PancakeSwap wars: half of CAKE voting power snapped up before new proposal
Holders of PancakeSwap’s governance token could have their CAKE and eat it, too, under a new proposal that would do away with lengthy token lockups necessary for participation in voting on governance matters and the distribution of rewards.
The CAKE Tokenomics 3.0 proposal would target an “annual deflation rate of 4%”, and do away with veCAKE and the Gauges Voting system (which determines which pools receive rewards) in favor of “a more straightforward and efficient emissions model.”
However, the plans to overhaul the current governance system were immediately preceded by eight connected addresses buying up and locking 25 million CAKE, or approximately half of the not-already-locked supply, according to DeFiWars, an account that monitors the decentralized finance (DeFi) sector.
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In locking these freshly acquired tokens, their owners ensure a hefty share of available voting power for the upcoming vote, with the added benefit of being only a temporary measure until the stake is released again under the new system.
PancakeSwap, on Binance’s BNB Chain, is the number-two decentralized exchange (DEX) by volume and fourth overall by total value locked with $1.5 billion of assets held on the platform, data from DeFiLlama shows.
The vote-escrowed governance token (veTokenomics) system has been adapted by many decentralized finance (DeFi) protocols since its introduction by Curve Finance in 2020. Curve founder Michael Egorov laid out his concerns in a post on X. He says that “upgradability is a bug” in this governance model and that, in going back on the vote-locking design, the move would set a “precedent.”
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Cakepie and StakeDAO, other DeFi projects focused on acquiring stakes in other platforms’ governance tokens, have also come out against the proposal, which appears to be designed to wrest control back from outside influence.
Despite the backlash from other teams, the proposal has found some support from regular users who apparently view the deflationary tokenomics as a potential positive price driver.
The forum post has received 150 replies, with mixed opinions expressed by community members. One user summed up their analysis as “Numbas (sic) going up is the best utility in this industry.”
However, many replies to the proposal have been negative, with users accusing the proposal of short-term thinking and feeling that their long-term faith in the project has been betrayed.
One user also voiced their opinion that the fact that recently locked CAKE tokens would be unstaked if the vote were to pass “is showing signs this is manipulated.”
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