Proposal to Launch veCAKE on zkSync

Proposal to Launch veCAKE Gauges System on zkSync

As mentioned in our initial veCAKE proposal, we are launching veCAKE in phases, and are excited to share the next deployment - zkSync!

Recap: Vote-Escrowed CAKE Overview

As a quick summary, here’s quick recap of veCAKE, with the following utilities:

1️⃣ Direct Gauge Emissions - veCAKE holders will be able to directly impact how CAKE emissions are distributed within each pool, rewarding specific liquidity pools and projects. Rewards and gauge weights are determined through voting power, which will be determined by veCAKE balance.

2️⃣ Enable 3rd Party Protocols through Delegation - external protocols, such as veCAKE managers and bribe markets, will compete to earn a share of veCAKE voting rights in order to direct CAKE rewards and receive voting incentives for doing so. veCAKE holders can opt to delegate their CAKE to automate their voting and potentially earn boosted rewards. However, direct participation is highly encouraged!

Inclusion of zkSync in veCAKE Gauges System

Currently, the total rewards available for farm emissions on BNB Chain, Ethereum, and Arbitrum is ~0.99 CAKE/block.

With the inclusion of zkSync, the current Trading Allocation emission of 0.0131 CAKE per block directed towards zkSync Farms will be added to veCAKE emissions.

As part of the voting gauges design, the Kitchen proposes to retain a 40% voting share of total veCAKE votes currently allocated to the gauges system to vote for core pairs, such as ETH-USDC on zkSync.

There are two key reasons:

• To ensure a smooth transition for liquidity providers from farms managed by the Kitchen to farms which are managed by veCAKE voting, without affecting their APRs significantly in the initial rollout
• To ensure that core liquidity pools continue to receive sufficient incentives, so that liquidity depth and fee generation are not significantly affected. This will ensure the continuity of CAKE burns from trading fees, which drives deflationary CAKE tokenomics.

In the initial rollout phase, the Kitchen will distribute these votes based on the following principles:

• Ensuring core liquidity pools are provided a competitive return on their LP positions
• Ensuring that existing Syrup Pool partner arrangements are met before migrating them fully to the veCAKE gauge voting system
• Ensuring that any of the smaller farms which did not receive any votes after the launch of veCAKE will receive at least some allocation in the initial rollout, capped at their current emission levels.

With the proposed vote allocation, the Kitchen will distribute its share of votes at the end of each voting epoch after all voting participants have voted.

In other words, the Kitchen will apply its voting share (at maximum, translating to ~0.4 CAKE/block) as far as needed to smoothen out any possible abrupt changes in the Farms, while allowing veCAKE participants to get used to the gauge voting mechanism.

If the gauge voting results will not affect any core liquidity pools and trading volumes significantly, the Kitchen will abstain from voting in that particular voting epoch or vote in alignment with existing votes.

Over time, the Kitchen aims to reduce the portion of CAKE emissions directly managed by the Kitchen as all veCAKE participants become familiar with the process.

More information can be found in our docs.

Proposal Details

If this proposal closes with the community in favor of these recommendations, the proposed changes will be enacted and veCAKE launched shortly on zkSync after this vote concludes.