Hello PancakeSwap Community!

In this article, we will explore the benefits of deflationary tokens, compare them to inflationary tokens, and introduce Ultrasound CAKE, a vision of the PancakeSwap native token CAKE.

To begin, let’s understand what CAKE is and its utility: (https://blog.pancakeswap.finance/articles/the-journey-of-cake-token)

What are Deflationary tokens?

Deflationary tokens are those that experience a reduction in token supply over time. This decrease in supply creates token scarcity, leading to increased demand and perceived value. Deflationary tokens have gained popularity as they address the issue of inflation commonly associated with many cryptocurrencies, where excessive tokens minting occurs.

Benefits of Deflationary Tokens:

Increased scarcity: Deflationary tokens create scarcity, which increases demand and, consequently, the stability of the token over time.

Reduced inflationary pressures: As mentioned earlier, deflationary tokens protect holders from the inflationary pressures of excessive token minting without sufficient value backing.

Stabilization of token power: Deflationary tokens help reduce market volatility. Holders are more inclined to retain the tokens due to their understanding of scarcity and utility.

These benefits encourage project teams to pursue reducing token supply, thereby achieving their deflationary objectives. In PancakeSwap’s context, this token ambition is referred to as Ultrasound CAKE.

The PancakeSwap team presents an extensive suite of deflationary techniques to burn CAKE tokens generated from our products. These methods will emerge from various products, including v3 and v2 Swaps, StableSwaps, Perpetual Trades, Farms, IFOs, NFT profile creations, and games such as Pottery, Prediction, and Lottery.

CAKE Tokenomics v2.5 Proposal

On April 28 2023, a significant stride was taken towards Ultrasound CAKE Our community approved the CAKE Tokenomics v2.5 proposal which aims to create a structure enabling CAKE to transition to a more sustainable tokenomics model. This model combines real yield(which does not impact CAKE supply) with token emissions (which inflate the quantity of CAKE). Following the successful vote, CAKE Syrup Pool emissions were promptly scaled back to 3 CAKE/block and will continue to be reduced to 0.35 CAKE/block (~2% APR) by the end of October. This indicates that token minting from products is decreasing rapidly, further stabilizing CAKE's token supply.

Cake Tokenomics and Deflationary Mechanisms, updated on 8 May 2023

As of May 8th, we have successfully burned 86.52% of the CAKE tokens minted on a weekly basis. This achievement brings us closer to reaching a CAKE burn rate of 100% or more. The rise in CAKE burn from v2 and v3 trading fees and Market Maker contributions, supplemented by adjusted token emissions.

The weekly chart below illustrates our mint, burn, and net-mint volume. Since the 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 towards an Ultrasound Cake.

Data Extracted on 16 May 2023, from Dune Analytics

In conclusion, Ultrasound CAKE aims to facilitate a more sustainable model for our tokenomics and provide benefits to our CAKE community. As we look towards the future, we will continue developing new products and implementing CAKE burn initiatives to create the most advantageous CAKE value for our community and holders.

If you are interested in the vote for CAKE tokenomics v2.5, visit here: https://pancakeswap.finance/voting/proposal/0x707643dd2c2b941c7274f26a0362922198912e8549050ae9f2d1d9d71ada04bb

FAQ about Proposal for CAKE tokenomics v2.5: https://blog.pancakeswap.finance/articles/faq-discussion-proposal-for-cake-tokenomics-v2-5-2-1

Stack ’em

The Chefs 🐰🥞