The rise of Decentralized Finance (DeFi) has given rise to Decentralized Exchanges (DEXs). What is DeFi? There is a whole ecosystem of cryptocurrencies known as DeFi tokens and DEXs are exchanges where you can buy such tokens.
To buy tokens on DEXs, all you need to do is connect a wallet. Metamask is one of the wallets used for this purpose and this guide shows how to use it to buy DeFi tokens on Pancakeswap.
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What is metamask?
Metamask is a browser extension that serves as a cryptocurrency wallet to interact with the Ethereum blockchain. Unlike a regular wallet, this one only supports ERC20 tokens, which are tokens built on the Ethereum blockchain.
It recently started supporting BEP20 tokens on Binance Smart Chain (BSC) as well. If you are a complete beginner, you should read up on getting started with Metamask.
You can easily set up a Metamask wallet by just creating a password. You can then add Ethereum blockchain or BSC tokens. Hundreds of tokens are supported, so anyone you’re interested in is likely to be supported if it’s based on these two blockchains.
Something really great about the wallet is that you can add unsupported tokens to it via the Add Token option. As a Web3 wallet, Metamask also supports Web3 Decentralized Applications (Dapps) and Non-Fungible Tokens (NFTs).
If you prefer to use your mobile device, you can also access the wallet by installing it from the Play Store or iOS Store.
Metamask is used to store and manage your account keys. Like a regular wallet, it also transfers transactions and sends and receives ERC20 and BEP20 tokens.
It’s also easy to swap tokens within the wallet using the Metamask “Swap” feature. The wallet aggregates multiple DEXs to get the best exchange rates for the swaps. Many people are not familiar with what DEXs are, but they are quite easy to use.
What is pancake swap?
Pancakeswap is one of the best decentralized exchanges. This is not to be confused with the pancakeswap (CAKE) token, which is the native token for the exchange. Pancakeswap is specifically designed to trade DeFi tokens based on BSC.
Besides trading DeFi tokens, you can also farm liquidity and stake the CAKE token to earn rewards on Pancakeswap. Unlike centralized exchanges, you can just go online and use the DEX without registration and no personal information is required.
Why use metamask?
Metamask was first launched in 2016 and now has millions of monthly users. This is because the wallet has found relevance, particularly in the DeFi ecosystem. Check out this quick guide to decentralized finance to learn more about the ecosystem if you’re just getting started.
If you want to easily buy or trade DeFi tokens, using something like Metamask is inevitable. As the world moves towards Web3, the wallet will also become more relevant as only wallets like Metamask can interact with decentralized exchanges, Dapps and NFTs.
How to buy crypto with Metamask
Since Pancakeswap is a DEX designed to trade BSC-based tokens, this guide will only focus on BSC-backed tokens. There are tokens available on both BSC and Ethereum.
You can also trade the BSC version of such tokens on Pancakeswap. So, how to buy a token on Pancakeswap with Metamask?
1. Create a wallet
The first thing you need to do is create a Metamask wallet. If you already have one, then congratulations, you can proceed to the next step. If not, it’s as simple as it gets metamask.io and click on the blue one Download Button. Supported browsers include:
- chrome
- fire fox
- Brave
- edge
You will then be asked to create a strong password that is easy for you to remember but difficult for others to guess. After creating a password, you will be prompted to copy your passphrase and keep it safe, you should proceed as suggested.
The passphrase is usually a 12-word phrase that you can use to recover your wallet in case something happens to your device or you forget your password.
You should write them down and you will be asked to enter them in the correct order to show that you really wrote them down. Countless people have lost fortunes by ignoring this step.
2. Add Funds to Metamask
Once your wallet is set up, you need to fund it with BNB, the native token for BSC. One way to do this is to buy by clicking the Obtain button in the image below.
The other option is to send the asset to Metamask from another wallet or exchange by simply copying the address above and sending the BNB there. The default wallet blockchain is Ethereum, so you need to change it to BSC by clicking the down arrow next to it ether as shown in the picture below.
Choose Binance SmartChain from the drop-down list and you’re good to go.
3. Connect Metamask to Pancakeswap
To connect your Metamask wallet to Pancakeswap, visit the website pancakeswap.finance. There you will see the connect wallet button in the top right corner as shown below.
Click the button and select metamask from the list of wallets and you will be connected. In the place where the connect button used to be, you should see a wallet icon with the first two and last six characters of the wallet address.
4. Buy crypto on Metamask
Finally go to Act as in the picture above. Click on it and select exchange from the drop-down list. You should have the following screen.
Assuming you want to buy CAKE, the native token for Pancakeswap as shown, then all you need to do is enter the amount of BNB you want to exchange for CAKE. click Max if you want to use all your BNB but it is not advisable as you still need some BNB to pay future fees.
Slippage, the amount of deviation from the expected rate, is set to 0.5% by default. You may need to increase this depending on the token of interest and how congested the network is at the time you want to trade.
If everything goes well, you will see a highlighted one TO DECEIVE button below. Click on it and your trade is complete. Congratulations, you have successfully bought your first crypto on Pancakeswap with Metamask.
Is Metamask safe?
Metamask was designed with security as an inherent feature as there is no custody. That means no user data is stored on it, so hackers don’t have a chance to steal your data from it.
However, it is a hot wallet and hot wallets are the most vulnerable of all. However, for someone interested in interacting with Ethereum, Metamask is a risk worth taking.
Pros and Cons of Metamask
What should you consider before proceeding with Metamask?
Advantages:
- Does not save user data
- No KYC is required for use
- Wallet is open-source, which makes it fairly safe to use
Disadvantages:
- Hot wallets are vulnerable
- Only supports Ethereum and BSC based tokens.
Is Metamask worth using?
Is it worth using Metamask after reading this article and seeing how to buy crypto with Metamask? If you want to interact with DeFi tokens on Ethereum and BSC, yes.
DeFi tokens, Dapps, smart contracts and NFTs are becoming the order of the day and Metamask is one of the main gateways to the ecosystem, so yes, it’s worth it.
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