PancakeSwap to Make Struggling CAKE Token Deflationary in Latest Proposal

Multi-chain decentralized exchange (DEX) PancakeSwap on Tuesday proposed a deflationary model for the platform’s struggling native token, CAKE. Pending approval from its community, the DEX is set to keep reducing the supply of CAKE through a proposed real yield and burn procedure.

PancakeSwap aims to boost the struggling exchange and reduce the inflation of its native token. In the past, the DEX has put up measures like lowering the cap on CAKE to 750 million, implementing new products earned at increasing CAKE burn, and reducing Syrup Pool emission, all aimed at ensuring overinflation is curbed.

The DEX aims to take inflation curbing to the next level with its CAKE deflationary model. A deflationary token is one that deflates over time because its supply decreases. It applies several mechanisms to ensure that supply is diminishing, which, according to the demand and supply rule, will increase demand and eventually increase the token’s value.

PancakeSwap Aims for Reduced Inflation Rate

The PancakeSwap proposal noted its desire to drastically reduce inflation in its native token, CAKE, to 3-5% from its current 20%. The protocol proposed several models that would facilitate this initiative but insisted that it would implement any of them with over 50% support from the community.

In the Real Yield Model, PancakeSwap intends to reduce staking allocation to 0.35-1 CAKE/block from 6.65 CAKE/block. It also wants to favor long-term stakers by increasing the CAKE emission weighting and giving them preferences in the new benefits it will launch.

The exchange also intends to introduce three new features that will create more user value and facilitate CAKE burning in the year’s second quarter. The DEX plans to implement regular IFOs and cIFOs, new Farms and Syrup Pools, and product upgrades. PancakeSwap noted that a significant facilitator of CAKE burn is trading fees, which come from increased usage and the exchange’s buy-back and burn strategy.

Low Inflation Model

If  PancakeSwap implements the deflationary model, CAKE emissions on Syrup Pool will drop by 94%. The Syrup Pool is PancakeSwap’s main liquidity pool on BNB Smart Chain. The new version of tokenomics will cut token rewards and stakers by over 68%.

PancakeSwap noted it would receive replies next week through social media platforms and a feedback form on its website before releasing a decision form on the week of April 24th.