There have been recent negative developments for the decentralized exchange (DEX) project powered by the Binance network. PancakeSwap’s CAKE token has dropped over 20 percent after proposed changes to the token economy. Thus, it has experienced a significant loss in value in recent days. Here are the details…
Binance-backed PancakeSwap is in crisis
Recently, PancakeSwap’s token CAKE has been affected by the token economy, which has not been well received by the community. CAKE price saw a significant drop in value by over 20 percent after the proposed changes. PancakeSwap, the leading DEX on BNB Chain, had proposed adjusting the CAKE token supply to reduce inflation from 20 percent to just 3-5 percent.
However, this offer also includes a reduction of up to 68 percent in rewards to traders and stakers. This move has caused many users to abandon DEX. This led to a significant drop in the price of the CAKE token, which is currently trading at $2.66. The vote on the proposal saw a split of 41.63 percent to 56.42 percent.
According to PancakeSwap, the project will only implement the plan if more than 50 percent of users agree. With over 1.5 million users, PancakeSwap is BNB Chain’s leading DEX. As Cryptokoin.com reported, it has recently released the V3 version with new unique features. In May 2022, the platform proposed to limit the supply of CAKE tokens to 750 million instead of an unlimited supply.
Will the supply of CAKE decrease?
There are currently around 193 million CAKE tokens in circulation. If the new proposal is accepted, the CAKE token supply is expected to decrease significantly in the future. This offer is an effort to contain inflation and stabilize the value of the CAKE token. However, it has not been well received by the community due to the reduction in rewards for traders and stakers.
As a result, the leading DEX on BNB Chain had proposed to adjust the CAKE token supply, reducing inflation from 20 percent to 3-5 percent. However, this would also result in reduced rewards to traders and stakers by up to 68 percent. This caused many users to abandon DEX. Voting on the proposal was divided. PancakeSwap stated that they will only implement the plan if more than 50 percent of users agree. Despite this setback, PancakeSwap remains the leading DEX on BNB Chain with over 1.5 million users. It has recently released the V3 version with new features.
PancakeSwap has yet to announce the next steps for the proposal. However, according to some, they will likely continue to work on a solution that addresses the concerns of the community while at the same time achieving their goals of reducing inflation and stabilizing the value of the CAKE token. We will see how this offer will affect the future of PancakeSwap and the value of the CAKE token.
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