Decentralized exchange (DEX) PancakeSwap wants to reduce inflation on its tokens to between 3% and 5% per year, well below current rates of more than 20%.
In a proposal published on April 18, the DEX cited the need to transition PancakeSwap (CAKE) to a staking model characterized by “low staking inflation”, “actual return extracted from PancakeSwap protocol revenue” and “product benefits that favor CAKE stakers in the longer term.”
“This is a significant and important change for PancakeSwap,” the DEX wrote, while also providing an opportunity for token holders to vote on appropriate changes and a comment form to discuss them. PancakeSwap currently operates a high token issuance model to incentivize high returns for protocol features such as liquidity pools and farming offerings, as well as removing tokens from circulation through high staking returns. .
“We think it’s time to take this model to the next level and power CAKE towards a deflationary model based on actual performance and CAKE burn.”
According to the developers, CAKE had a net issuance rate of 40 per block at its inception in September 2020; dropped to 14.25 per block in May 2022, with the rate floating at 9.2 CAKE per block at press time. Over time, developers want to implement “ultrasonic CAKE” with a net emission rate of less than 2 CAKEs per block.
“An issuance rate of >2 CAKE/block is still highly inflationary for existing CAKE holders and stakers.”
PancakeSwap is one of the most popular DEXs on the BNB Chain. Last year, DEX introduced a 750 million supply cap for CAKE, which currently has around 381.6 million tokens in circulation and locked in skating. Meanwhile, the total value locked in the PancakeSwap stands at $2.35 billion.
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