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Low Inflation and Real Yield for CAKE Stakers
PancakeSwap, a leading decentralized exchange (DEX) on the BNB Chain, has proposed a significant change to its tokenomics model.
In a recent discussion proposal, the platform suggested a move towards a deflationary model characterized by low staking inflation, real yield drawn from PancakeSwap’s protocol revenues, and benefits favoring longer-term CAKE stakers.
"The CAKE Tokenomics v2.5 proposal aims to transform CAKE into a low-inflation model driven by real yield and continued CAKE burn, aligned with the growth of its leading AMM v3 DEX platform and other popular DeFi products on PancakeSwap," Chef Mochi, Head Chef at PancakeSwap stated to BSC News.
The proposal, which is now open for community feedback, aims to target a low annual inflation rate of 3-5% for CAKE, PancakeSwap’s native token. The platform has proposed a CAKE staking model that rewards loyal CAKE holders who stake with them, ensuring that their CAKE tokens are not subject to high inflation.
The proposed changes will not affect the percentage of trading fees allocated to buyback-and-burn, providing additional value return to CAKE stakers. PancakeSwap will also continue to allocate a percentage from other products to token burn, and reward the most loyal CAKE stakers with the largest share of emissions and protocol fees.
PancakeSwap has mapped out the impact of the proposed changes on its journey to ultrasound CAKE, Syrup Pool APRs, and CAKE Inflation % based on the voting options. The platform recommends 0.35 - 1 CAKE/block for the Syrup Pool because CAKE will become low inflation immediately, benefiting existing CAKE holders and stakers. Loyal CAKE stakers will receive the largest share of protocol revenue, aligned with PancakeSwap’s growth as a Top 3 DEX.
The most significant driver of CAKE burn comes from trading fees, and the subsequent CAKE buyback-and-burn. As more users use PancakeSwap, transaction fees generated will increase CAKE burn. This deflationary mechanism incentivizes users to hold onto CAKE, creating a virtuous cycle that benefits all stakeholders in the PancakeSwap ecosystem.
PancakeSwap plans to create more value for its users and drive the long-term success of the CAKE token. The platform's Q2 roadmap outlines its plan to introduce three new products and expand to other chains to further increase CAKE burn. The proposal is open for community feedback, and a “decision proposal” will be presented once there is consensus around a few main choices.
What is PancakeSwap:
PancakeSwap is a Decentralized Exchange built on BNB Chain and available multichain on Ethereum and Aptos. It offers users various features such as Liquidity Pools (LPs), swapping, yield farming, Syrup Pools, an Automated Market Maker, Initial Farm Offerings (IFOs), an NFT profile system, and other tools. In addition, the protocol helps users make the most out of their crypto assets by trading, earning through yield farming, and winning via lottery, prediction, and NFT collectibles. With the highest trading volumes in the market, PancakeSwap is the leading DEX on BNB Chain.
Where to find PancakeSwap:
Website | Twitter | Medium | GitHub |