Project leaders at decentralized crypto exchange PancakeSwap have proposed a significant reduction in the inflation rate target for their native CAKE token.
The suggested new inflation rate of 3%-5% is a substantial decrease from the current rate of over 20%. In this context, inflation refers to the growth in a token’s supply. Lower inflation could result in higher token prices due to the principles of supply and demand.
PancakeSwap is the largest DEX on BNB Chain and one of the busiest exchanges in the crypto market. Trading volume reportedly reached $7.5 billion in March, while the number of CAKE holders exceeded 1.3 million. It also reported 1.6 million unique traders.
“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,” a blog post said.
New Proposal Aims For 94% Cut in CAKE Emissions
The proposed “version 2.5” tokenomics model would transition CAKE to a deflationary model by cutting token rewards for traders and stakers by more than 68%. Under this proposal, the CAKE emissions of Syrup Pool, PancakeSwap’s primary liquidity pool on BNB Smart Chain, would drop by 94%.
Chef Brie, a PancakeSwap employee, explained on the exchange’s Discord server that the discussion proposal aims to shift from the high-inflation CAKE staking model to a low-inflation model offering real yield and utility.
The proposal is currently open for community feedback and will move to a “decision proposal” for a final vote after a week, as outlined in a recent blog post.