PancakeSwap, the decentralized exchange (DEX) platform, has put forth a significant proposal aimed at reducing the maximum supply of its native token, CAKE. This proposal, if approved, will see a considerable decrease from the current 750 million tokens to 450 million, aligning more closely with the circulating supply of 388 million.
Set for a 24-hour voting period starting from an official announcement on December 28, the proposal’s potential implementation date is January 4, 2024.
The motivation behind this reduction lies in augmenting CAKE’s consistent deflation trajectory, accelerating its evolution towards ultrasound CAKE. Developers stress the importance of this step, emphasizing its alignment with PancakeSwap’s growth objectives.
CAKE’s Evolutionary Emission Rate
Since its inception in September 2020, CAKE had an initial net emission rate of 40 tokens per block, leading to an annual inflation rate of around 80%. However, the emission rate has seen a gradual decline over time, primarily through staking rewards accrued by users.
Earlier in April 2021, a proposal to modify CAKE Syrup Pool emissions was ratified by token-holders. This adjustment reduced emissions from 6.65 CAKE per block to 3.0 CAKE per block over a five-month period, with a monthly decrease of 0.5 CAKE per block.
This alteration, coupled with a token burn mechanism, rendered CAKE deflationary on a net basis.
Refined Insights Drive Change
After nearly three years of PancakeSwap’s development, the team now possesses more precise estimations concerning the necessary incentives for achieving growth targets. Lowering the total supply of CAKE stands as a pivotal step toward realizing ultrasound CAKE, marking a shift from a hyperinflationary tokenomics model.
PancakeSwap’s Significance in the Crypto Realm
PancakeSwap presently ranks among the most prominent DEX platforms in the cryptocurrency domain. Its total value locked (TVL) amounts to $1.64 billion, with projected annualized protocol revenue reaching $191 million.
The Evolution of PancakeSwap’s Governance
The proposal to reduce CAKE’s token supply emerges following PancakeSwap’s recent launch of a novel voting system called “Gauges” in the preceding month. Concurrently, the platform introduced “veCAKE,” a vote-escrowed system empowering users to participate in governance proposals and determine CAKE emissions allocations.
Significantly, PancakeSwap discontinued its previous “syrup pool” reward system, redirecting additional fees exclusively to users holding veCAKE.
PancakeSwap’s governance now pivots on veCAKE, distinct from vCAKE, enabling users to stake CAKE for veCAKE tokens. These tokens facilitate governance voting via Gauges Voting and determining CAKE emissions allocations.
Moreover, under this evolved system, CAKE holders can vote on additional rewards for specific pools every fortnight. However, participating in these votes requires users to lock their CAKE tokens in a smart contract for a predefined duration, with longer lock-up periods translating to greater voting power.
PancakeSwap’s proposal to reduce the CAKE token supply signifies a strategic move towards fostering a healthier ecosystem. This initiative aligns with the platform’s commitment to fine-tuning its tokenomics, driving growth, and amplifying community engagement through enhanced governance structures.
By taking decisive steps towards recalibrating its token supply and fortifying governance mechanisms, PancakeSwap continues to solidify its position as a pioneering entity within the decentralized finance (DeFi) landscape.
