The PancakeSwap team has proposed changing the DeFi project’s tokenomics. The initiative envisions moving from the current high-inflation CAKE utility token model to neutral emission or deflation ‘with real yield and utility’.
1/3 ?We are proposing significant improvements to CAKE tokenomics to achieve ultrasound CAKE (emissions neutral or deflationary) immediately.
Link of proposal:https://t.co/2rtGhnRh3h pic.twitter.com/W5HFHloNsB
— PancakeSwap?Ev3ryone’s Favourite D3X (@PancakeSwap) April 18, 2023
CAKE Tokenomics v2.5 envisages reducing the annual CAKE emissions from 20% to 3-5% through:
- lower staking rewards — 0.35-1 CAKE per block vs 6.65 CAKE;
- real yield derived from protocol revenues — stakers will be allocated 5% of fees from PancakeSwap v3, with monthly rates of 0.01% and 0.05% depending on the lock-up duration of the utility token;
- increasing the weight of long-term stakers in CAKE emissions;
- participation in PancakeSwap’s rapidly expanding product suite focused on the aforementioned user base.
The developers stressed that the proposal would leave unchanged the following components:
- a percentage of fees allocated to buybacks and burning CAKE;
- a percentage of revenue from other products to implement the above process;
- rewards for the most loyal stakers with the largest share of emissions and trading fees.
Below is a scenario analysis of CAKE inflation under different parameters (the team prefers the latter option):
The team plans to gather community feedback through a feedback form and social-media responses.
On 24 April, based on an analysis of community response, the community will be invited to vote on several proposals. The option that receives more than 50% of the votes will come into force.
The roadmap for Q2 includes plans to launch three new products and expand support for other networks to further increase CAKE sales. Thus, the release aims to create greater value for users, the press release states.
In May 2022, the PancakeSwap community voted for a cap on the CAKE supply of 750 million coins. In the following months, developers rolled out new products and added support for other networks and gradually reduced the Syrup Pools emissions to minimize inflation.
In April 2023, the PancakeSwap team introduced the third version of the protocol for the BNB Chain and Ethereum networks. It enables liquidity providers to concentrate capital in specific price ranges, as implemented in Uniswap v3.