PancakeSwap just announced a significant decrease in the amount of its CAKE token supply, after receiving overwhelming support from its community.
This new development is expected to strengthen CAKE's deflationary mechanism, value, and scarcity
Let's see the details about this, and how well CAKE is set to perform in the coming bull run.
PancakeSwap collated the results of a governance vote on December 28, 2023, to decide whether to burn 300 million CAKE tokens by reducing the number of tokens from 750 million to 450 million.
Just 2.2% of votes were cast against the "CAKE Supply Cut" plan, with 97.8% of the total votes being in support.
The PancakeSwap team originally proposed the CAKE Supply Cut, claiming that the token's actual value and potential were not being reflected in its too-large current supply.
Furthermore, they claimed that the decrease will contribute to the creation of "ultrasound CAKE," a community-created name for a token that is more deflationary than Ethereum.
Additionally, the company clarified that since the burned tokens would come from the team's allocation and the treasury, the supply decrease would not impact current CAKE holders.
Given that there are currently 388 million CAKE in circulation, the proposed maximum of 450 million CAKE would leave 62 million CAKE available for use at a later date.
PancakeSwap has made changes to its tokenomics and emissions before and has even added several features over the last 12 months to increase CAKE's deflation and investor appeal.
One of the most notable changes Pancake Swap has made is the vote-escrowed model.
The vote escrowed model allows CAKE holders to temporarily lock their tokens in return for veCAKE, a non-transferable token that gives investors staking incentives and voting power.
Additionally, PancakeSwap offers a repurchase and burn program that buys and burns CAKE tokens using a portion of the trading fees collected on the site. Every week, the buyback and burn program is triggered. The volume and activity on the platform determine how much CAKE is burnt.
According to CoinMarketCap, CAKE is trading at $3.6 at the time of writing and is up by about 35% over the last seven days.
CAKE's market cap now sits at around $884.7 million, making it the 42nd largest cryptocurrency in the world.
According to the chart above from TradingView, CAKE broke through the $1.95 resistance in early November and consolidated for a while above this zone.
However, its bullishness only came into effect in late December, as the cryptocurrency rallied by 90% to where it is now consolidating around the $3.4 – $3.5 resistance.
CoinMarketCap data shows that CAKE is about 91% down from its all-time high of $44, leading us to notice the sharp change in price action on CAKE's weekly chart, as shown above.
This shows that the CAKE bulls are starting to wake up and that a CAKE bull run may have even already started.
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