New Deflationary System

In the case of the CAKE token, all transactions by SWAPS use a fee of 0.5% that are intended for treasury, liquidity providers and burning. In CAKE the token burn is 0.0575%.

Knowing the above, I propose something different, but keeping and adding the above, and that is to use the power of compound interest to store value both in CAKE-BNB, and even other tokens that are neither BNB nor CAKE, this proposal can be extended to all liquidity pools to make all tokens deflationary. But first we will briefly talk about the compound interest applied in my proposal to see how it would be implemented.

Liquidity holders earn 0.17% of CAKE-BNB fees, the more Daily Trading Volume you have, the larger pool will be the reward for liquidity providers, if a user's share is 0.1% and the daily volume was $63,000, I earn $0.1071, now let's assume that you added liquidity and your weight in the pool is 50%, if the volume is $63,000 again you will have earned $53.55

That being said, we will add the compound interest to the liquidity holder who theoretically owns 0.1%=54,000 value in CAKE in the CAKE-BNB pool, we will assume that the daily volume gives liquidity providers profit of a constant 1% for 5, 10, 100 or 1000 years exaggerating, and no one withdraws their participation in this example.

We are only focusing on the liquidity provider you name as Wallet X.

(in year 0 and 1 I have a miscalculation in supplier liquidity, so I left it like that)

As you will see in the image summers, an initial capital of the wallet x of $54,000 and in 1,000 years it would have accumulated a total of $2,423,759, it will have earned $2,369,759 in 1.000 years, half of the LP would be CAKE and BNB. Here we will not calculate the value locked in CAKE, not in USD.

With the example above we only used 0.38% in annual fees as that is the current APR on fees. But the greater the volume, the greater the amount of blocked tokes of both CAKE and BNB.

My proposal is to create a new DEADWALLET or an existing one, which accumulates LP tokes. This brings several benefits:

1- The Pool created will always have liquidity, even if said liquidity is Minimum, in case the pool does not have liquidity providers there will always be the DeadWallet that will collect the funds so that all users can exchange, even if the impact price is extremely high and no longer have liquidity providers.

2- The above is an insurance built by the exchanges made from the same community. A short example, let’s say what happened with Luna. Unable to execute SWAPS on some DEXs because providers withdrew their LP tokens.(extreme panic)

3- Instead of destroying the market capital or burning the tokens, both tokens are added to all liquidity pools and the supply and demand of both tokens would increase.

4- BNB and CAKE would in this case be the most deflationary currency in the crypto ecosystem by protocol without having to burn it. It will only be trapped in the smart contract with the token that is linked in the pool.

One way to get funds from each Pool is from the 0.17% fee paid to liquidity providers. You can raise that fee to 0.03% or 0.17% to charge 0.03%. Said charge could be collected at the beginning of all the pools, this for a short period of time while DeadWallet is gaining strength to accumulate both tokes of a pair. It could be 1 or 2 months.

The second way to accumulate funds is through donations from the community itself. The public address of the DeadWallet is shared and the community donates their LP tokes to that address.

The third way is to implement the previous 2. If the same community wants the token to be more inflationary and sees that I don’t accumulate enough LP tokens in the accumulation period (1 or 2 months) the same community can donate their own LP tokens to boost deflation. An example would be that I donate my LP valued at 10 CAKE and another person donates 100 CAKE, this would be voluntary.

The fourth way to get the funds would be to allocate 1 week of the burning of CAKE to the most VOTED pair. By the community, and it can be the most voted pool every 2 or 3 months.

The fifth way, it can be all of the above

Finally, this DeadWallet will never be able to farm, since it will only be possible to send more tokes, it will not be possible to interact with that wallet.

https://medium.com/@InvirteEnJuan/new-deflationary-system-6b6977183e29