Proposal to Retain Stablecoin Fees From Stablecoin Pools

Background

Under PancakeSwap’s current revenue flow, protocol fees generated from trading activities across the platform are partially accrued to the Treasury as protocol revenue. Today, all Treasury-bound fees, regardless of their source, are first converted into CAKE. When the protocol needs to cover operating expenses such as Chefs’ salaries or external service provider fees (typically denominated in USD), the Treasury must then sell CAKE back into stablecoins to meet these obligations. This workflow introduces two key inefficiencies:

• CAKE price volatility exposes the Treasury to unnecessary market risk when converting assets to meet predictable USD-denominated expenses.
• Lack of stablecoin reserves limits the protocol’s ability to discretionally buy back CAKE during favorable market conditions.

Problem Statement

Converting all protocol revenue into CAKE and later selling a portion back into stablecoins creates:

• Operational friction
• Exposure to short-term price volatility
• Reduced flexibility in Treasury management This is especially inefficient for fees that are already generated in stablecoins, as it introduces an unnecessary round-trip conversion (stable -> CAKE -> stable).

Proposal Overview

The Kitchen proposes that all Treasury-bound protocol fees arising from major stablecoin pools on PancakeSwap be retained in stablecoins, instead of being converted into CAKE. This change would apply across all AMM implementations, including v2, v3, StableSwap, and Infinity. Based on rough estimates, fees from these stablecoin pools accounted for approximately 29% of total Treasury revenue over the past year.

Rationale

This proposal aims to:

• Improve Treasury operational efficiency
• Reduce exposure to CAKE price volatility for routine expenses
• Establish a stablecoin reserve for protocol operations
• Enable discretionary CAKE buybacks when market conditions are favorable Importantly, this proposal does not change the economic intent of CAKE buybacks, nor does it introduce sustained sell pressure on CAKE. Since a portion of CAKE acquired by the Treasury must eventually be sold to fund USD-denominated expenses, retaining stablecoin fees upfront has no material net impact on CAKE buy or sell pressure over time. It simply removes unnecessary conversions and gives the protocol more flexibility in execution.

Adjustment Details

With the above in mind, we propose the following adjustments to Treasury fee handling:

• Current Practice: All protocol fees are converted into CAKE before accruing to Treasury
• Proposed Practice: Treasury-bound protocol fees generated from major stablecoin pools are retained in stablecoins, while fees from non-stablecoin pools continue to be converted into CAKE. For a start, this will only include stablecoin pools consisting of any one of the following tokens: USDT, USDC, USD1, and U. This may be expanded to other major stablecoins that arise in the future
• Scope: Applies to PancakeSwap v2, v3, StableSwap, and Infinity
• Estimated Impact: ~29% of annual Treasury revenue would remain in stablecoins, based on historical data

Implementation Steps

• Update Treasury fee routing logic to bypass CAKE conversion for stablecoin pool fees within the next few weeks
• Maintain existing CAKE conversion behavior for non-stablecoin pools

Final Notes

This proposal is an administrative and Treasury management improvement, not a change in PancakeSwap’s long-term tokenomics direction. It strengthens the protocol’s financial resilience while preserving flexibility around CAKE buybacks and emissions.