A proposal to make PancakeSwap (CAKE) scarce isn’t preventing the token from collapsing, reading from the candlestick recorded on April 19.
CAKE Slides 25% From February Highs
CAKE is the utility token of PancakeSwap, a decentralized exchange running on the Binance Smart Chain (BSC). Like the rest of the cryptocurrency market, CAKE is under immense pressure, dropping four percent on the last trading day.
Notably, CAKE is also down 25% from early February. The token price is at March 2023 lows and looks likely to break the support line at around $3.45.
The bearish engulfing bar of April 19 is wide-ranging and with decent volumes. It is a continuation of losses of March 27 and a confirmation of sellers set in motion on February 9. On this day, the Uniswap community voted to deploy Uniswap v3 on BNB Chain, a smart contracting platform similar to Ethereum.
It also marked the first time Uniswap, a decentralized exchange, had been deployed to a high-activity platform like the BNB Chain. The contraction of CAKE prices was in response to the expected competition considering Uniswap’s dominance in Ethereum and decentralized finance (DeFi), judging from the protocol’s total value locked (TVL).
As an illustration, DeFiLlama data on April 19 shows that Uniswap had a TVL of $4.29 billion, more than $2 billion that of PancakeSwap. Despite initial fears, PancakeSwap remains the dominant DEX on the BNB Chain ecosystem, enabling the trading of BEP-20 tokens.
PancakeSwap’s Tokenomics Proposal
CAKE’s dump continues even after a proposal from the PancakeSwap community to make CAKE more deflationary. In the new proposal, CAKE would have an annual inflation rate of 3% and 5%, prioritizing shifting to a more sustainable staking model. Here, the goal is to have low staking inflation of CAKE, wherein the real yield is from PancakeSwap’s revenue. At the same time, the goal is to create a structure that favors long-term CAKE staking.
Breaking down details, staking allocation per block will drop from 6.65 CAKE per block to a target of about 0.35 – 1 CAKE per block. At the same time, a system favoring long-term stakers will see CAKE holders who choose to tie their tokens for longer earn a bigger share of the platform’s revenue. CAKE stakers will be allocated 5% of trading fees generated from PancakeSwap v3.
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GM ev3ryone! The anticipated #PancakeSwapv3 is now LIVE on both BNB Chain and Ethereum!
Upgrade offers:
Lowest fees in the industry
Increased fee earnings for liquidity providers
New tools for seamless user experience
Read more : https://t.co/l7GQVxqVC3 pic.twitter.com/5G9TnFzxOb
— PancakeSwap
Voting on this proposal started on April 19, 4 PM UTC and ends on April 21, same time. The voting period is to allow for consensus. As of writing, 63% of all voters favor the proposal to make CAKE “ultrasound.” For this system to be implemented, it should receive majority support from the community.
