- PancakeSwap token (CAKE) spiked more than 20% following a proposal to reduce the maximum token supply from 750 million to 450 million.
The price of CAKE, the native token of the decentralized exchange PancakeSwap, soared over 20% following a proposal to reduce the maximum supply by 300 million.
CAKE was trading hands at about $2.72 at 9:20 a.m. ET, an increase of 13.1% over the past 24 hours.
PancakeSwap announced on Thursday a proposal to cut CAKE’s supply from 750 million to 450 million.
“By reducing our token supply by 300,000,000 CAKE, we signal PancakeSwap’s successful pivot from a high-inflation emissions model, to a much more efficient flywheel,” PancakeSwap wrote on X.
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🐰 PancakeSwap Family!
🥞 We are proposing to reduce the max token supply of $CAKE from 750M to 450M.
💥 After a year of hard work and deflation, we are razor-focused on ultrasound CAKE.
🌟 By reducing our token supply by 300,000,000 $CAKE, we signal PancakeSwap’s successful… pic.twitter.com/PIk3SBEhiJ
— PancakeSwap🥞Everyone's Favorite DEX (@PancakeSwap) December 21, 2023
The Proposal
“Over the past year, PancakeSwap has significantly revamped its tokenomics, emissions and growth strategy,” the proposal for the token reduction stated.
“Starting from improving CAKE Tokenomics v2.5 to most recently launching the veCAKE Gauges System, CAKE is in a position to pursue further growth across all deployments.”
“Now that CAKE has achieved consistent deflation for several months and is focusing on accelerating our journey to ultrasound CAKE, this proposal aims to reduce the CAKE token’s total supply to a maximum cap of 450 million CAKE. With a current circulating supply of 388 million CAKE, the Kitchen believes this new and lower cap will be sufficient to gain market share across all chains and sustain the veCAKE model,” the proposal added.
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Reason For The Reduction
The reasons for the cut of 300 million theoretical CAKE are three.
First of all, increase the level of certainty for the community about the future supply of the CAKE token. In fact, by reducing the maximum limit to 450 million, we are already getting close to the 386 million tokens already created.
The second is precisely that of having taken a step forward towards ultrasound CAKE.
The third is to ensure sufficient flexibility for growth.
Now we will have to wait for the community to express itself, but given today’s +20% on the markets, it seems that it has already expressed itself in favor of the initiative.
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