One of the unique things about the crypto industry is the fact that many major projects operate as decentralized autonomous organizations (DAOs). As such, their users get a say in the decisions made by these organizations and can have their voices heard.
A recent example of this was with the decentralized crypto exchange PancakeSwap. The DEX recently put forward a proposal to reduce the supply of the popular CAKE token by 300 million units. This was a resounding success in the community and was quickly approved.
PancakeSwap Token Supply to Be Reduced
In a statement released to the media, the management of PancakeSwap said that its motivation for reducing the token supply was to improve its performance. Reducing its maximum supply, it says, will help CAKE to, “gain market share across all chains and sustain the veCAKE model.
The DEX proposed that the maximum supply of CAKE be cut from 750 million to 450 million. The proposal went live on December 28, 2023, and saw a massive response from the PancakeSwap community, with over 70,000 votes cast in favor of the decision. While voting has not officially closed yet, the proposal has essentially passed.
As per the details of the proposal, this supply reduction will take place on January 4, 2024, and this promises a plethora of benefits for the token itself and the community. PankcakeSwap has explained that progression towards ultrasound cake is its biggest priority at the moment.
Token supply, it says, is important to understanding the impact of token burns and future emissions. On top of this, PancakeSwap is looking to move away from a hyperinflationary tokenomics model, and seeing as CAKE has been experiencing deflation for the last few months, now is the right time to reduce its supply.
In response to this decision, the market value of CAKE has seen positive movements. It had ended December 27 trading at $3.57 per token but as of this article, is trading at $3.75. Some even speculate that it could reach the $4 mark at some point and this could bode well for the token long term. Naturally, as the news of the tokens’ supply being reduced next week was made public, many investors scrambled to get their hands on it.
This increase in demand has led to the price of the token spiking and it could possibly ride this high up until the supply reduction takes place. So far, PancakeSwap seems to have had a success on its hands. The proposal was wildly popular, with 92.60% of respondents supporting it. And now, the CAKE token has benefited from the news in terms of its market price. Once the reduction does take place, it will be interesting to see the long-term effects.
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