older business equaling lower risk. This is the concept of the early adopters get a bigger reward for taking a bigger risk. Same with bitcoin, early miners got 50 bitcoins per block, with a higher risk of a project that has a bigger risk of failure]

    For example, security of the bitcoin blockchain is paid through inflation and so is Ethereum or any L1 blockchain

    I'm not certain what the inflation is, but if your figure is correct, it will take over a year to catch up to Uniswap circulating supply, and the maximum supply of Uniswap is 1B so...

    There's a vote ongoing right now whether to burn cake tokens (I guess income from cake platform operations) or distribute to hodlers or to distribute to stakers/LP participants, lots of twitter posts are saying burn them, and that is what I'm talking about, with such a booming business for Cake, numbers are not static, can the inflation go negative? I doubt it, but maybe it's enough to significantly slow it down

    So, is hodling a Uni the same as hodling a Cake, what I meant is that is Uniswap business operating income being funnelled to increase all the Uni token value like burning tokens like what Cake is doing, basically in stock parlance a buyback, but in the case of Cake, burning tokens means no one owns those cake tokens