PancakeSwap Announces CAKE Tokenomics 3.0 Aiming 4% Annual Deflation

PancakeSwap has officially announced the implementation of CAKE Tokenomics 3.0, marking a significant shift aimed at enhancing sustainability and reducing inflation. This new model is scheduled to commence on April 23, 2025, and will focus on achieving a 4% annual deflation rate. The plan includes the burning of millions of CAKE tokens to support price stability. Chef Philip, a key figure in the project, emphasized the importance of this transition, stating that CAKE Tokenomics 3.0 is designed to defend the true value of CAKE and protect its holders.

PancakeSwap aims to enhance its ecosystem through three significant adjustments in CAKE Tokenomics 3.0. These include achieving a 4% annual deflation rate, eliminating complex features like veCAKE, and reducing CAKE emissions to ensure a more sustainable project. The specific changes involve the retirement of CAKE staking, veCAKE, Gauges Voting, Revenue Sharing, and Farm Boosting. This means users will no longer need to lock tokens for benefits, simplifying the user experience by unlocking all previously locked CAKE and veCAKE. PancakeSwap plans to implement a token burn process to eliminate around 5.3 million CAKE each year, supporting the targeted deflation rate. Additionally, initial daily CAKE emissions will decrease from 29,000 to 20,000 tokens, followed by a further drop to 14,500. Users will have a six-month window from April 23, 2025, to withdraw any locked CAKE tokens.

The introduction of CAKE Tokenomics 3.0 has sparked a robust discussion among developers and community members regarding its long-term benefits. Chef Philip emphasized that CAKE Tokenomics 3.0 defends the true value of CAKE and protects its holders by strengthening long-term fundamentals, such as aggressively cutting emissions to accelerate deflation and sustainably grow value. 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. Cakepie articulated in a statement that sunsetting veCAKE would be devastating for their ecosystem, as their entire structure is built 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.

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. 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.