Developers of decentralized exchange (DEX) PancakeSwap are looking to slash the maximum supply of its ecosystem token, CAKE, from 750 million to 450 million. CAKE tokens currently trade at $3.58 at the time of writing.
According to a Dec. 28 announcement, the voting proposal for the 300 million token reduction will last 24 hours. If approved, the proposal will take effect on Jan. 4, 2024.
"Now that CAKE has achieved consistent deflation for several months and is focusing on accelerating the journey to ultrasound CAKE, the proposal aims to reduce the CAKE token's total supply," developers wrote while noting that the new proposal will better align CAKE with its current circulating supply of 388 million.
During its inception in September 2020, CAKE had a net emission rate of 40 per block, amounting to an inflation rate of around 80% per year, and has been on a subsequent decline thereafter. Users receive CAKE as part of staking rewards.
On April 25, token-holders approved a proposal to adjust CAKE Syrup Pool emissions from 6.65 CAKE per block to 3.0 CAKE per block, reducing by 0.5 CAKE per block monthly for five months. Combined with a token burn mechanism, CAKE tokens have since become deflationary on a net basis.
"After nearly three years in development, the team now has more accurate estimations of incentives required to achieve growth targets," PancakeSwap developers commented. "Lowering the total supply is a critical step to achieve ultrasound CAKE and to send a clear signal of PancakeSwap's pivot away from a hyperinflationary tokenomics model."
Related: PancakeSwap adds portfolio manager function in partnership with Bril
PancakeSwap is currently one of the most popular DEXs. At the time of publication, the DEX had $1.64 billion in total value locked and is expected to generate $191 million in annualized protocol revenue.
