PancakeSwap, a top decentralized exchange (DEX) on the BNB Smart Chain (BSC), has passed the CAKE Tokenomics v2.5 Decision Proposal, which makes their native token rarer. The plan aimed to change how CAKE, the DEX’s utility token, works. The main focus is on low inflation from staking, where the real return comes from the protocol’s income. It also considered changing its product to help CAKE stalkers who bet in the long run.
The recently introduced v2.5 tokenomics plan includes a significant reduction in token incentives for traders and stakes, amounting to over 68%. This shift towards a new economy is expected to result in falling prices for CAKE.
Also, it will cut CAKE pollution by as much as 94% on PancakeSwap’s main liquidity pool, called the “Syrup Pool.” The suggestion was made based on what people on PancakeSwap said. There, members worry that the current growth rates of CAKE cannot be kept up in the long run, especially since PancakeSwap v3 just came out at the beginning of this month.
The majority want a drastic Reduction
PancakeSwap gave its community three good choices for how to make CAKE “emission neutral.” The vote, however, showed that the best choice was the first, which allowed CAKE to be cut down quickly. The CAKE Syrup Pool’s pollution will drop immediately from 6.65 CAKE per block to 3 CAKE per block.
The DEX will cut CAKE pollution by another 0.5 CAKE per block for five months. This plan aims to get the pollution from PancakeSwap to 0.35 CAKE per block in 6 months. If you choose this, the CAKE emission rates, the token payouts that platform speakers earn, will go down by 94%.
Many people in the PancakeSwap community think that this level will bring the annual inflation rate of CAKE down from 21% to between 3% and 5%. PancakeSwap is a new crypto project striving to make its native tokens deflationary, intending to increase their value. This approach is rooted in the concept of scarcity economics.
As per the information provided by CoinMarketCap, CAKE’s value has decreased by 5.87% in the last month. This decline has made CAKE one of the more affordable cryptocurrencies in the market. At present, CAKE is being sold for $2.71, making it a potentially attractive investment opportunity for those looking for cost-effective options.
Stakers are already leaving because of the planned drop in stake rewards. Even though a lower inflation rate will help tokenomics by making its supply less diluted, this is the case. Since the PancakeSwap team suggested the tokenomics change, the amount invested has decreased from just over 1b CAKE to about 677m CAKE. According to the news release, PancakeSwap plans to use the best choice by the end of June.
Final Thoughts
PancakeSwap has implemented the CAKE Tokenomics v2.5 Decision Proposal, reducing token incentives and inflation rates for its native token, CAKE. This move aims to make CAKE rarer, decrease its pollution, and increase its value as a deflationary token.
Ken Emmanuel is a Blockchain Content writer, a Web3 Enthusiast and a Social Media Management Strategist, he likes writing educative contents to help people gain more knowledge and get inspired. The growth of any organization he work with is always his priority. He is a Geographer by profession and loves reading.
