Pancake Bunny

Pancake Bunny operated as a decentralized finance (DeFi) yield aggregator and optimizer, primarily on the Binance Smart Chain (BSC) and later expanding to Polygon. The project was developed by a team known as MOUND, which comprised developers and entrepreneurs with backgrounds in gaming, social platforms, and quantitative finance. Mound, and by extension Pancake Bunny, received a strategic investment from Binance Labs, lending it credibility in its early stages.

The core business of Pancake Bunny was to provide a service for "yield farmers"—users who provide liquidity to DeFi protocols in exchange for rewards. The platform's main function was to automate the process of compounding these rewards, which involves frequently harvesting earned tokens and reinvesting them back into the liquidity pools to maximize returns. This addressed a key complexity for users, who would otherwise need to manually calculate the optimal time and frequency to reinvest, while also paying transaction fees for each step. Revenue was generated through a 30% performance fee on the profits earned by the vaults, with an additional 0.5% withdrawal fee if funds were removed within 72 hours of deposit. A significant portion of these fees was distributed to users who staked the platform's native governance token, BUNNY.

The platform offered various vaults for single assets and liquidity provider (LP) tokens, primarily from PancakeSwap. Users would deposit their crypto assets into these vaults, and the Pancake Bunny smart contracts would automatically handle the compounding process. The native token, BUNNY, was central to the ecosystem; it was used for governance, allowing holders to vote on proposals, and for staking to receive a share of the protocol's profits in the form of BNB. A key feature was that for every 1 BNB in performance fees collected, a set number of BUNNY tokens were minted, linking the token's supply to the platform's performance.

A defining event in Pancake Bunny's history was a major security exploit in May 2021. The protocol suffered a flash loan attack where an attacker manipulated the price of BUNNY on its liquidity pools, minted a massive amount of nearly 7 million BUNNY tokens, and subsequently sold them on the market. This action caused the token's price to crash by over 95% within minutes, leading to losses estimated at around $45 million. Following this exploit and a subsequent, smaller attack on its Polygon fork, the development team found it impossible to sustain operations. In February 2022, the team announced it would disband and transition the protocol's governance to a decentralized autonomous organization (DAO), giving the community authority over its future.

Keywords: yield aggregator, DeFi, Binance Smart Chain, PancakeSwap, yield farming, auto-compounding, BUNNY token, MOUND, liquidity pools, flash loan attack, decentralized autonomous organization, BSC, crypto optimizer, liquidity mining, staking, DeFi protocols, BNB Chain, governance token, smart contracts, crypto vaults