Why PancakeSwap Wants to Reduce Maximum Supply by 40%

The Decentralized Exchange (DEX) PancakeSwap wants to achieve the mission of ultrasound CAKE. Hence, it has proposed to reduce the maximum supply of CAKE from 750 million to 450 million.

The high token inflation drastically plummeted the price of CAKE amidst the bear market. Hence, the PancakeSwap community pivoted its native token – CAKE, towards a deflationary model earlier this year. 

On Thursday, PancakeSwap proposed to reduce the maximum supply of CAKE tokens by over 40%. If the community supports the proposal, the new maximum supply of CAKE will be reduced to 450 million. The proposal explains:

“With a current total supply of 388M CAKE, the Kitchen believes this new and lower cap will be sufficient to gain market share across all chains and sustain the veCAKE model.”

So far, over 354,000 users have voted in support of the proposal. The voting process will end on Friday at 8:00 AM UTC.

Read more: Tokenomics Explained: The Economics of Cryptocurrency Tokens

High Token Inflation

CAKE token inflation was one of the main pain points of the community. Hence, the team conducted major developments in 2023.

It announced a V3 upgrade in April 2023 and significantly reduced the creation of new CAKE tokens. The team planned a 45% yield reduction on the BNB chain and a 32% reduction on the Ethereum chain.

Not to mention, PancakeSwap also received criticism for upgrading to V3 by forking the code of Uniswap’s V3. The community was concerned that frequent forking would make all the Decentralized Finance (DeFi) apps look the same.

As of writing, CAKE is trading at $3.84, up by over 6% in the past 24 hours.

Read more: How To Use PancakeSwap: A Step-By-Step Guide

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