PancakeSwap gears up to make CAKE deflationary but trouble persists

• As of this writing, about 185.18 million CAKES were circulating in the market.
• CAKE has been one of the weakest cryptos in the market over the last month.

Popular decentralized exchange (DEX) PancakeSwap proposed crucial changes to its tokenomics in an attempt to move its native token CAKE towards a deflationary model.

In a blog post, the DEX put forward a plan to target an annual inflation rate of 3%-5% for CAKE, a significant reduction from the current rate of 21%-23%.

Read PancakeSwap’s [CAKE] Price Prediction 2023-2024

CAKE becomes scarce

In its CAKE tokenomics v2.5, PancakeSwap outlined the journey towards “ultasound CAKE,” which entailed lowering its net emission rate from 9.2 CAKE per block at the time of writing, to less than 3 CAKE per block.

The net emission rate, or the token rewards which stakers earn, would drop to 0.35 – 1 CAKE per block on the Syrup Pool, representing a cut of over 94% from the current rate.

The proposal was available for community feedback till next week and once an agreement is reached on a few key decisions, it will move to a “decision proposal” stage.

Last year, the PancakeSwap community decided to put a supply cap of 750 million for CAKE. As of this writing, about 185.18 million CAKES were circulating in the market, per CoinMarketCap.

Driven by the concept of scarcity economics, crypto projects have been making all efforts to make their native tokens deflationary in order to achieve higher prices in the future.

Weekly volume surges

At the time of writing, PancakeSwap was the second-largest DEX in the crypto space, with a trading volume of over $350 million in the last 24 hours.

The cumulative trading volume across the last seven days was $2.36 billion, representing an increase of nearly 70% from the previous week.

The volume of its V3 iteration more than doubled since the launch on Ethereum [ETH] and BNB Chain earlier this month. As of this writing, trades worth more than $1.5 billion were settled on PancakeSwap V3.

Source: DeFiLlama

How much are 1,10,100 CAKEs worth today?

CAKE is still not out of trouble

CAKE has been one of the weakest cryptos in the market over the last month, logging a fall of 5.87%. At press time, it exchanged hands at $3.616.

The MVRV Ratio was moving in the negative territory, and a sharp pull downward on 13 April aggravated the situation. A negative value indicated that holders would realize significant losses if they decided to sell their CAKE tokens.

The lack of profitability deterred investors from forming a positive outlook toward CAKE as the weighted sentiment was also negative.

Source: Santiment