Original article by Fu Le on crypto, Moon Token Pavilion
Recently, the crypto world has stirred up a storm—CAKE (Pancake Coin) unexpectedly soared nearly 50%! Many investors are puzzled: what exactly happened with this coin? How did it rise so rapidly?
Today, we will unravel the mystery behind it in the simplest terms possible!
Reason One: CAKE has transformed into a 'rare treasure'; the less there is, the more valuable it becomes!
Imagine if half of the iPhones in the world suddenly disappeared; would the remaining iPhones double in value? The trend of CAKE follows this logic!
PancakeSwap has launched a creative 'limited burn' mechanism, where a portion of the transaction fees in CAKE is directly burned with each transaction. According to data, an astonishing 1.76 million CAKE were burned just last month, and the burning rate even exceeded the minting rate of new coins, continuously reducing the total supply and naturally driving up the price!
(In short: when items are scarce and demand increases, prices naturally rise!)
Reason Two: PancakeSwap's 'cross-border layout' has led to a surge in transaction volume!
In the past, CAKE primarily thrived on the Binance Smart Chain (BSC). However, it did not stop there; it has set its sights on mainstream blockchains like Ethereum and zkSync, embarking on a 'cross-border journey'!
Especially recently, PancakeSwap successfully connected to a layer two network (equivalent to an express lane on a highway), significantly enhancing transaction speed, reducing costs, and leading to a sharp increase in user numbers and a doubling of trading volume! With the thriving business, CAKE, as a 'platform token', has also seen its value rise accordingly!
Reason Three: High-interest temptation, who can resist?
Now, storing CAKE can yield an annual interest rate of over 20%! For example, if you deposit 50 CAKE, you can earn nearly 10 extra coins in just 10 weeks!
This interest rate is far higher than traditional bank wealth management products, naturally attracting a large influx of investors. Consequently, the circulating supply of CAKE in the market further decreases, pushing prices to new heights!
(Simply put: storing coins generates interest; everyone is hoarding coins and not selling, which naturally stabilizes the price!)
Reason Four: The Binance Smart Chain has unexpectedly gained popularity, and CAKE is capitalizing on it!
Recently, a 'meme coin' named Mubarak was born on the Binance Smart Chain (BSC). Due to a like from Binance CEO CZ, this coin skyrocketed by 1300 times in a short period!
A large number of investors flocked in, and funds on the BSC chain surged like a tide. As the 'leading coin on-chain', CAKE naturally became a beneficiary, effortlessly enjoying the market dividends.
Reason Five: The external environment is warming up, and DeFi is reigniting the flames of battle!
During last year's bear market, investors chose to lay low. However, this year, decentralized finance (DeFi) has revived! The trading volume and total value locked (TVL) of PancakeSwap have surged to among the top three globally, with returns doubling compared to last year!
With the Federal Reserve's policy easing, institutional funds are also willing to venture into the crypto space, and the entire market is showing signs of warming. In this larger context, leading coins like CAKE have naturally seized the opportunity for rapid price increases.
What should ordinary people be wary of?
1.- Never chase highs blindly! After a surge, there is often a risk of correction; do not get trapped at high prices due to momentary impulse.
2.- Focus on long-term trends! PancakeSwap continues to expand; if it can consistently implement the 'burn coins + cross-border layout' strategy, there is still vast development potential in the future.
3.- Beware of the 'meme coin' traps! There are many scam meme coins on the BSC chain; do not blindly follow the trend out of greed!
In summary:
The surge of CAKE is attributed to the platform's comprehensive upgrade, aggressive burning behavior, the hot trend on-chain, and the overall market recovery! However, the crypto market is volatile; those wishing to invest must be fully prepared and not be impulsive due to temporary gains!
(Invest carefully; this article is for reference only and does not constitute any investment advice!)
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