PancakeSwap’s CAKE Tokenomics 3.0 Proposes Deflationary Changes Amid Community Debate and Controversy

• PancakeSwap has officially announced the implementation of CAKE Tokenomics 3.0, signaling a major shift aimed at increasing sustainability and reducing inflation.

• This new model, set to roll out on April 23, 2025, focuses on a 4% annual deflation target and the burning of millions of CAKE tokens to support price stability.

• Notably, Chef Philip emphasized the importance of this transition, stating, “CAKE Tokenomics 3.0 defends true value and protects CAKE holders.”

PancakeSwap’s CAKE Tokenomics 3.0 rolls out April 23, 2025, focusing on sustainability with a 4% deflation rate and major changes, including token burning.

What Are the Key Changes in CAKE Tokenomics 3.0?

PancakeSwap aims to enhance its ecosystem through three significant adjustments in CAKE Tokenomics 3.0: achieving a 4% annual deflation rate, eliminating complex features like veCAKE, and cutting down CAKE emissions to ensure a more sustainable project.

Here are the specific changes:

• Retirement of CAKE Staking, veCAKE, Gauges Voting, Revenue Sharing, and Farm Boosting: The cancellation of the CAKE staking and veCAKE mechanisms means users will no longer need to lock tokens for benefits. This strategy intends to simplify the user experience by unlocking all previously locked CAKE and veCAKE.
• Burn Mechanism to Reduce Circulating Supply: PancakeSwap plans to implement a token burn process rather than distributing trading fees among users. This measure is expected to eliminate around 5.3 million CAKE each year to support the targeted deflation rate.
• Phased Reduction in CAKE Emissions: Initial daily CAKE emissions will decrease from 29,000 to 20,000 tokens, followed by a further drop to 14,500.

Users will be granted a six-month window from April 23, 2025, to withdraw any locked CAKE tokens.

The Debate Around CAKE 3.0

The introduction of CAKE Tokenomics 3.0 has sparked a robust discussion among developers and community members regarding its long-term benefits.

“At its core, CAKE Tokenomics 3.0 defends true value and protects CAKE holders by strengthening long-term fundamentals—such as aggressively cutting emissions to accelerate deflation and sustainably grow value,” emphasized Chef Philip.

However, significant opposition exists. The Cakepie DAO, representing a strong faction of veCAKE holders, expressed serious concerns through social media platforms. They criticized the removal of veCAKE as a lack of transparency that could adversely affect initiatives built around this system.

This incident underscores the division within the community about how PancakeSwap is navigating the complex balance between stakeholder interests and deflationary practices.

“Sunsetting veCAKE would be devastating for Cakepie and for every project built on long-term alignment with PancakeSwap. Our entire ecosystem is structured around veCAKE, with millions of CAKE locked for four years as a clear show of commitment. Removing veCAKE would erase that commitment overnight and undermine the trust and efforts of all builders who believed in PancakeSwap’s vision,” Cakepie articulated in a statement.

In response to the backlash, PancakeSwap proposed a $1.5 million compensation package in CAKE tokens for Cakepie (CKP) holders, contingent on the acceptance of a 1:1 swap from mCAKE (Cakepie’s CAKE derivative) to CAKE.

As of now, Cakepie is deliberating whether to endorse this proposal.

Currently, CAKE is trading at approximately $1.97, reflecting a 17% increase since April 8, the day PancakeSwap first revealed the Tokenomics 3.0 initiative.

Furthermore, data from DeFiLlama indicates PancakeSwap’s 24-hour trading volume has exceeded $1 billion, surpassing Uniswap for the first time.

According to a report by COINOTAG, PancakeSwap commands over 90% of the DEX market share on BNB Chain, revealing the integral connection between PancakeSwap and the broader BNB ecosystem.

Conclusion

The rollout of CAKE Tokenomics 3.0 represents a pivotal transformation aimed at fostering a sustainable future for PancakeSwap. While the community grapples with the implications of these changes, including the contentious removal of veCAKE, there is a shared understanding of a pressing need for sustainable practices. Both stakeholders and developers will continue to monitor the outcomes of this ambitious transition closely.