The maximum supply of CAKE tokens that will ever exist on the market has been reduced to 450 million units.
The crypto community of PancakeSwap, one of the most popular DEX and AMM protocols in the crypto space, has approved an improvement proposal for reduce the maximum supply of the token.
The creators of the proposal argue that limiting the maximum supply of CAKE to 450 million, instead of the maximum cap of 750 million that was initially defined in its protocol, will increase the potential of the token to establish itself as a key element in the digital economy.
In the governance proposal, the developers argued that a total CAKE token supply of 450 million units will be sufficient to gain market share across all blockchains and sustain its tokenomics model.
The CAKE supply reduction was approved by the protocol governance, with a 97,88% of votes in favor and already several cryptocurrency price monitoring sites, such as CoinMarketCap and CoinGecko, reflect the new maximum amount of CAKE tokens to exist.
Source: PancakeSwap Finance
A trip to ultrasound CAKE
One of the compelling reasons why PancakeSwap developers chose to reduce the total supply of CAKE tokens is ensuring the growth of the protocolAs they explained, now that the project is just over three years old, the incentives needed to ensure its future growth and expansion have been estimated with greater precision.
“450M CAKE is a reasonable new cap, as it guarantees sufficient supply for future growth,” the developers had commented in the recently approved governance proposal. PancakeSwap seeks to gain market share in the blockchain ecosystem, including Ethereum and the blockchains that are part of this network’s Layer 2 ecosystem.
In addition to this, the DEX protocol also wants to move away from the hyperinflationary tokenomic model it started with and opt for a deflationary tokenomics, where token burning exceeds issuance, in order to ensure that CAKE becomes a deflationary token and can potentially increase in value over time.
In September 2020, when the protocol was implemented, the CAKE token issuance was 40 units per block. According to the developers' explanations, the token issuance was conceived in this way in order to generate liquidity and boost the growth of the protocol on the BNB Chain network. However, in May 2022, the issuance of new tokens was reduced to 14,25 CAKE per block, after a thorough review of its tokenomic model.
A year later, in May 2023, PancakeSwap token issuance was reduced again to 4,67 CAKE per block, and now, following the approval of the governance proposal in question, The issuance of new tokens has been limited to 0,71 CAKE per block.
With all these reductions, PancakeSwap has reduced CAKE issuance by 96% overall.
PancakeSwap's Highlights in 2023
While the reduction in the total supply of CAKE on the market has not impacted the value of the token, which is trading at around $3,48 per unit at the time of writing this article, the protocol developers have conducted an analysis of the achievements and progress made in 2023.
On X (formerly Twitter), PancakeSwap developers celebrated that the CAKE market share doubled in the last 12 months; that there was a significant increase in trading volume within the DEX, which reached $630.000 billion; and that the total value locked or the TVL deposited in your smart contracts grew to $1.680 billion dollars.
PancakeSwap developers also celebrated that in 2023, the protocol expanded to a total of 9 blockchains and new versions were successfully launched, providing more performance opportunities to liquidity providers and greater accessibility, with lower fees, to users.
On the other hand, the DEX developers also highlighted the diversification of rewards in the protocol and its journey through the world of NFTs and Web3 games.
PancakeSwap currently has a user community of 2 million people, of which 1,5 million are monthly active users, which shows the importance that the protocol has gained in the ecosystem over the last three years.
Continue reading: PancakeSwap debuts in the blockchain gaming market
