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Make $50/Day Passive Income on PancakeSwap (step-by-step) - YouTube
Channel: Max Maher
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I invested $15,000 of my own money into
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5 different farms on PancakeSwap
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In this video, I'm gonna show you exactly how to yield farm,
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how this can easily earn the average investor between
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$5 and $100 per day
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and how much money actually made
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doing this for one week.
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Before you can touch PancakeSwap,
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you need to set up a crypto wallet that supports
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the Binance Smart Chain.
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Luckily for us, the crypto wallet that most us are familiar with,
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MetaMask, is perfect for this, so we'll be using that today.
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You just have to Google "MetaMask extension",
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install it, choose a password and
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Please don't. If someone else gets a hold of that,
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you could lose all of your money.
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So keep that in a very, very safe place.
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Now that your wallet is set up, you need to buy
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some usable tokens for PancakeSwap.
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Any BEP-20 token will work.
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BUSD and BNB are both great options.
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So once you buy BUSD or BNB on the exchange of your choice,
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send those tokens to your MetaMask wallet
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and you'll be ready to go.
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I'm buying and sending BNB from Kucoin,
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which I will have linked below if you want to use them
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for some discounted trading fees.
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Now you just need to connect MetaMask to PancakeSwap.
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Go to pancakeswap.finance
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Click Connect wallet in the top right.
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Pick MetaMask. Click Connect.
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And then depending on what network you're already on,
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it will ask you to switch to Binance's network.
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So you can just click Switch Network if you see it
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and then you're all set.
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Your wallet is connected.
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Now from here you'll just want to click the link for Patreon
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in the description of this video if you want
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even more money making content, buy alerts, daily signals,
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a whole lot more.
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There's a reason we have more than 10,000 satisfied members.
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How is that for a smooth pitch? [Laughs]
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Anyways, before we go in deep,
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PancakeSwap is an automated market maker or AMM
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that allows two tokens to be exchanged on the Binance Smart Chain.
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The liquidity on PancakeSwap allows users
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to exchange their crypto and that liquidity
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is provided by users as well.
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And that's how you actually make money.
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This is exactly what I'm going to show you how to do today.
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Providing liquidity for trading pairs
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for others to trade aka Yield Farming,
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aka passive income for you.
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The way that you make money is through a combination of
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transaction fees and platform tokens.
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More on that in a minute.
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So let's go ahead and jump into
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all the different features available on this site.
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Starting out with the trading page, we have
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Exchange and we have Liquidity.
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With Exchange, this is where you exchange
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one crypto for another, simply swapping cryptos
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similar to a spot trade.
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And then we have liquidity, this is where you'll see your
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current LP tokens.
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You can think of an LP token as a receipt.
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You deposit your cryptos into a pool
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and you receive an LP token
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showing the assets that you deposited.
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For this video, I provided liquidity to five different pools,
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so I received five different LP token types.
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But how do you actually make money from this?
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Great question.
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Let me present you the Earn page.
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Here we have Farms and we have Pools.
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Farming is a method of passive income with crypto
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where you supply a one to one ratio of two cryptocurrencies
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as liquidity for a trading pair.
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Don't worry, you'll understand all of this.
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And in exchange for doing so,
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you'll receive those LP tokens,
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your receipt for providing those cryptos.
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I like to think of each farm as a small business.
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If a business has $100 in total assets
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and you provided five of those dollars,
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you are simply entitled to 5% of the profits for that business.
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What's also cool is that LP tokens,
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that receipt showing your ownership
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of this small business for providing your assets.
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The LP tokens entitle you to a few things.
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First, a portion of the fees generated by the trading pair,
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plus the tokens themselves are stakable,
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so you can earn even more of that juicy passive income
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simply from having those tokens and staking them.
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So let's say you wanted to put $3,000
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into a CAKE-BNB liquidity pool.
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You would need to go to Farms,
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find the pair that you're looking for,
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and then click Get CAKE-BNB LP.
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Then you would supply $1500 worth of CAKE
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and $1500 worth of BNB.
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You can also do this through the liquidity screen that I showed you,
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but this way you don't have to select the specific coins.
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Here, in exchange for the $3,000 you would get the
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LP token receipt for what you supplied to the pool.
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Then those LP tokens will show up
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in the liquidity section.
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You can then take those LP tokens
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and stake them in their corresponding farm
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by clicking on the pair that you provided liquidity for
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enabling the farm, which can take a second.
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Then you click Stake LP.
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Click Max for the amount,
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and then click Confirm on both PancakeSwap and MetaMask,
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once it prompts you.
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It's also worth noting that the APR shown on
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each farm is a combination of the transaction fees
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earned and the LP rewards.
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And then you can even take that CAKE that you receive
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in rewards from staking and
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stake it again for even more CAKE.
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This is done on the next page, Pools.
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It's like this machine of earning passive income
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from every end, and
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I know this might seem like a lot, but just
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hang in there with me and I promise you'll get it.
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I think the fact that these things aren't very user-friendly
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gives us more opportunity to
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earn even more money because most people aren't
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going to figure this all out, but here you are.
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Now, it's also important that you understand
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First, of course, the cryptos that you're providing
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can decrease in value or increase.
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That's no different than buying any crypto.
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But you need to be aware that
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within a farm that can also happen.
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But we also have
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If you're in economics, you can think of this as
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kind of opportunity cost.
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Impermanent loss is what happens when the
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price of one crypto that you provided liquidity for
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changes relative to the other, more dramatically.
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So let's say you supply $500 of CAKE
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and $500 of BNB into a liquidity pool
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and then BNB's price skyrockets but CAKE's doesn't.
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What happens here is you actually end up
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earning less than if you would have just
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held BNB outright outside of a pool.
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This is because the liquidity pool
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will constantly rebalance your holdings,
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so it's always 50-50 for each asset.
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50%-50%
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You're not exactly losing money,
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but you're losing the opportunity to make more money.
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I like to think of it as the cost of
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doing business, because in most cases, you will earn
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But there are occasions where you may
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have that impermanent loss.
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Here's a chart showing the impermanent loss percentage
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relative to the change in price.
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In a nutshell, you're putting multiple cryptos
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into a liquidity pool and taking on the risk
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of impermanent loss
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However, this is in exchange for the right to a certain percentage
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of all fees generated by the pool,
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aka crypto passive income.
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Now let's move on.
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Next is the win page.
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Here you can bet on the short term price movement
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of BNB to win multiples of whatever you bet.
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The lottery page is where you can buy tickets for $5 and
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hope that you win the pot.
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I don't really dabble here.
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And lastly, we have the PancakeSwap NFT market
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*One week later*
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$15,000 total into five different farms,
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and here are the results after seven days,
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As you can see, not so good.
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I provided liquidity for five different pairs
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BUSD, CAKE, USDT, MBOX, and ADA,
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all of which were paired with BNB.
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And in the seven days that I was running this experiment,
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every single coin was down a significant percentage.
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But don't worry, I've done the math
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because I did earn money.
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Timing my buy-ins couldn't have been much worse
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but there were still rewards generated.
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And hey, that's investing and it's
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my job to be transparent about the results.
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So even though the ending values are down, we
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did earn quite a bit of CAKE from the
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base farm rewards and money from LP rewards.
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If we take a look at the percentage change,
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we can see how much I'm down on each farm.
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That has nothing to do with farming.
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In fact, farming saved me money.
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It's important to compare my positions
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to the percent that I would be down
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if I just held the cryptos outright.
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Not in a farm, not staking, just in a wallet somewhere.
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Somewhere, I lost less money on every single pool
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than I would have if I just held the cryptos.
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I've broken it down so we can see
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how much I made in fees and LP rewards generated.
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Looking at the totals from pool fees and LP rewards,
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I made a total of $152 from farming
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off of my investment of $15,000 in seven days,
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which is a whopping 1% return in seven days
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or 68% annualized.
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I think yield farming is best with cryptos that you
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plan to hold long term anyways.
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This is because you won't care if prices drop
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10% like they did for me, because you're still
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earning more than you would have holding outright.
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So if you plan to hold long term anyways,
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there really is only upside here.
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So in a vacuum it would have taken
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$34,500 to generate $50
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every day in passive income
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from yield farming based on these numbers.
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Now, obviously, you need to take into account
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negative price fluctuation and changes in trading volume,
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which can affect your APY.
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Something else to consider is you can
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take on a safer strategy to yield farming
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and only farm pairs with a stablecoin.
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The consensus here seems to be that you can reliably make
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15% to 20% API in these pools, stablecoin pools
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with much less volatility risk.
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So assuming a 20% return annually, it would
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take about $92,000 to maintain $50 per day in passive income.
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Now, let's say 20% isn't good enough for you.
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You want the highest returns possible.
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Well, there's no set in stone best way to go about this,
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I wanted to take a look at a research paper
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by nansen.ai, looking at yield farming activity.
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And as you can see, 36% of all farmers
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who join a farm, exit within the first 5 days.
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And this makes sense, because the juiciest
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rewards will come at the launch of a farm
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for the sake of attracting new farmers
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before yields decrease.
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So it seems based on this activity
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that the best strategy for the highest yield possible
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is to look for new farm opportunities,
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hop in and then move on before
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rates start dropping or volatility really starts kicking in.
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To further illustrate this point, nansen.ai
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pointed out that a whopping 42% of farmers
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who join on the first day of a pool
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leave within the first 24 hours.
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Now, of course, this is a higher risk strategy
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and much more work, and I'm not sure that we could
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call it passive income at this point,
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but that is the way to earn the highest yield possible here.
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So if you appreciate my efforts and transparency in this topic,
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please consider hitting the subscribe button.
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It's free, and you can always change your mind later.
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And from here, I recommend you check out this video that
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highlights the best possible passive income
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that you can get by lending out your stablecoins.
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It's much less work than yield farming.
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So I'd like to thank you so much for watching,
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and I hope you have a profitable day!
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