PancakeSwap Proposes Token Supply Reduction
Decentralized exchange PancakeSwap has put forward a proposal to decrease the maximum supply of its native token, CAKE. The developers aim to align the token supply with the current circulating supply and reduce it from 750 million to 450 million. The voting proposal for the reduction will last for 24 hours, and if approved, it will take effect on January 4, 2024. The reduction is intended to complement CAKE’s deflation and accelerate its journey towards ultrasound CAKE.
CAKE’s Emission Rate Continues to Decline
Since its introduction in September 2020, the emission rate of CAKE tokens has been gradually decreasing. Users earn CAKE tokens as staking rewards. In April 2021, token-holders approved a proposal to adjust CAKE Syrup Pool emissions, resulting in a net deflationary effect on CAKE tokens. The PancakeSwap development team believes that reducing the total token supply is a critical step towards achieving ultrasound CAKE and moving away from a hyperinflationary model.
PancakeSwap Launches New Voting System
PancakeSwap recently introduced a new voting system called “Gauges” along with the veCAKE vote-escrowed system for governance proposals and determining CAKE emissions allocations. The DEX phased out its syrup pool reward system and will now distribute additional fees exclusively to veCAKE holders. Participation in PancakeSwap’s DAO governance relies on veCAKE tokens obtained through staking CAKE. Under this new system, CAKE holders can vote on rewards for specific pools every two weeks by locking their tokens in a smart contract for a predefined period.
Hot Take: PancakeSwap Aims for More Efficient Token Supply
PancakeSwap’s proposal to reduce the supply of its native token, CAKE, demonstrates the platform’s commitment to optimizing its tokenomics. By aligning the supply with the circulating tokens and implementing a deflationary mechanism, PancakeSwap aims to achieve ultrasound CAKE and move away from a hyperinflationary model. This reduction, coupled with the introduction of a new voting system and veCAKE tokens, enhances PancakeSwap’s governance capabilities and strengthens its position as one of the leading decentralized exchanges in the crypto landscape.
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