The PancakeSwap community has put forward a proposal to decrease the overall supply cap of its native token, CAKE. With a current circulating supply of approximately 388 million, this proposal suggests reducing the total supply limit from 750 million to 450 million. The aim is to establish a maximum cap of 450 million for the token, considering its deflationary trend and the focus on ultrasound CAKE.
The community behind PancakeSwap, known as the “Kitchen” team, is confident that this lowered cap will be sufficient to capture market share across all chains and sustain the veCAKE model. The proposal outlines various reasons for implementing this adjustment. Initially, when PancakeSwap launched in 2021, the token supply was set to provide incentives for bootstrapping the ecosystem, but with nearly three years of development, the team now has a better understanding of the incentives required to achieve growth targets.
Moreover, the total supply plays a crucial role in understanding the impact of token burns and future emissions. Reducing the total supply is vital for achieving ultrasound CAKE and signaling PancakeSwap’s transition away from a hyperinflationary tokenomics model.
The new cap of 450 million CAKE is considered reasonable by PancakeSwap as it ensures sufficient supply for future expansion. This includes gaining market share on Ethereum, Ethereum Layer 2s, and pursuing new initiatives like position managers. By tightening the supply, PancakeSwap aims to create a sustainable ecosystem that supports its growth plans.
Following the proposal, the price of CAKE experienced a 21% surge, rising from $2.22 to $2.70 within hours on Thursday. Since then, the price has stabilized around $2.52. This positive market reaction indicates investor confidence in the proposed reduction and its potential benefits for the PancakeSwap ecosystem.
This recent proposal follows PancakeSwap’s announcement of burning over nine million CAKE tokens, totaling more than $19 million, as a strategy to decrease the circulating supply. As of December 5th, 2023, PancakeSwap successfully burned 0.089% of the total CAKE supply for November 2023. This represents the third consecutive month of reducing the CAKE total supply, resulting in a cumulative net mint reduction of -712,667 CAKE from September to November 2023.
The PancakeSwap community’s proposal to reduce the total supply cap of CAKE from 750 million to 450 million reflects its commitment to establishing a sustainable tokenomics model. By tightening the supply, PancakeSwap aims to achieve ultrasound CAKE, expand its market share, and pursue new initiatives. The positive market response to the proposal highlights investor confidence in the PancakeSwap ecosystem and its long-term growth prospects. As the proposal is implemented, it will be interesting to observe the impact on CAKE’s value and the overall success of PancakeSwap’s strategic goals.
Leave a Reply