Manual vs Auto staking for Cake on Pancakeswap
There are two kinds of people in this world. There are those who auto stake and there are those that manual stake. Which one are you?
Updated 6/10/2021 The autoswap pool is at about 71 million coins and the regular pool is at 65 million. It was a big increase since I wrote the original article. The rates have dropped.
The Auto stake pool on Pancakeswap appears to have more funds for the first time than the manual stake. They are both at about 65 million Cake coins. This has meaning to me. It is one thing to stake some Cake for a few hours or a few days. If you are going into auto cake, you are planning to hold for at least 3 days. If you plan to hold 3 days, then what is to stop you from holding longer.
In order to make more money from manual Cake, you need to compound 288 times per day. That is not realistic and if you aren't staking that much the fees will start to get you even if they are only 50 cents.
Although Auto Cake has a 2 percent performance fee and a penalty for removing funds I think it is still the best option out there in Defi.
If you leave your funds in Auto Cake for a year, you should have approximately 224% of the original amount. For example if you start with 100 Cake coins, you should end up with 224 Cake coins at the end of the year. It doesn't mean you made a profit. It is possible that Cake went down more than 50% even though you accumulated more coins.
It is also possible that the interest rate will drop but I have some thoughts on that too.
Right now there is about 180 million Cake coins and 130 million of them are staked in manual or autocake. The Cake/BNB pool has 700 million dollars in it. Assuming half of that is Cake. That is $350 million dollars of Cake. Take the price of Cake at $18 and that is another 20 million or so coins. We now have 150 million of the 180 million coins accounted for. That doesn't leave many floating around. If someone was to clean out Pancake Swaps 20 million coins and stake them it should reduce staking rewards by at most 20%.
If someone really did buy 20 million coins, Cake would go up so high that people wouldn't really care about the yield. The yield of Cake is protected by the scarcity of Cake. If you can't get Cake, you can't stake cake.
If Cake increases in price, the yield per coin in US dollars will also increase. Imagine that Cake goes to $100 and not much else changes. If you are used to yielding 5 coins a day at $20, then yielding 5 coins a day a $100 will turn your yield farm from a hobby into a sustainable business/investing strategy.
Long term strategy for Cake staking is to setup several wallets that do Decentralized Finance and that way you can unstake transfer some Cake to each wallet and then turn them off and put them away for a while. That would be if you did Auto Cake of course. When you do Autocake, you can just leave it alone in your hardware wallet. Our main two wallets for Pancake Swap are the SafePal S1 and the D'CENT.