The PancakeSwap Community Proposes Reducing Maximum Supply of CAKE Tokens
The Decentralized Exchange (DEX) PancakeSwap has put forth a proposal to decrease the maximum supply of its native token, CAKE, from 750 million to 450 million. This move comes in response to the high token inflation that caused a significant drop in the price of CAKE during the bear market. Earlier this year, the PancakeSwap community shifted its focus towards a deflationary model for CAKE.
Overview of the Proposal
PancakeSwap’s proposal aims to reduce the maximum supply of CAKE tokens by more than 40%. If approved by the community, the new maximum supply will be set at 450 million. The proposal states that this lower cap will allow PancakeSwap to gain market share across different chains and sustain the veCAKE model. Currently, over 354,000 users have voted in favor of the proposal, and voting will conclude on Friday at 8:00 AM UTC.
Addressing Token Inflation
To address concerns about token inflation, PancakeSwap implemented significant developments in 2023. In April, they announced a V3 upgrade that included substantial reductions in the creation of new CAKE tokens. The team planned a 45% yield reduction on the BNB chain and a 32% reduction on the Ethereum chain. However, PancakeSwap faced criticism for forking Uniswap’s V3 code during the upgrade process, with some community members expressing worry about homogeneity within DeFi apps.
Current Status and Price of CAKE
As of now, CAKE is trading at $3.84, reflecting an increase of over 6% in the past 24 hours.
PancakeSwap’s proposal to reduce the maximum supply of CAKE tokens demonstrates its commitment to addressing token inflation and increasing its market share. By implementing a deflationary model and garnering support from the community, PancakeSwap aims to stabilize the price of CAKE and sustain its veCAKE model. This move reflects the ongoing efforts within the DeFi space to create sustainable and efficient tokenomics.
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