PancakeSwap, a decentralized cryptocurrency exchange on BNB Chain, has revealed its CAKE Tokenomics Proposal 3.0, which aims to achieve 4% annual deflation rate and wishes to reduce the CAKE supply by 20% over the course of next five years. According to the proposal, there are chances of cancelling CAKE staking model, veCAKE and Gauges Voting as these processes are complicated and removal of these processes could simplify ownership and governance.
This proposal of retiring the staking models has been gaining significant opposition from Cakepie, a SubDAO created by Magpie to enhance the functionalities of PancakeSwap’s veCAKE tokenomics model.
Cakepie, the largest veCAKE holder, is arguing that by eliminating veCAKE the entire ecosystem can be affected and could cause the community members to undermine their trust in PancakeSwap.
Key Concerns
Lets have a look at the concerns that have been raised by Cakepie on the social media platform X (formerly known as Twitter):
Loss of Trust: Removing veCAKE could hurt trust in PancakeSwap and make it less appealing to new users.
Reduced Income: Long-term CAKE holders would lose a key source of revenue for them and this would lead to investors ultimately not investing in the token at all.
Market Volatility: Without veCAKE, the selling would increase and could lead to major price swings, making the market less stable.
Less Community Control: The change could give out a huge power to big investors and this could undermine the community’s decision-making role.
Cakepie Proposes Alternatives
Cakepie has suggested some alternatives that can improve the system without having to remove veCAKE. These ideas include:
- Limiting rewards to smaller pools of liquidity. By doing this, the system will encourage diversity, reduce whale influence, and increase efficiency of the ecosystem.
- Giving voters a share of fees which will lead to users holding on to their shares, promoting stability and reducing volatility.
- Allowing people to exit with penalties. This could help in maintaining the integrity of veCAKE by discouraging short-term speculation and promoting long-term stakeholder engagement.
PancakeSwap’s Governance and Integrity Concerns
Cakepie also questions the fairness of PancakeSwap’s governance process. The SubDAO pointed out that 25 million CAKE tokens were locked in multiple wallets before the proposal was announced. This indicates that some people might have been planning to influence the decision ahead of time.
This raises concerns about transparency in the ecosystem and according to Cakepie, the outcome of this debate will affect not just PancakeSwap but it will affect the entire DeFi community in some way or the other.
Also Read: CAKE Token Economics 3.0 Proposed, Token Experiences 8.5% Gain
