PancakeSwap, the largest Decentralized Finance (DeFi) project on top of the Binance Smart Chain (BSC), is searching for new ways to limit its total token supply. This comes after an entire year in which the inflationary policy of many AMM protocols on top of different blockchains has pushed the price of these tokens lower and lower over time.
PancakeSwap Wants to Limit Its Circulating Supply
PancakeSwap is searching for new ways to protect itself from further depreciation. The CAKE token has been in a bear trend since May 2021 and it has not been able to recover. After reaching an all-time high of over $40 per coin, the digital currency started to move lower and it is now being traded at close to $4.20. It is also worth pointing out that the recent sell-off in the crypto market has not been positive for CAKE holders.
There has been a new proposal that would limit the total supply of CAKE tokens to 750 million. This could end one of the main pain points of these DeFi protocols that have been inflating their token supply in order to attract new investors and users in the cryptocurrency market. This would be a good measure considering that its price went from over $40 to almost $4 in just months.
In just a period of 24 hours, 98.8% of the voters supported the proposal, showing a strong community consensus when it comes to the total supply of CAKE. According to the proposal, this would incentivize the sustainability of the ecosystem, a stronger community and a small effective circulating supply.
At the time of writing, there is a circulating supply of 296 million CAKE, according to data shared by CoinGecko. Let’s not forget that PancakeSwap is the largest project running on top of the Binance Smart Chain, the blockchain network created by Binance to compete against Ethereum (ETH).
Over the course of the last months, there have been many other protocols following the same tokenomics as PancakeSwap. However, not all of them are planning a new business plan. Therefore, we might see some of these DeFi protocols change the course of their tokenomics in the future as well. Price depreciation is something that we have seen over the last few years in many of these types of projects.
It is also worth taking into consideration that there could be other changes implemented on top of PancakeSwap and the CAKE token. We are talking about new use cases for this virtual currency and incentives for those users that decide to lock their CAKE tokens. This is expected to help the token behave better in the market and have a lower impact in terms of currency depreciation against both BNB and USDT.
Should PancakeSwap’s decision to introduce a maximum cap to its token supply end up creating more incentives for investors to enter the PancakeSwap ecosystem, other projects could follow the same steps in the coming months.