PancakeSwap v3 liquidity source is live on Matcha, giving you even more liquidity when trading crypto on BNB Smart Chain and Ethereum. Matcha is a DEX that aggregates liquidity to find you the optimal execution route for your swaps across the crypto ecosystem. Deep, competitive and decentralized liquidity gives Matcha more routes to choose from to deliver the best prices on swaps and limit orders. 

What is PancakeSwap v3?

Version 3 is the latest update to the PancakeSwap protocol, an AMM (automated market maker) protocol that allows individual liquidity providers to stake tokens in liquidity pools in return for Liquidity Pool token rewards.

It is the third version of PancakeSwap, bringing substantial protocol upgrades to PancakeSwap v2, which Matcha also supports. New in PancakeSwap v3 is more efficient liquidity provision and an improved fee and reward structure.

Developed from a software fork of Uniswap v3, another liquidity source on Matcha, PancakeSwap primarily serves the BNB Smart Chain (BSC) community with most liquidity on the Ethereum and BSC networks, but it also facilitates liquidity provision and token trading on Polygon zkEVM, zkSync Era, Abritrum One, Linea, Base, opBNB, and Aptos.

What is Matcha?

Matcha is a DEX aggregator built by 0x that lets you trade over 4 million tokens across 9 blockchains. It offers efficient token swaps and limit orders by pooling liquidity from 100+ sources. 

Since launching in 2020, Matcha has facilitated $62B in 3.5M+ trades. 0x was founded in 2017 by Will Warren and Amir Bandeali, and the team has contributed to key technologies like WETH, the ERC721 NFT standard and more, drawing $109M in investment to date.

PancakeSwap v3’s liquidity pools get more efficient

One of the major changes in the latest PancakeSwap is that liquidity can now be concentrated within the price range that’s actually being traded. Wallets which provide liquidity to PancakeSwap v3 can now set a price range within which to allocate their assets for optimal efficiency, instead of the uncapped range which existed in v2, as explained on the PancakeSwap blog. 

Try the new PancakeSwap v3 on Matcha right now and see for yourself! Just visit Matcha DEX aggregator to start trading on BNB Smart Chain. Matcha will find you the best price across all aggregated liquidity, piece of cake! 

Changes to liquidity fees and farming 

Matcha users may benefit from the new fee structure in PancakeSwap v3. This gives individual liquidity providers the option to set fees as low as 0.01%, which should help drive down costs as liquidity providers try to bring in more volume through competitive pricing. 

Trading fees on PancakeSwap v3 are split into 4 tiers, where individual liquidity providers set the fee themselves. When adding liquidity, they can choose to set a fee of 0.01%,  0.05%, 0.25%, or 1% on the asset pair. 

There have also been changes to how farming APR is calculated, which depends on the wallet’s contribution to the pool, affecting both fees and rewards for participating liquidity providers.

How PancakeSwap works

PancakeSwap v3 is an AMM that automatically connects users with their desired trade. Liquidity is crowdsourced from other users who stake their tokens in liquidity pools, receiving liquidity provision (LP) receipt tokens which can be further staked on the PancakeSwap platform to earn CAKE, its native governance token.

Trade on BNB Smart Chain now!

Beyond liquidity provision, PancakeSwap v3 offers various interactive features centered around their native token, including NFTs and Initial Farm Offerings (IFOs), where users can stake their rewards to acquire tokens from emerging projects.

Providing liquidity on PancakeSwap

To pool liquidity, PancakeSwap v3 and earlier versions enable individual wallets to stake tokens on both sides of a trading pair (e.g. BNB/USDC) in a smart contract, and receive LP receipt tokens in return. 

In PancakeSwap v3, each liquidity provider position is represented as a non-fungible token (NFT) that describes the unique parameters of the position. These NFTs can be transferred between parties, which also transfers the ownership of the assets and any fees they earn. Notably, in version 3, trading fees earned by a liquidity provider must be claimed manually.  

Wallets that contribute liquidity to PancakeSwap receive liquidity pool (LP) receipt tokens proportional to their contribution. For example, if you deposited BNB and USDC into a liquidity pool on PancakeSwap v3, you'd receive BNB-USDC LP tokens. These tokens can be deposited to earn CAKE rewards on the relevant PancakeSwap farm. 

The assets provided are used to facilitate trades executed by the protocol, and the wallet providing liquidity receives liquidity provider (LP) tokens proportional to their share in the liquidity pool. When another user trades one token for another in the pair you've contributed liquidity for, they swap using the assets users like you provided to the liquidity pool.

Evolution of PancakeSwap

PancakeSwap launched in 2020 on BNB Smart Chain (BSC), offering lower fees and faster transactions than equivalent protocols on Ethereum. It quickly grew into the biggest automated market maker (AMM) on BSC until upgrading into PancakeSwap v2 in 2022. 

PancakeSwap v3 launched in April 2023, and now has over $300 million locked in liquidity. There is over $1.3 billion in Total Value Locked (TVL) across the PancakeSwap ecosystem, mostly on PancakeSwap v2 though many will likely soon upgrade.

Growing liquidity on Matcha

PancakeSwap v3 is just one of over 100 liquidity sources on Matcha! With the deepest liquidity of any DEX aggregator, Matcha ensures you have the best prices available any time you trade. Now with over 21 liquidity sources on BSC, you’ll always find an optimal route - fast! 

Keep an eye out for more liquidity source summaries as we continue to expand our industry-leading liquidity through the 0x Swap API!