Controlling CAKE supply
Last updated
Was this helpful?
Last updated
Was this helpful?
There's currently no hard cap on the supply of CAKE token, making it an inflationary token.
Community members often point to this as a cause for concern, and while the chefs certainly understand the wish for a hard cap, there's a big reason we don't expect to set one in the near future:
CAKE's primary function is to incentivize providing liquidity to the exchange. Without block rewards, there would be much less incentive to provide liquidity (LP fees etc. would remain).
So what are the other ways CAKE's supply is limited, to counter inflation?
The chefs aim to make deflation higher than emission by building deflationary mechanisms into PancakeSwap's products. The goal is for more CAKE to leave circulation than the amount of CAKE that's produced.
By reducing the amount of CAKE made per block, we slow inflation. This has already been done once: Since the , we've already effectively reduced the number of CAKE entering circulation from 40 CAKE per block to 14.5. But we don't want to do this too frequently, too early, for the same reason we don't want a hard cap: we still need to incentivize people to provide liquidity.
Regular token burns () are built into many of PancakeSwap's products (like a 10% burn of CAKE spent on lottery tickets), with more on the way. Check the **** **** for details on present and upcoming deflationary mechanisms.