Key Highlights of the Tokenomics Proposal:

• Deflationary Goal: We aim for a ~4% annual deflation rate and target a ~20% reduction in the CAKE supply by 2030.
• Retirement of the veCAKE and Gauges Voting System: The veCAKE and Gauges Voting system will be phased out for a more straightforward and efficient emissions model.
• Retirement of CAKE Staking: All staked CAKE will be unlocked immediately, giving users full access to their CAKE without penalties, regardless of the original staking period.
• Retirement of Revenue Sharing: Fees previously allocated to revenue sharing through staking from the 0.01% and 0.05% v3 pools will be redirected to the CAKE burn.
• Reducing Emissions: Total CAKE emissions per day will be cut from ~40,000 CAKE to 22,500 CAKE, helping to reduce the supply and support deflation.

This proposal aims to streamline the PancakeSwap ecosystem by optimizing CAKE efficiency, enhancing flexibility, and optimizing returns for liquidity providers, all while supporting sustainable growth.

Proposal to Reinvent PancakeSwap's CAKE Tokenomics

PancakeSwap must work towards the best interest of CAKE holders and this proposal offers a path forward.

When the veCAKE and Gauges Voting system launched, the goals were simple:

• Lock CAKE for the long-term to drive additional benefits to CAKE lockers through bribe revenue
• Bribe revenue is generated by protocols wishing to incentivize liquidity for their pools
• veCAKE holders vote to receive the bribe, and CAKE emissions are allocated to trading pools depending on their voting share

However, community feedback has highlighted several concerns:

• The tokenomics model is too complex, and the community desires a more straightforward system.
• The benefits of veCAKE don't justify the time, complexity, and risk involved.
• The bribing system allocates rewards inefficiently, over-rewarding low-volume pools while high-volume pools receive fewer rewards. For example, low-volume pools received a disproportionate share of rewards—highly bribed pools received over 40% of total emissions, whereas they contributed less than 2% of the CAKE burned.

Addressing the Issues: A More Efficient Emissions Model

To address these inefficiencies and improve the flexibility of the CAKE ecosystem, we propose the following changes:

• Retirement of the veCAKE and Gauges Voting System: We propose to retire the veCAKE and Gauges Voting System in favor of a more straightforward and efficient emissions model. This will simplify the process and make it more adaptable to the ecosystem's needs.
• Retirement of CAKE Staking: All staked CAKE will be unlocked immediately, giving users full access to their CAKE without penalties, regardless of the original staking period.
• Retirement of Revenue Sharing: Fees previously allocated to revenue sharing from the 0.01% and 0.05% pools will be redirected to the CAKE burn.
• Reducing Emissions: Total CAKE emissions will be cut from ~40,000 CAKE to 22,500 CAKE, helping to reduce the supply and support deflation.
• Direct Emissions Management: Instead of relying on the veCAKE system, the PancakeSwap team will directly manage emissions. This new approach will allocate rewards based on real-time data and prioritize high-volume liquidity pools, improving liquidity efficiency by 30-40% and contributing to a more sustainable ecosystem.

Important Note:

• The majority of APRs on farms will not be affected. Almost all LPs will continue to earn similar levels of return as they would have prior to these changes. These proposed changes impact less than 40 pools out of several hundred.

What Will Change if the Proposal is Passed and Implemented?

1. Unlocking all veCAKE and retirement of the CAKE Staking Model:

• All veCAKE will be unlocked and redeemable for CAKE on a 1:1 basis via the PancakeSwap interface shortly after if this proposal passes. The redemption page will remain available for 6 months, giving users sufficient time to exchange their veCAKE for CAKE. This gives users full access to their CAKE without penalties, regardless of the original staking period.
• After this 6-month period users can still withdraw their veCAKE through the legacy page or directly from the veCAKE contract.
• For veCAKE linked to veCAKE managers (e.g., CakePie, StakeDAO, Aster), users must wait for the partner veCAKE managers to implement a withdrawal process. We will whitelist addresses associated with those partners, but please note that we cannot directly process partner token withdrawals.

Important Note:

• Rewards will only continue to accrue until one epoch after this proposal passes, ending on May 6, 2025. After this epoch, no further reward will be accumulated from the veCAKE pool APR and bribe APR from veCAKE holdings. All bribes and votes from April 9th - April 23rd will be the final round of gauge voting, and related emissions go into effect until May 6th. Any rewards accrued before this epoch will remain unaffected, but no additional rewards will be generated beyond that date.
• Farm yield boosting will also be retired from position managers, syrup pools, and farming.
• This shift aligns with our vision of a decentralized financial system where users can participate and exit freely, without the burden of long-term commitments. By removing staking restrictions, CAKE will become more flexible, empowering users to use them for governance, liquidity provision, or other activities within the ecosystem.

2. Retirement of the Revenue Sharing Model

• The CAKE revenue-sharing model will be discontinued. The 5% of LP fees previously allocated to revenue sharing (from the 0.01% and 0.05% pools) will now be directed toward the burn mechanism.
• This will increase the burn rate for these pools from 10% to 15%. Since the 0.01% and 0.05% pools on CAKE v3 account for a significant portion of the overall trading volume, this change will accelerate CAKE deflation.

Important Note:

• Revenue Sharing rewards will only continue to accrue until one epoch after this proposal passes, ending on May 6, 2025. After this date, no further rewards will be accumulated from the revenue-sharing pool from CAKE staking. Any rewards accrued before this date will remain unaffected, but no additional rewards will be generated beyond that date.

3. Reducing Daily Emissions to Drive Deflation:

• We propose reducing daily emissions to further drive deflation and optimize the CAKE ecosystem. Specifically, we plan to decrease total emissions from ~40,000 CAKE to ~22,250 CAKE per day, cutting annual emissions from 14.6 million to 8.1 million CAKE.
• This reduction will result in a more efficient burn mechanism, permanently removing CAKE from circulation. This will contribute to an annual deflation rate of ~4% and reduce the total CAKE supply by ~20% over the next five years.

Implementation Plan:

• The daily emissions to farms are approximately 29,000 CAKE or 10.5 million CAKE per year. We expect a more targeted allocation of emissions by phasing out the current bribing system and transitioning direct emissions to high-volume, high-growth liquidity pools. These emissions will be based on real-time market data, ensuring liquidity is directed to the most productive pools
• Phase 1: Immediately after the launch of the veCAKE redemption page, daily farm emissions will be reduced from ~29,000 CAKE to ~20,000 CAKE and the Ecosystem Growth fund will be reduced by 50% from ~6,500 CAKE to 3,250 CAKE, and these savings will be directed to the burn.
• Phase 2: Over the following 4 weeks, daily farm emissions will be further decreased from ~20,000 CAKE to ~14,500 CAKE, representing a 50% total reduction. These changes translate to ~6.5 million CAKE per year that will be burned, permanently removing these CAKE from the market. Again, for the majority of LPs, their current APRs will not be impacted.
• Phase 3: The above represents a 17,750 CAKE per day reduction (~44% of emissions). After this, the team will further streamline emissions and focus on high-value liquidity pools that help in reducing the number of CAKE entering the market while enhancing the overall burn rate, supporting the long-term sustainability of the CAKE ecosystem and creating more value for our community.

Simplified CAKE Utility Model We envision the following outcomes that will drive the evolution of CAKE’s utility and the value proposition for our community:

1. IFO Participation Made Easier: Previously, users had to stake CAKE on PancakeSwap to participate in Initial Farm Offerings (IFOs). Going forward, we will remove this requirement. After the success of five TGE events with Binance Wallet, we aim to open up IFO participation to anyone with CAKE in their non-custodial wallet. There will be no need to lock them up beforehand—simply use your CAKE to subscribe to IFOs. This change reduces the barrier to entry and encourages more users to join the CAKE ecosystem.

2. TGE Event Participation: Following the success of co-hosting five TGE events with Binance Wallet, CAKE will soon be usable to subscribe to Token Generation Events (TGEs) hosted by Binance Wallet and PancakeSwap. Similar to IFOs, there will be no need to stake CAKE in advance—users will simply commit the amount of CAKE they want to participate with, and any unused CAKE will be refunded after the event.

3. Flexible Voting Proposals: We propose introducing a new voting system where CAKE holders only need to commit CAKE temporarily during the voting period to submit their votes. This eliminates long-term staking commitments, offering more flexibility and greater control over governance decisions.