Pancake Swap’s New Proposition Has Caused a 21% Increase in Pancake Prices Within Hours

The Pancake Swap community has suggested that the native should reduce the total supply of CAKE. On December 21, a newly announced proposal discussion argued that the asset's total supply limit should be reduced from 750 million to 450 million.

Given CAKE's consistent price reduction over the past few months and the focus on coming to Ultrasound KK, this proposal aims to establish a maximum of 450 million tokens. Current circulation is around 388 million.

The “Kitchen” team responsible for managing the Pancake Swap platform, is confident that this reduced cap will be enough to capture market share across all chains and sustain the veCAKE model.

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Correction factor

The Pancake Swap community explained that there are several strong reasons to implement this fix.

The proposal states that when PancakeSwap launches in 2021, an initial token offering is set to provide sufficient incentives to kick-start the ecosystem. With nearly three years of growth, the team now has a more accurate estimate of the incentives needed to achieve its growth goals.

Additionally, the total supply serves as a critical metric to understand the impact of token burns and future releases. Reducing this number is necessary to get an ultrasonic cake and escape PancakeSwap's hyperinflationary Tokonomics model.

In addition, PancakeSwap considers it reasonable to implement the new 450 million CAKE capital, ensuring sufficient supply for future expansion, such as gaining market share on Ethereum, and Ethereum Layer 2s, and pursuing new initiatives such as position managers.

Following the new proposal, CAKE rose from $2.22 to $2.70, a 21% increase in Thursday's hours. The price has since stabilized around $2.52.

Token burning

The new development comes just days after PancakeSwap announced that it has burned more than nine million CAKE tokens. The move – aimed at eliminating indirect supply – destroyed more than $19 million worth of CAKE tokens.

As of December 5, 2023, Pancake Swap has successfully burned 0.089% of the total supply of CAKE for November 2023. This marks the third consecutive month of total supply of CAKE, with a net supply of -712,667 CAKE in November 2023.