PancakeSwap has integrated professional market makers on both the Ethereum and Binance Smart Chain networks. This strategic move aims to help traders execute their orders at a lower cost, enhancing the overall trading experience on the decentralized exchange.
Beyond the traditional Automated Market Maker (AMM) model, trades on PancakeSwap can now be automatically routed to a whitelisted set of market makers—but only if they offer a better price than the current AMM price. This intelligent routing is handled by a smart order routing system, ensuring that users always get the best available execution without any extra effort on their part.
How Market Maker Integration Works
The integration is designed to be seamless and automatic. When you make a trade, the system checks multiple liquidity sources in real-time. Here’s how it works in two common scenarios.
Scenario 1: When an AMM Liquidity Pool Already Exists
If PancakeSwap already has an AMM liquidity pool for a trading pair (for example, WETH/USDC), the platform will also request a quote from its integrated market makers for the same trade. The smart router then compares the prices from both sources and directs the trade to the one offering the better rate at that specific moment.
Scenario 2: When No AMM Liquidity Pool Exists
In cases where there is no existing AMM pool for a particular asset pair, the smart router will automatically direct the trade to a market maker. This ensures that users can still trade even for pairs with less established liquidity. Note that this doesn’t prevent other projects from creating their own AMM pools later to contribute to the decentralized liquidity ecosystem.
Fee Structure
One of the standout features of this integration is that users are not charged any additional fees for trades executed by market makers. Instead, PancakeSwap collects a small commission from the market makers themselves based on the trading volume they facilitate.
- For non-stablecoin pairs, PancakeSwap charges market makers a 0.05% fee.
- For stablecoin pairs, the fee is reduced to 0.01%.
These fees contribute directly to the platform’s sustainability and growth initiatives, including the buyback and burn of CAKE tokens.
Detailed Fee Breakdown
| Transaction Type | Fee Charged to Market Makers | CAKE Burn Allocation | Team Treasury Allocation |
|---|---|---|---|
| Non-stable pairs (e.g., ETH/USDC) | 0.05% | Partially allocated | Partially allocated |
| Stablecoin pairs (e.g., USDT/USDC) | 0.01% | Partially allocated | Partially allocated |
Currently Supported Assets
The list of supported assets may change based on market conditions and maker participation. Currently, the following tokens are supported:
On Ethereum
- Major Assets: WETH, WBTC
- Stablecoins: USDT, USDC, DAI, BUSD
- Other Popular ERC-20 Tokens: MATIC, DYDX, CRV, LINK, APE, CVX, STG, LDO, SNX, RNDR, FET
On Binance Smart Chain
- Major Assets: BNB, ETH, BTCB
- Non-BNB Chain Native Tokens: ARB, OP
It’s important to note that, unlike AMMs, market makers may not execute trades of any size. The amount they are willing to trade depends on their available liquidity. Very large orders may sometimes be only partially filled, which is normal. We recommend that users always review the quoted price and amount before confirming a transaction.
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Market Maker Downtime
Market makers do not provide quotes 24/7. There may be occasional downtime due to significant economic events, system upgrades, or other operational reasons. During these periods, certain tokens might not be available for trading via market makers. Users are advised to wait until the service is fully restored.
Frequently Asked Questions
Q: Will market maker integration be expanded to other chains like Aptos?
A: It is possible. Currently, this feature is available only on Ethereum and Binance Smart Chain. We are continuously monitoring other chains and may expand based on user demand and network conditions.
Q: If users aren’t charged fees, how does PancakeSwap generate revenue?
A: PancakeSwap charges market makers a small commission on the volume they execute. A portion of this revenue is used to buy back and burn CAKE tokens, supporting the token’s deflationary model.
Q: Can liquidity providers still earn LP fees?
A: Yes. Liquidity providers continue to earn a 0.17% fee on all trades executed through the AMM pools they contribute to. They also remain eligible for CAKE farming rewards.
Q: Do market makers add liquidity to AMM pools? Will this reduce APR for LPs?
A: No. Market makers maintain their own independent liquidity and do not participate in AMM pools. Therefore, they do not earn any fees or APR from AMM transactions. Liquidity providers continue to earn rewards as usual.
Q: I already provide liquidity on PancakeSwap Ethereum. Do I need to take any action?
A: No action is required. You will continue to earn LP fees from AMM-executed trades and CAKE rewards from farming.
Q: How can I become a market maker on PancakeSwap?
A: PancakeSwap selects market makers through a manual review process. If you are interested, we recommend reaching out to the team directly through official community channels.
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The integration of market makers is a major step toward making PancakeSwap more efficient, liquid, and user-friendly. By leveraging both AMM and professional market making, the platform ensures that traders of all sizes can access the best possible prices with minimal cost.