CAKE Drops 24% on the Week as PancakeSwap Community Mulls Slashing Staking Rewards

PancakeSwap’s native token has been flattened this past week.

CAKE token has plummeted roughly 24.4% over the past seven days, per CoinGecko, as a proposed change to the project’s tokenomics looms large.

PancakeSwap is a decentralized exchange (DEX) built on the BNB Chain. The project recently forked Uniswap V3’s code and launched its version on Ethereum and Aptos.

The core team introduced the proposal to reduce the token’s inflation rate to 3-5% from the current rates above 20%.

In plain English, the proposal, if passed, would lower the amount of tokens the project’s stakers can earn.

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

The vote on the proposal began on April 26 and ends tomorrow. Currently, the community has voted in favor of an “aggressive reduction” of staking rewards, which would cut the amount of tokens emitted by more than half.

While the reduced inflation rate will improve tokenomics by slowing dilution of its supply, the immediate decline in staking rewards has already caused an exodus in stakers.

The token’s price has dropped almost simultaneously with the amount of CAKE unstaked.

Since the team first proposed the tokenomics change on April 19, the staking amount has reduced from 1.007 billion CAKE to 677.851 million CAKE on April 27.

While CAKE suffered declines amid the tokenomics proposal, the rest of the cryptocurrency market experienced significant volatility due to macroeconomic events and on-chain analytics errors.

At the time of writing, Bitcoin is trading roughly at par with its price a week ago, while Ethereum is down 2.6% during the same period.