Proposal to Redirect Emissions for Ecosystem Growth

To enhance activity and growth across our upcoming products in the PancakeSwap Roadmap, the Kitchen proposes to redirect emissions from our Farms to a new allocation - Ecosystem Growth. Ecosystem Growth is proposed to replace the existing Multichain Warchest allocation.

Why This Matters:

Currently, we are emitting approximately 28,684 CAKE to Farms per day. By reallocating a portion of these emissions, we enhance our capacity to fund other products and initiatives, such as PancakeSwap v4 and other essential parts of our roadmap. Reclassifying Multichain Warchest as Ecosystem Growth will allow us to support initiatives beyond just chain expansions, which are important for our long-term growth.

Summary of Proposed Changes

1. Emission Reduction:

• Reduce current emissions to Farms by approximately 3,000 CAKE per day (a ~10% reduction), lowering the daily emission from 28,684 CAKE to 25,684 CAKE.
• This reduction will be implemented in two phases of 1,500 CAKE per day each to minimize the impact on APRs across pools and chains. If the proposal is approved, these changes will occur at the end of the upcoming veCAKE epochs, at the Kitchen's discretion.

2. Ecosystem Growth Allocation:

• The 3,000 CAKE per day will be redirected, to a new category called Ecosystem Growth. This allocation will accumulate over time, serving as a warchest to support various products and initiatives, such as PancakeSwap v4, expansion to new chains, and any other products that might need some incentives to bootstrap activity.
• Ecosystem Growth will replace the existing Multichain Warchest category, including the emissions that have accrued till date, and future emissions.

3. Emissions Status:

• Importantly, this proposal WILL NOT result in an overall increase in CAKE emissions. The total emission remains unchanged; we are simply redirecting existing resources to maximize their impact.

Decision-Making for Ecosystem Growth:

• The Kitchen proposes to have discretion in allocating the CAKE allocation within Ecosystem Growth, with the aim of increasing traction of various products and initiatives efficiently.
• Our aim is for these products to be self-sustaining i.e. CAKE burn generated being equal to or greater than the emissions directed toward them.
• As seen in our handling of the Multichain Warchest, we have been careful to only use what was necessary, currently still leaving ~0.2 CAKE per block unused out of the originally approved 1.25 CAKE per block (which was later reduced by 0.4 CAKE per block).
• With our efficient utilization of the Multichain Warchest emissions, we have maintained deflationary CAKE for 1 year while expanding strongly across 8 other chains: | | |:--------------:| | as of 30 September 2024 |

Chain	DEX Rank (by 7-day Volume)	7-day Volume	TVL
BNB Chain	1st	$5B	$1.5B
Arbitrum	3rd	$292M	$16M
Base	3rd	$163M	$8M
Ethereum	6th	$141M	$78M
ZKsync	2nd	$17M	$6M
Linea	3rd	$14M	$6M
Aptos	4th	$9M	$24M
Polygon zkEVM	2nd	$1.9M	$760k
opBNB	1st	$477K	$6M

Updated Tokenomics

This will be the updated Tokenomics structure for our Trading allocation, simplified into two distinct categories. Emissions to Multichain Farms are mostly controlled by our veCAKE voters every fortnight, while emissions to Ecosystem Growth are proposed to be used at the Kitchen’s discretion. The exact breakdown between the two categories is not shown as that might fluctuate depending on how we utilize the emissions.

PancakeSwap v4

For the first use of the Ecosystem Growth funds, we propose to earmark $250,000 and 0.05 CAKE / block to support the upcoming PancakeSwap v4 deployment.

Grant Program

• Hooks are a key part of PancakeSwap v4, which are add-ons that can be tagged to liquidity pools to enhance their functionality. We need to leverage the broader developer ecosystem to help design innovative and effective hooks for PancakeSwap v4.
• As such, we’d like to set up a Hooks Grant Program with a total prize pool of $250,000 to incentivize developers to build PancakeSwap v4 hooks. The Kitchen will create Requests for Proposals for various Hook categories and invite developers to apply. We will also have an open category where we fund effective and useful hook ideas.
• This $250,000 will be sourced from funds that have already accrued to the Multichain Warchest allocation. We ask for discretion in the exact implementation of the program. All funds will go towards rewarding developers on an as-needed basis. Unused funds will remain in the newly labeled Ecosystem Growth allocation for future use.

Emission Program

• Separately, we ask for 0.05 CAKE / block for an ongoing Emissions Program to reward the most profitable hooks on PancakeSwap v4.
• We understand hook developers may face difficulty in attracting liquidity despite having built a great hook. Hence, we propose to reward hooks that have displayed good market traction with CAKE emissions to direct even more liquidity towards them.
• Hooks that come through our Grant Program will be rewarded with some CAKE emissions to start. However, to continue receiving CAKE emissions, hooks will need to regularly generate high revenue, which will lead to more CAKE burn.
• The Kitchen requests for discretion in the exact implementation of the Emission Program as well. Unused emission will remain in the Ecosystem Growth allocation.

Conclusion

We believe that these proposed changes will significantly enhance our ability to support ecosystem growth via various new products and initiatives, leading to sustainable growth and improved user experience. If the community supports this proposal, we will implement these changes and redirect a portion of CAKE emissions to foster innovation and development within our ecosystem.

We appreciate your consideration and look forward to your feedback.