PancakeSwap wants to cap token inflation rate between 3% to 5% per annum
Decentralized exchange (DEX) PancakeSwap wants to lower its token inflation to anywhere between 3% to 5% per annum, far below current rates of over 20%.
In a proposal released on Apr. 18, the DEX cited the need to transition PancakeSwap (CAKE) into a staking model characterized by “low staking inflation,” “real yield drawn from PancakeSwap’s protocol revenues,” and “product benefits favoring longer-term CAKE stakers.”
“This is a significant and important change for PancakeSwap,” the DEX wrote, while providing an opportunity for token holders to vote on appropriate changes and a feedback form to discuss them. Currently, PancakeSwap operates a high token emission model to incentivize high yields for protocol features such as liquidity pools and farm offerings, as well as removing tokens from circulation via high staking yields.
“We believe it is time to take this model to the next level and supercharge CAKE towards a deflationary model based on real yield and CAKE burn.”
According to developers, CAKE had a net emission rate of 40 per block at its inception in September 2020; it was reduced to 14.25 per block in May 2022, with the rate floating at 9.2 CAKE per block at the time of publication. Eventually, developers wish to implement “ultrasound CAKE” with a net emission rate of lower than 2 CAKE per block.
“A >2 CAKE/block emission rate remains highly inflationary to existing CAKE holders and stakers.”
PancakeSwap is one of the most popular DEXs on BNB Chain. Last year, the DEX introduced a 750 million supply cap for CAKE, which currently has around 381.6 million tokens in circulation and locked in staking. Meanwhile, PancakeSwap’s total value locked amounts to $2.35 billion.
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