PancakeSwap community passes proposal to reduce token supply by 300M

In a landmark decision, decentralized exchange (DEX) PancakeSwap has successfully passed a proposal to reduce the total supply of its native token, CAKE, to a maximum cap of 450 million from  750 million.

The proposal, which closed on Dec. 29, garnered an overwhelming 97.88% approval rate from the voting community, reflecting a significant shift in the platform’s tokenomics strategy.

The reduction comes after PancakeSwap’s intensive efforts over the past year to overhaul its tokenomics, emissions, and growth strategy.

“Ultrasound CAKE”

The platform, which launched in 2021, initially faced challenges due to significant token inflation as it sought to establish a robust ecosystem.

However, with almost three years of development and refinement, including the introduction of CAKE Tokenomics v2.5 and the veCAKE Gauges System, PancakeSwap has now positioned itself for accelerated growth.

The proposal was driven by several key factors. First, it aimed to provide certainty to the community regarding the future supply of CAKE tokens.

This move is seen as a critical step towards achieving what the platform refers to as “ultrasound CAKE,” signaling a departure from a hyperinflationary model towards a more sustainable and growth-oriented approach.

Another crucial aspect of the proposal was ensuring sufficient flexibility for future growth. With the new cap set at 450 million CAKE, PancakeSwap aims to gain market share across various chains and sustain the veCAKE model effectively.

Growth on the horizon

The voting process, which was open to the PancakeSwap community, saw participation from numerous stakeholders. The overwhelming support indicates strong community backing for the platform’s strategic direction.

There are currently 388 million CAKE in circulation, with a market cap of $850 million, according to CryptoSlate data.

The reduced CAKE supply is expected to positively impact the token’s value and the platform’s overall market position. The token is up roughly 38% over the past week since the governance voting began and is currently trading at $3.46 per coin.

It climbed to a high of $3.92 on Dec. 28 but has since given up some of those gain amid the wider market retracement.