PancakeSwap has called for a vote on its latest proposal to reduce CAKE emissions to farm pools. As per the announcement, users can vote to reduce CAKE emissions by 11%. The vote will be open for two days, concluding on the morning of June 25.
Making CAKE “emission neutral” or “deflationary” is the ultimate objective of emission reduction. On average more CAKE will be burned per block than produced. However, this approach would adversely impact the yearly interest rate of farms and staking pools linked to CAKE.
The CAKE-BNB APR may fall by about 12%, for instance, if the team burns one other CAKE every block. This could have a detrimental effect on the platform’s liquidity and impacts the several projects that PancakeSwap supports.
The team recommends the following solutions to maintain a healthy APR for the farms and promote liquidity on the platform: no change, a 0.25 CAKE per block decrease, and a 0.50 CAKE per block reduction.
Regulation of inflation is crucial for cryptocurrencies. The creators of PancakeSwap claimed that the CAKE token’s maximum circulation restriction was necessary to motivate users to provide liquidity. This makes sense, given that any exchange’s success depends heavily on the availability of liquidity. As a result, holders were compelled to deposit their tokens into PancakeSwap pools often to prevent losing a third of the CAKE’s annual worth.
On May 12, a vote was held to address this issue, and it was decided in favor of limiting the CAKE maximum supply to 750 million tokens.
At press time, PancakeSwap was trading at $3.21, up by 5.6% in the last 24 hours. However, the token is still 28.1% down on the 14-day chart. Additionally, CAKE is down by 92.7% from its all-time high of $43.96.