CAKE: Token of Decentralised Exchange PancakeSwap Falls by 20%, and Rewards Are Diminished

In the past week, CAKE, the native token of BNB Chain's primary decentralised exchange PancakeSwap, has dropped by 20%. The reason? A significant modification to how protocol users receive rewards for staking their tokens. A proposal that reduces CAKE's inflation rate to approximately 4% from its previous rate of over 20% has been approved. This means that token stakers will receive significantly diminished rewards.

However, the proposition is technically advantageous for the ecosystem because it slows the rate of token emission. However, consumers are finding it challenging to disregard the immediate impact on their returns. This week, the proposal was approved by a significant majority in a vote. In addition, the implementation has resulted in a 94% decrease in the rate of CAKE emissions, effectively halting the emission rate.

Why was the proposal brought forward?

The primary cause was defects in the project's tokenomics. At its previous emission rate, the project required frequent infusions of new funds in order to maintain its price. By minimising emissions, the future of the token will be protected at the expense of short-term stake gains.

As for BNB Chain itself, it is presently the third-ranked blockchain by total value locked (TVL), largely due to PancakeSwap. Its TVL is approximately $4.62 billion, with PancakeSwap contributing approximately $2.08 billion. Among BNB Chain users, CAKE is also one of the most frequently held tokens. Consequently, further shifts in sentiment regarding the token and PancakeSwap may have implications for the chain as a whole.

(Relating to CAKE)

CAKE is a cryptocurrency that functions as the native token of the Binance BNBChain-based decentralised exchange PancakeSwap. PancakeSwap is a well-known automated market maker (AMM) that enables users to trade cryptocurrencies without a central authority. The CAKE token plays a vital role in the PancakeSwap ecosystem, as it is used for a variety of functions, such as liquidity provision, governance, and fee payment. CAKE holders can stake their tokens in liquidity pools to receive rewards and vote on proposals to participate in the governance of the platform. CAKE has a market cap of several billion dollars and is one of the most prominent tokens on BNB Chain as of April 2023.