PancakeSwap (CAKE) Price Falls 22% in a Week Amid New Proposal

• The idea to lower the token’s inflation rate from above 20% to 3-5% was made by core team.
• The sudden drop in staking incentives has already triggered a flight of stakers.

The value of the native token on PancakeSwap has decreased during the last week. According to CMC, the price of the CAKE token has dropped by around 22.76% over the last week. Since uncertainty surrounds a planned modification to the project’s tokenomics.

The BNB Chain is the foundation for PancakeSwap, a decentralized exchange (DEX). Recently, the team behind the project forked the code for Uniswap V3 and released the version on Ethereum and Aptos. 

The idea to lower the token’s inflation rate from above 20% to 3-5% was put out by the core team. If the plan is approved, it will reduce the potential reward for the project’s staking community in tokens.

The proposal read:

“Current inflation rates are unsustainable for CAKE over the long term, and reductions are required for the long-term health of PancakeSwap.”

Staking Incentives Lowered

The proposed voting has been ongoing since April 26 and will end on 27th April. An “aggressive reduction” of staking incentives, which would reduce token emission by more than half, has been so far approved by the community.

The sudden drop in staking incentives has already triggered a flight of stakers, but the lower inflation rate will enhance tokenomics by reducing dilution of its supply. As more CAKE remains unstaked, the price of the token has fallen.

Staking has decreased from 1.07 billion CAKE when the tokenomics modification was originally suggested on April 19 to 677.851 million CAKE as of April 27. In the midst of the tokenomics proposal, CAKE saw its value drop, while the whole cryptocurrency market saw large swings owing to macroeconomic events and recent banking crisis.