CAKE exchange rate rises by 20% after the proposal to reduce the asset’s issue

What’s new? The team of the decentralized crypto exchange (DEX) PancakeSwap has proposed that the community reduce the total supply limit of the native token CAKE from 750 million to 450 million coins. The current volume of issued coins is 388 million CAKE, while the circulating supply is 263,8 million. Amid the discussion of this initiative, the asset’s exchange rate momentarily jumped 20% to $2,72, the highest since November 21.

Proposal on the PancakeSwap forum

What else is known? The exchange’s team also regularly conducts burns of CAKE collected as transaction fees. For example, 17,6 million coins were destroyed in October and over 18 million in November. Since the beginning of this month, 17,97 million CAKE worth $43 million have been removed from circulation.

Cryptocurrency burning is the process of removing a certain number of tokens from circulation, after which they become permanently inaccessible. Often burning is carried out in order to increase the rate of an asset or prevent it from inflation. Burning can be done by sending tokens to a wallet without a private key, by conducting a hard fork, using special software, or using algorithms that destroy some of the funds during transactions.

The project’s developers write that over the past year, PancakeSwap has significantly updated its tokenomics, issuance process, and growth strategy. In particular, CAKE has consistently maintained a deflationary model for several months. Over the past six months, the asset has grown in value by 75б12%, according to TradingView.

According to the PancakeSwap team, the limit of 450 million coins will be enough to ensure future growth: in particular, increasing market share in the Ethereum ecosystem, including Layer 2 (L2) solutions based on it.

PancakeSwap is the largest DEX in the BNB Chain ecosystem and the third largest among projects on all blockchains, behind only Uniswap and Curve. Its total value locked (TVL) is $1,5 billion, according to DeFiLlama. The BNB token also reacted to the community initiative with a 6,2% increase.

Earlier, the community approved the launch of the veCAKE token to improve governance processes. The project also launched its own marketplace for Web 3.0 games with NFT support.