7 months ago
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PancakeSwap’s Kitchen launches proposal for the redirection of 500 CAKE emissions towards veCAKE bribe rewards.
PancakeSwap (CAKE) announced its latest proposal to redirect a portion of CAKE emissions to “bootstrap the veCAKE ecosystem”.
This redirection to Bribes aims to increase liquidity flow into the ecosystem and improve CAKE incentive efficiency. The proposal reads:
“[…] The Kitchen is proposing to redirect a portion of current CAKE emissions to participate in the veCAKE locker ecosystem (i.e., provide CAKE as bribes for strategic pools).”
The Proposal
The Kitchen’s proposal suggests that 500 CAKE be reallocated from the ~29,184 CAKE emitted to farming pools daily to locker protocol bribes.
If this initiative to bolster the veCAKE ecosystem proves successful, the proposal indicates a larger reallocation amount may be requested. The success would be measured “based on pool volumes, TVL, and capital efficiency”.
⚡️ The Kitchen is proposing to redirect CAKE Emissions from Farms to incentivize core pair liquidity and enhance veCAKE vote incentives.
The proposal aims to:
– Redirect 500 CAKE/day to locker protocol bribes
– No overall increase in CAKE emissions
– Allocation based on a… pic.twitter.com/5qb9cOKqrE
— PancakeSwap v4🥞 (@PancakeSwap) April 16, 2024
The proposal also clarifies that the proposal will have no impact on CAKE’s deflationary status due to “no emissions being added or removed,” just reallocated. It’s worth noting that under this proposal no increase in overall CAKE emissions will occur.
According to the proposal, if approved, the Kitchen will allocate bribes on a “per epoch basis” and distribute them between “any locker protocol built on veCAKE”. This includes locker protocols like StakeDAO, Cakepie, and Hidden Hand.
“Bribe allocation will be based on bribe efficiency to get the best return on CAKE used in this effort,” reads the announcement.
In the scenario where locker protocol bribe efficiency is within 10% of one another, “bribes will be split evenly among them” to minimize risk to the ecosystem while maximizing the value delivered. At the time of writing, the proposal had received unanimous support from over 5500 votes.
The Role of veCAKE
veCAKE, or vote-escrowed CAKE, serves as the governance token within PancakeSwap’s ecosystem. By locking up holdings of CAKE for up to four years, users are awarded a varying allocation of veCAKE, allowing them to vote on governance proposals.
As the governance utility of the platform, veCAKE tokens also enable users to influence CAKE emission allocations across PancakeSwap’s liquidity pools. This creates a cycle aiming to promote further liquidity to enter the veCAKE locker ecosystem.
Implications of the Proposal
PancakeSwap’s proposal to shift the portion of CAKE emissions from farming to bribing indicates an intent to provide more rewards to users most involved in governance.
This shift could potentially improve user engagement with the platform as participants are further incentivized to lock into PancakeSwap governance initiatives. Additionally, it has the potential to impact the flow of liquidity into veCAKE, promoting more diverse and decentralized governance in the future.
However, the reallocate of 500 CAKE in daily emissions out of farming incentives could result in discontent among users relying upon farming reward consistency.
Furthermore, the proposal focuses on the redirection of liquidity. This exposes a vulnerability for smaller investors as larger players with more voting power can dictate the direction of CAKE emissions.
The proposal was initiated on April 16 and is set to conclude on April 23.
