Journalist
Posted:
- PancakeSwap wants to reduce the total supply of CAKE.
- This makes the token ‘ultra-sound’ and available on many chains.
In a groundbreaking move, members of the governance community of popular decentralized exchange (DEX) PancakeSwap [CAKE] vote on a proposal to significantly reduce the total supply of its original token.
If the proposal is approved, CAKE’s maximum supply would decrease by 40%, from 750 million to 450 million.
🐰💙PancakeSwap Fam, the moment has arrived!
🥞Proposal to increase the maximum supply of $CAKE from 750M to 450M!
🌟By reducing our token supply by 300,000,000 $CAKEwe signify PancakeSwap’s successful shift from a high-inflation emissions model to the Ultrasound CAKE era.
🗳Vote for… pic.twitter.com/3zCzoBBiRl
— PancakeSwap🥞Everyone’s favorite DEX (@PancakeSwap) December 28, 2023
According to the proposal, the decision to significantly limit CAKE’s supply arose from the decision the need to make the symbolic ultrasound.
PancakeSwap commented,
“Total supply is an important metric in understanding the impact of token burning and future emissions. Reducing this number is a critical step to achieving ultrasonic CAKE and allows us to send a clear signal of PancakeSwap’s pivot away from a hyperinflationary tokenomics model.”
Furthermore, DEX believes that by reducing the overall supply of CAKE, this could allow the company to increase market share in other chains.
The voting, which began on December 28 and ends on December 29, has received overwhelming support from the community. At the time of writing, more than 98% of votes cast are in favor of the reduction.
High number of users but low deposits
With a trading volume of $12 billion recorded in the past month, the V3 iteration of PancakeSwap has ranked as the third decentralized finance (DeFi) protocol with the highest trading volume in the past month, according to data from DappRadar.
Thanks to the series of ecosystem updates completed on the DEX in 2023, PancakeSwap has seen steady growth in the number of active monthly users.
Dates of Token terminal showed that this has increased by 29% since January. So far this month, 1.8 million addresses have completed at least one transaction on the exchange.
However, despite the increase in user activity, net deposits to PancakeSwap have declined since February. This metric measures the difference between the total value of tokens added to and removed from liquidity pools on the exchange.
When this decreases, it shows that more tokens are being withdrawn than added, indicating reduced liquidity and possibly lower trading volume.
AMBCrypto found that PancakeSwap net deposits have fallen 41% since February. This caused monthly trading volume on the DEX to peak at $17.38 billion in May.
Source: Token terminal
This resulted in a corresponding spike in network costs and revenues in the same month.
How much are 1,10,100 CAKEs worth today?
According to data from Token Terminal, PancakeSwap’s network fees totaled $17.3 million in May and have fallen 40% since then.
Similarly, protocol revenues were $5.6 million in May, down 45% since then.