Popular decentralized exchange PancakeSwap has commenced the rollout of its significant Tokenomics 3.0 upgrade for its native CAKE crypto token, aiming for a more sustainable ecosystem.
The platform announced that pivotal adjustments to the CAKE token’s structure would take effect on April 23, 2025. A major change involves the retirement of CAKE staking and governance participation through veCAKE.
Following the unlocking of all existing locked CAKE and veCAKE positions, users will have a six-month window to redeem their tokens on a one-to-one basis. This marks a clear departure from the previous yield-bearing mechanisms.
With Tokenomics 3.0, PancakeSwap transitions to a revenue-sharing model centered around buying back and burning CAKE tokens. It also establishes a firm maximum supply cap of 450 million CAKE, eliminating ongoing emissions from yield farms.
These strategic changes aim to significantly curb token inflation, foster long-term stability, and better reward platform supporters. The transition involves reducing daily CAKE emissions in stages, from 29,000 down to 20,000, and ultimately settling at 14,500.
This reduction strategy is projected to result in the permanent removal (burning) of approximately 5.3 million CAKE tokens from circulation annually, tightening the supply.
However, the proposed tokenomics redesign has faced pushback, notably from Cakepie DAO. As a major CAKE holder whose protocol relies heavily on the veCAKE model, Cakepie expressed concerns regarding alleged irregularities in the voting process that approved the changes and the removal of established decentralized governance elements.
Cakepie DAO advocated for modifying the existing system rather than completely removing it, suggesting mechanisms to incentivize high-performing liquidity pools and deter early staking withdrawals. In response, PancakeSwap extended an olive branch, offering Cakepie users compensation up to $1.5 million in CAKE if the DAO agrees to facilitate a 1:1 redemption for mCAKE holders.
Despite the controversy, the market response for CAKE has shown positive momentum. The token’s price was recently observed at $2.01, marking a slight 0.7% increase over 24 hours, accompanied by a significant 36% surge in daily trading volume to $78.6 million.
Furthermore, PancakeSwap’s 24-hour decentralized exchange (DEX) volume climbed to $1.03 billion, eclipsing Uniswap’s $896 million for the period, based on DeFiLlama data. Its weekly trading volume also saw a 5% increase, contrasting sharply with Uniswap’s 39% decline.
From a technical standpoint, the CAKE price appears to be rebounding from a recent low of $1.60. It is currently challenging the midline of the Bollinger Bands indicator. Concurrently, the Relative Strength Index (RSI) has risen to 53.95, surpassing the neutral 50 mark, which suggests growing buying interest and potential bullish momentum.
A decisive break above the $2.05 level could pave the way for the crypto token to target the next significant resistance area around $2.50.