PancakeSwap Unveils CAKE Tokenomics Proposal 3.0, Fostering True Ownership, Simplified Governance, And Sustainable Growth

Community of decentralized exchange (DEX) PancakeSwap introduced its Tokenomics Proposal 3.0 for the CAKE token, which aims to enhance the efficiency of the PancakeSwap ecosystem. This proposal focuses on improving CAKE token performance, offering greater flexibility, and optimizing returns for liquidity providers while fostering sustainable long-term growth.

The key elements of the proposal include a deflationary goal of reducing the CAKE supply by 20% by 2030, targeting a 4% annual deflation rate. Additionally, the proposal calls for the phase-out of the veCAKE and Gauges Voting System, replacing it with a more efficient and simplified emissions model. The proposal also includes the removal of CAKE staking, unlocking all staked CAKE tokens immediately without penalties, regardless of the staking duration. Moreover, the revenue-sharing model, which previously allocated fees from the 0.01% and 0.05% v3 pools, will be redirected to CAKE burns.

Supporting the deflationary objective further, the proposal suggests reducing the total daily emissions of CAKE from approximately 40,000 to 22,500, which will help control the supply and promote deflation.

The proposal is designed to serve the best interests of CAKE holders by offering a clearer path forward. Initially, the veCAKE and Gauges Voting System aimed to lock CAKE tokens long-term, allowing holders to earn additional benefits from bribe revenue. This bribe revenue, generated by protocols seeking to incentivize liquidity for their pools, was distributed to veCAKE holders based on their voting power. With the new changes, the focus shifts towards optimizing token utility and ensuring a more sustainable and streamlined process.

In order to address the existing inefficiencies and improve the overall flexibility of the CAKE ecosystem, the community has proposed several key changes. First, the veCAKE and Gauges Voting System will be phased out in favor of a more streamlined and efficient emissions model. This shift aims to simplify the process while making it more adaptable to the evolving needs of the ecosystem. Additionally, the proposal includes the removal of CAKE staking, which will allow all staked CAKE to be unlocked immediately, providing users full access to their tokens without any penalties, regardless of the original staking duration. 

In addition, the revenue-sharing model will be retired, with fees that were previously allocated to revenue sharing from the 0.01% and 0.05% pools now redirected to the CAKE burn. In addition, CAKE emissions will be reduced from approximately 40,000 to 22,500 per day, supporting deflationary goals and controlling supply. 

Under the new system, emissions will no longer rely on the veCAKE framework. Instead, the PancakeSwap team will take direct control over emissions management. This new model will allocate rewards based on real-time data, prioritizing high-volume liquidity pools and improving liquidity efficiency by 30-40%, ultimately contributing to a more sustainable ecosystem.

Key Changes To CAKE Ecosystem If Proposal Is Approved And Implemented

If the proposal is approved, all veCAKE tokens will be unlocked and redeemable for CAKE at a 1:1 ratio via the PancakeSwap interface shortly after the proposal passes. A redemption page will be available for six months, giving users ample time to exchange their veCAKE for CAKE. After this period, users will still be able to withdraw their veCAKE through the legacy page or directly from the veCAKE contract. 

For veCAKE tokens linked to third-party managers such as CakePie, StakeDAO, or Astherus, users will need to wait for these partners to implement a withdrawal process. Addresses associated with these partners will be whitelisted, though PancakeSwap cannot directly process token withdrawals for third-party managers. Additionally, the current CAKE staking model, which includes staking periods ranging from one week to four years, will be retired. After the proposal passes, all staked CAKE will be unlocked immediately, providing users full access without penalties. The CAKE unstaking page will be available for six months, giving users plenty of time to unlock their staked CAKE.