GM PancakeSwap Community,
Our native token, CAKE, is on a path to becoming a deflationary token with a reduced supply over time. This initiative is pivotal in ensuring a more sustainable future for PancakeSwap, and we want to highlight our progress in 2023 toward our deflationary dream.
The Ultimate Goal: Ultrasound CAKE
Ultrasound CAKE is more than a concept; it's our ambitious vision for a thriving ecosystem. Our primary aim is to gradually reduce CAKE's supply over time, thereby driving up demand and fostering stability in its value. By effectively combating inflation, we are charting a path toward sustainable growth that aligns with the best interests of our community.
Deflationary Initiatives in 2023
We've been hard at work implementing various initiatives to achieve Ultrasound CAKE, and here's an overview of our critical efforts:
- CAKE Tokenomics v2.5: Our community-approved proposal for CAKE Tokenomics v2.5 marks a significant milestone on our path to sustainability. Before v2.5, inflation rates posed long-term sustainability challenges for CAKE, necessitating reductions for the overall health of PancakeSwap. As a result, we decided to reduce CAKE syrup pool and Farm emissions. Following the successful vote, CAKE Syrup Pool emissions have been promptly scaled back to 3 CAKE per block and will continue to decrease to 0.35 CAKE per block (~2% APR) by the end of October. Additionally, we have implemented progressive Farm reductions, starting from the BNB Chain v2 to BNB Chain v3 migration, followed by subsequent weekly and fortnightly reductions. This has led to a rapid decrease in token minting from products, further solidifying CAKE's token supply stability.
- Token Burning: Thanks to substantial trading volumes (12.8 billion from v3 as of writing) and the successful launch of products like Pancake Protectors, we have already burned an impressive 238 million CAKE tokens since the start of 2023. Notably, CAKE burns are primarily driven by trading volume, and our v3 deployment on chains such as BNB Chain, Ethereum, Polygon zkEVM, and zkSync Era contributed significantly to the overall burn. We are optimistic that new chain launches will further increase the CAKE burn.
The weekly chart above illustrates our mint, burn, and net-mint volume. Since the proposal for CAKE Tokenomics v2.5 vote passed on April 28th, we have observed a significant positive trajectory, with net-mint volume consistently tracking at a low range compared to pre-vote weeks. This demonstrates our commitment and dedication to building toward Ultrasound Cake
- Revenue Sharing Pool: We introduced Revenue Sharing Pool. Through this utility, Fixed-Term CAKE stakers can now directly share in the v3 trading fee revenue, giving them a real yield that amplifies Fixed-Term CAKE rewards and contributes significantly to our deflationary efforts. Instead of minting extra CAKE, we now share a portion of our trading fee revenues with our dedicated stakers, strengthening our commitment to deflation.
- Combating Inflation Rate: As of 24 July 2023, our total CAKE supply stands at 390.2 million, while approximately three months ago, on May 1st, 2023, it was 390.1 million. Our inflation rate has remained nearly 0%, even with three more months of Syrup Pool reward reductions ahead.
This achievement can be attributed to several factors synergizing to curb inflationary pressures. Notably, our solid trading volumes, strategic Farm emission reductions, and successful product releases, like Pancake Protectors, have significantly contributed to higher CAKE burns. As a result, we have managed to keep inflation well below 5% per annum, surpassing expectations and laying a solid foundation for our journey towards Ultrasound CAKE.
- Lowering Max CAKE Supply: Lowering the max CAKE supply will be appropriate sometime this year. However, as we are still expanding into multiple chains, we will consider this again once we have developed our product suite on other chains and secured a sustainable position.
We are committed to achieving Ultrasound CAKE and creating a sustainable tokenomics model for PancakeSwap. Thank you for your unwavering support, and together, we will keep PancakeSwap as the leading DEX in the DeFi space.
Thank you for being a part of our journey.
The Chefs🥞🐰