Here we compare staking on DODO Finance vs PancakeSwap, one large and one small, to see if there are any real differences in the risks when staking them for investment.
Investors who stake small projects like a new DeFi app or a new DAO (decentralized autonomous organization), often do so because they have to if they want to get access. With DeFi, it could allow them to access more profitable pools or earn bonuses on interest rates. With a DAO, it’s to vote on important governance issues.
By contrast, investors who stake in larger projects like current #1 staked value on our website Solana, often do so strictly for investment purposes.
And with the recent volatility in our markets, long-term holders and those just waiting for the next buying opportunity are looking to staking to earn some income while waiting.
So that got us asking the question, is staking for smaller projects inherently riskier or not?
Today we are going to look at 2 DeFi projects on the Binance Smart Chain, one big and one small to see if that’s true.
The DeFi Apps o DODO Finance vs PancakeSwap
The apps we are comparing are DODO Finance and PancakeSwap (CAKE). Let’s start with what they have in common.
- Both are on BSC
- Both are DeFi apps and DEXes specifically.
- Both are listed on Binance and a couple of other exchanges
And there are 2 major differences.
- Size. PancakeSwap is 10x larger than DODO
- Services. DODO offers more services than CAKE does including minting NFTs, crowdpooling, bridges, and cross-chain capabilities
Now let’s look at the staking options and see how they differ.
First, we need to examine tokenomics because they make a difference in evaluating the risks. So I made a little table with the most important features.
|Market Cap||$2.9 billion||$220 million|
|Circulating Supply||258 million||269 million|
|Total Supply||Infinite||1 billion|
|Maximum Supply (if different)||Much less due to weekly burn feature||1 billion|
|$USD Value Staked||$2.3 billion||$37.5 million|
|TVL in Contracts (Total Value Locked)||$5.1 billion||$240 million|
|Adjusted Reward for Staking||22.58%||31%|
PancakeSwap is the largest DEX in the Binance Smart Chain (BSC) ecosystem. And you can see from the tokenomics above that they have a much larger TVL ($5.1 billion) than market cap ($2.9 billion) which could suggest that their token CAKE is undervalued.
One of the biggest risks when comparing 2 projects for staking is the underlying token. After all, if you get paid in Token X but then Token X falls by 60% then your returns go down too. CAKE has an unusual aspect of their tokenomics in that every time a new project or pool is created with CAKE, CAKE creates new tokens. To offset that, CAKE burns transaction fees regularly in a weekly burn program.
Over the last 30 days, when crypto markets have been in a downtrend, CAKE is up 3%. That’s a good sign if we want to stake since we will get paid in CAKE. And you can see that it’s considered easy to stake CAKE directly on PancakeSwap. The adjusted reward, which takes inflation of the supply into account, is at 22.58%. This is a low-risk staking option.
Staking DODO Finance
DODO is a DEX that calls itself a PMM or proactive market maker. They use this name since it’s an upgrade from a general AMM. They are much smaller than CAKE but have more staked by percentage (41% to 35%). This is a big positive for DODO. Stakers, especially in projects of this size, usually want to stake not just for the investment potential but also for governance issues or greater access within the app. It means they are sticky to the app and likely to continue using it and keep their DODO staked there.
In these last 4 weeks of crazy market activity, DODO has held up pretty well down only 2%. This is a good sign since our payments would be in DODO. Like CAKE, you can stake directly on DODO which is easy and eliminates middleman costs.
Lastly, as a smaller project, DODO pays more both as the gross reward (63.92%) and the adjusted reward (31%) than CAKE does at 50.41% and 22.58%, respectively.
Conclusion on Staking on DODO Finance vs PancakeSwap
These projects have more similarities than differences including what they do and the ability to stake directly from your wallet. DODO being the smaller project pays ~8.5% more per year net than CAKE does. It also has a higher staked % than CAKE but both staked percentages are significant. Both tokens have held up well against adverse market conditions.
So is it really that much riskier to stake on DODO than CAKE? In this case, probably not. And we earn more for it with a higher reward.