BakerySwap Review: DeFi AMM & NFT Marketplace
There are a growing number of decentralized exchanges following the automated market maker (AMM) protocol made so famous by Uniswap, and one of the more interesting out there is BakerySwap.
This particular AMM doesn’t just support yield farming and swaps, it also has its own NFTs and NFT marketplace. Plus it was created on the Binance Smart Chain (BSC) so it doesn’t suffer from the high costs associated with the Ethereum network.
What Is BakerySwap?
As we’ve mentioned above, BakerySwap is a DEX on the Binance Smart Chain that uses the automated market maker protocol. In addition to yield farming and swaps, BakerySwap is somewhat unique in supporting NFTs too.
Currently BakerySwap is one of the top DEXs on the Binance Smart Chain, although it is facing increasing competition as more AMMs are choosing the BSC for its lower costs and faster transactions. One of the contributing factors to the popularity of BakerySwap is the fact that it is the very first NFT DeFi platform created on the BSC.
BakerySwap can be considered an NFT-Fi platform since it uses NFT tokens financially for yield farming. When BakerySwap was first launched it was possible to use its native BAKE token to mint a random NFT “combo meal.” These were unique NFTs that didn’t only serve as an NFT, but they could also be staked to earn additional BAKE tokens.
Currently minting new combos is not possible, however you can still find them listed on BakerySwap’s NFT marketplace. Additionally, BakerySwap has a more traditional NFT market where artists are free to list their NFT creations.
In a similar model to other AMMs there is a 0.3% transaction fee associated with the liquidity pools, and 0.25% of these fees go to the liquidity providers (LPs), while the remaining 0.05% goes to BAKE holders.
BakerySwap was developed and is run by an anonymous group of developers who use a decentralized autonomous organization (DAO) to provide the platform with governance. In line with the principals attached to this type of organization the team did not have any pre-sale of tokens, or tokens reserved for the team.
Instead the team shares in a ratio of 100:1 farmed BAKE. Basically this means the developers receive 1 BAKE for every 100 BAKE farmed. Anyone familiar with the developer fees attached to other DEXs and blockchain projects will know that this is a very low amount of tokens allocated for the development team.
Binance Smart Chain (BSC)
BakerySwap was created on the Binance Smart Chain as a way to avoid the high gas fees and slow transactions that have become the norm on the Ethereum network. This has created a high barrier for entry to decentralized finance, so BakerySwap hopes to improve the conditions for those who are new to decentralized finance.
The Binance Smart Chain was specifically created to enable blazing-fast, inexpensive transactions for smart contract based dApps and DeFi projects. This not only lowers the entry barrier for new DeFi users, it also makes it easier and cheaper for developers to get their projects into production.
You can find many new DeFi projects choosing the BSC over Ethereum to host their protocols. In addition to BakerySwap these also include PancakeSwap, the Spartan Protocol, and BurgerSwap.
While these platforms do have their individual differences they all share the common goal of bringing DeFi to everyone through the use of the BSC. And just like the dApps that run on Ethereum, the BSC dApps and protocols are easy to use and can be accessed through web3 wallets like MetaMask.
BakerySwap Key Metrics
BakerySwap is a fork of the Ethereum-based SushiSwap, just as PancakeSwap was. That means the tokenomics of BakerySwap are very similar to those found with SushiSwap and PancakeSwap.
This model incentivizes the liquidity providers of the ecosystem very heavily, which in turn attracts a large amount of liquidity and users to the platform. However this also means that these incentives need to be fueled through a highly inflationary BAKE block reward.
The team continues working on the tokenomics though, and has an ultimate goal of making BAKE a deflationary token in the future. So even though BakerySwap is currently battling inflation, it is necessary to help the protocol bootstrap its liquidity and user base.
BAKE Token Economy
There are several solutions to the problems faced by AMMs that have been implemented into BakerySwap. The most significant are the methods being used to combat the battle to constant inflation faced due to incentivizing liquidity providers.
The BakerySwap developers are answering this inflation by reducing the supply of BAKE while simultaneously boosting demand for the token. Of course this is far easier said than done, but so far the team is seeing success.
There are also plans to use the assets and merged contracts to develop even more products. The most recent of these has been the Bakery Gallery, a curated NFT platform for top emerging artists.
The following excerpt from the BakerySwap Medium outlines the DAO’s goals:
- Only rewarding $BAKE related pools to support $BAKE value.
- Leveling the liquidities of non-$BAKE related pairs from all the other swap exchanges AMM, instead of relying on $BAKE rewarding to attract the non-$BAKE liquidity providers.
- Making the BakerySwap AMM more user friendly and also including new features on making smart contracts with other tokens to be able to farm BAKE or consume them, which including the following strategies:
- Launchpad: projects may use any of the $BAKE pair LP tokens for fundraising, and after redeeming the LPs token, the corresponding $BAKE will be burned, and the other tokens will be distributed to the project team.
- $BAKE staking pools: users can stake $BAKE to farm new project tokens or assets within the projects.
- Paying with $BAKE — for partners selling their crypto assets on Bakery, they have to accept $BAKE payments and split the profit with us, and we will burn our shares of $BAKE.
It’s very good to see that the development team is aware of the problems they are facing, and that they’ve developed a plan to address those problems to remove of reduce them.
Earning with BakerySwap
Of course what everyone wants to know is how they can use BakerySwap to earn BAKE tokens. Depending on your risk appetite and the amount of capital you have for investing there are three primary means of earning on BakerySwap.
The first basic method for earning is to provide liquidity to one of the BakerySwap liquidity pools. This allows the LPs to earn fees and BakerySwap Liquidity Pool (BLP) tokens.
Secondly the users are then able to take those BLP tokens and stake them to earn more BAKE tokens, or other limited edition tokens. Which they earn depends on what pool they choose to stake the tokens in since there are both BAKE pools and pools with other rewards. The top pools are those named after baked goods such as the ‘Doughnut’ (BNB BLP) pool and the ‘Waffle’ (BUSD BLP) pool.
Besides the liquidity provisioning and token farming users can also stake their BAKE tokens to earn even more BAKE. This is accomplished in the ‘Bread’ pool (more baked goods!) and it has no minimum staking amount or any lock-up period.
Users are able to stake a number of other tokens as well to earn BAKE. Currently staking to earn BAKE is enabled for CAR, POKER, SOCCER. It’s also possible to stake BAKE tokens and earn other tokens such as TKO, TSA, and SACT. Or BAKE tokens can be staked to earn NFTs that can then be sold on the BakerySwap marketplace, or even taken to other NFT marketplaces like OpenSea and Rarible.
BakerySwap NFT Supermarket
The BakerySwap NFT Supermarket is not only a unique offering for a DEX, it also offers users an exciting array of NFTs from some of the top emerging artists in the space. Some of the early popular NFTs offered include ‘Musk & DOGE’ and the gamification NFT categories such as ‘Battle Weapons’ and ‘Rare Cars’.
Note that some of these categories are offered only for a limited time, making the NFTs more rare. Users can find a wide range of digital artwork, and there are many pieces that feature the BakerySwap donut logo. Cats and dogs are also popular subjects, and there are many unique and interesting abstract pieces as well.
Inside the NFT Marketplace, in terms of artworks, you can find:
- BSC Artists for new promising Artists.
- Featured Artistsfor selected quality and consolidated artists.
- Meme Contestsfor cobranded activities with partners, or directly NFT issued by them.
And beyond digital art, you can also find lots of gamification and NFT + DeFi solutions like:
- Game Items from different partners like Battle Pets.
- DeFi NFT, like $SOCCER, $POKER or the new BSC Games Box.
Purchasing these NFTs is downright easy too. Any web3 wallet that supports the Binance Smart Chain can be used, and many people favor either the Binance Wallet or MetaMask. MetaMask is great because it can be used to interact with a number of different platforms while maintaining control over private keys.
Purchasing an NFT at BakerySwap using MetaMask can be accomplished in just a few clicks. All the NFTs are purchased using BAKE tokens, so you would need some of them if you’re interested in a BakerySwap NFT.
And some of the special NFT categories like ‘Battle Pets’ will allow you to burn the NFT and receive either BAKE or PET tokens in return. Of course you can expect this will be less than the amount spent on the NFT, although it is possible you could purchase an NFT for less than its ‘burn back’ value.
There’s also the ‘BSC Artists’ section which allows anyone to upload their own artwork and tokenize it by minting their own NFT. The process for doing this can be accessed within the NFT Marketplace by clicking the button “Mint Artwork’, filling in some details about the piece and the artist, and uploading the artwork.
Once that’s finished simply click the ‘Mint’ button and your artwork will be tokenized on the BSC blockchain and available for sale within the NFT marketplace. This is something anyone can do to earn passive income from BakerySwap.
BakerySwap Bakery Gallery
The Bakery Gallery is the newest feature that’s been added to BakerySwap. Bakery Gallery is a curated platform of digital artwork in NFT form that is attempting to attract the most talented artists by featuring their work, while also attracting the most sophisticated and discerning NFT collectors and investors.
Bakery Gallery is focused on giving exposure to featured artists, which are the base of Bakery Gallery. It is also designed to attract more talent to BSC via organizing Top Quality Drops.
Bakery Gallery has 3 main sections:
- Upcoming Drops: With info about Drops coming to BSC.
- Featured Artists: With the profiles of our selected artists.
- Artworks: With the same NFT Supermarket current features.
Bakery Gallery is differentiated from other curated art platforms, in that there’s no focus on social media following to select artists, but instead the focus is on strict talent. A group of professional curators is helping Bakery in this passionate journey to attract the most talented digital artists.
When BakerySwap first launched they added the ability for users to create ‘Combos’, which were the first NFTs on the platform that could also be used for staking to earn more BAKE.
After a short while, to maintain the rarity of the Combos, BakerySwap pulled the ability to mint new combos, although existing combos can still be sold in the marketplace.
Yet the team soon saw that people were not willing to part with their combos. Not only were they unique, but they also provide very high staking power and BAKE rewards. So there weren’t many combos being listed in the marketplace, and most new BakerySwap users had no ability to acquire combos.
So the team reopened combo minting for a month, from February 20, 2021 through March 12, 2021. During this time period users were once again happily able to mint new combos.
Combos come in four different tiers: basic, regular, luxury, and supreme. The level of the combo is determined by the amount of BAKE used when minting the combo, and higher levels provide increased staking power.
Lucky users have been able to mint combos with high staking power for a relatively low cost. These can provide excellent staking rewards, or they can be sold for hefty profits.
One of the features of the BakerySwap combos is the ability to decompose them. This is something that can’t be done with ERC-721 NFTs. Decomposing results in the destruction of the combo, while the user receives up to 90% of the BAKE used in the creation of the combo back. There may be cases where it is better to decompose a combo rather than selling it on the open marketplace.
- The following outlines information regarding combo creation for the BakerySwap team:
- Combo Staking Power = R * B
- R = a random number generated when composing a Combo
- B = the amount of BAKE contributed for composing a Combo
- The reward multiplier for Bakery Combo is 10x.
BakerySwap isn’t only limited to liquidity pools, and exchange, and the NFT creation and marketplace. There is also a crypto token Launchpad component to BakerySwap.
This token issuance model is beneficial for the projects, for investors, and for the token launchpad itself. And BakerySwap has created a next generation launchpad as well.
Besides offering up the ability to launch ERC-20 and BEP-20 based tokens the Launchpad at BakerySwap gives the ability to launch new NFT projects. Thus BakerySwap has taken the token distribution model and used it to the benefit of the entire community.
Launchpad tokens can be purchased using the BUSD stablecoin and everyone who holds BAKE tokens is eligible to participate in the initial DEX offerings (IDOs).
The basic token distribution model uses a ratio of 100 BAKE:1 BUSD. That means for every 100 BAKE held by a user 1 BUSD worth of new tokens or NFTs can be purchased. The project has seen success using this model, with a number of successful projects (Battle Pets and DEFI100) launching under these terms. However there has been another model used in the launch of certain projects.
The Spartan Casino IDO used a model where users were able to purchase the Spartan Casino WAR tokens at a ratio of 1:1 for BAKE and BUSD. That allowed a user with 100 BAKE to purchase 100 BUSD worth of WAR.
There was also a maximum investment of 10,000 BUSD set on the IDO to encourage broader participation. The IDO went off in March 2021 and was an overwhelming success.
In fact, the IDO model at BakerySwap has been so successful that some IDOs have been fully subscribed in under two seconds. This is why BakerySwap found it necessary to change their IDO rules so that only BAKE holders can participate, and the maximum buy-in is 10,000 BUSD.
The BAKE Token
As mentioned previously there was no pre-sale and no pre-mine of the BAKE token because the team is fully interested in the fair and equal distribution of all BAKE tokens. In addition, the BakerySwap team receives just 1 BAKE token for every 100 BAKE tokens farmed. This allows BakerySwap to pay liquidity providers some of the highest yields of any AMM or DEX by far.
As originally envisioned the full release of BAKE tokens would have been completed in just 11 months, however based on community feedback an adjustment to the emission schedule was made in March 2021 which significantly lowered the amount of BAKE being issued as rewards.
The daily amount of BAKE issued was dropped to 250,000, where it will remain for 9 months. After that rewards will be halved every 9 months by adjusting the reward multipliers of the pools and creating a reserving pool for the farming after BAKE emissions stop in the initial contract.
This means that, after approximately 24 years of emissions, the Total Max Supply in circulation will be 270M. Any future policy changes could only decrease that total amount, never increase.
In terms of price, the BAKE token has come a long way in 2021. After trading between $0.01 and $0.02 throughout 2020 the price began rising along with the broader market in 2021.
After a rally in February took the price to $2.69 there was a pullback that basically erased half the gains made. The token them rallied again in April, hitting an all-time high of $8.48 on May 2, 2021. Again the token is pulling back and has given back almost half the gains to trade at $4.82 as of May 13, 2021.
For those looking to get their hands on some BAKE tokens and starting to use BakerySwap, Binance is the place to go, with nearly all the trading volume in the token occurring on that platform.
BETH Liquidity Mining
Another exciting addition at BakerySwap is the ability to participate in Ethereum staking. While there’s huge excitement around Ethereum 2.0 and staking ETH, the issue many face is the requirement for a minimum of 32 ETH in order to become a validator. Most people simply can’t afford this large investment.
Binance is getting around this through the introduction of BETH on both the BSC and Ethereum networks. This innovation gives holders 100% of the on-chain staking income without requiring a minimum of 32 ETH. Thus it gives everyone access to Ethereum 2.0 staking. Plus, on the BSC only BakerySwap is offering BETH as one of the very first adopters of this token.
BakerySwap is clearly an improved version of the AMM DEX built on the Binance Smart Chain. Besides offering faster transactions and lower fees, it also has a number of innovations that can’t be found at other DEXs, such as NFT creation, an NFT marketplace, NFT staking, and an IDO launchpad. BakerySwap has rapidly been able to position itself as one of the leading AMM DEXs.
As of May 2021 BakerySwap continues growing rapidly as interest in DeFi, and particularly the cheaper, faster DeFi provided by the BSC, continues growing massively. Plus there are new developments in the pipeline, including NFT aggregation and decentralized derivatives trading.
Anyone interested participating in the DeFi space should definitely take the time to investigate using BakerySwap as it looks like it will only get better in the coming months.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.