PancakeSwap, the dominant decentralized exchange (DEX) built on the BNB Chain, announced on Monday the burn of over 8.4 million CAKE tokens, representing $10 million. The latest burn joins a series of scheduled token burns held by the decentralized protocol.
A token burn is a way of erasing a portion of a cryptocurrency from its circulating supply. The burn involves sending an assigned quantity of cryptocurrency to a burn address. The deflationary mechanism aims to reduce that asset’s total available units and increase its demand in the market.
Token burns can be scheduled to occur every week, month, or after any other designated timeframe. In PancakeSwap’s case, the token burns occur weekly. Ether (ETH) and Binance Coin (BNB) are other examples of crypto assets using the token burn process to bolster their performance.
PancakeSwap Burns 8.4M $CAKE
The announcement shows a breakdown of the token burn. Trading fees from crypto swaps and perpetual in PancakeSwap’s V2 were 271,000 CAKE tokens, equivalent to $321,000. Trading fees derived from PancakeSwap’s V3 were 66,000 CAKE tokens worth $78,000.
The protocol’s prediction and lottery services recorded a downsize of 66,000 CAKEs ($79,000) and 37,000 CAKEs ($44,000), respectively. PancakeSwap’s non-fungible token (NFT) business saw a burn of 8,000 CAKE tokens worth $1,000.
Outlook on PancakeSwap’s Overall Performance
A zoom-out on PancakeSwap’s performance since January reveals that the DEX is experiencing a gradual decrease in engagement, similar to the overall DEX market.
On-chain data from the analytics platform DeFiLlama shows that PancakeSwap currently holds a total value locked (TVL) of $1.37 billion.
Still, the project continues to expand its reach to new audiences on several networks. The latest was the protocol’s launch on the Coinbase-backed layer-2 network, Base. Also, PancakeSwap’s recently launched V3 was deployed on BNB Chain and Ethereum as part of efforts to bring advanced features to more audiences.
Meanwhile, PancakeSwap’s native cryptocurrency CAKE has been on a steady decline. After trading for as high as $4.66 earlier this year, the asset currently trades at $1.2.
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