[Proposal Discussion] The Flip: Liquidity Should Get Paid More

[Chef_Mustard]

The Flip: Liquidity Should Get Paid More

The Kitchen proposes raising the LP fee share to 88%

TL;DR

The Kitchen proposes raising the LP share of swap fees to 88% on PancakeSwap v3 and Infinity across all 11 supported chains, up from around two-thirds on most pools today, with v2 unchanged; the remaining 12% protocol fee goes to the Treasury. Alongside this, effective CAKE emissions are cut by ~69%, from 22,500 to 7,000 CAKE per day, and those 7,000 CAKE go to the Pantry, our ecosystem growth fund.

What changes

Every v3 fee tier and Infinity pool moves to an 88/12 split on all 11 chains: BNB Chain, Ethereum, Arbitrum, Base, Solana, Robinhood, Monad, Arc, zkSync, Linea and opBNB.

Notes

1. v2: unchanged, as its fees are hard-coded. It remains our main CAKE burn engine, sending 23% of swap fees to burn.

2. Existing Infinity pools: LP fees are fixed at pool creation, so the lower protocol fee cuts the total swap fee instead. For example, a 1% pool becomes ~0.76% (0.67% to LPs, ~0.091% to the protocol).

3. Protocol fee: the 12% on v3 and Infinity goes to the Treasury.

What it means for LPs and traders

This proposal is built for the people who make PancakeSwap work every day: the LPs who supply liquidity and the traders who use it.

For LPs: more of every fee

Based on 2025 volume, LPs on v3 and Infinity would have earned ~$62M more in fees. For every $1,000 of swap fees a pool generates, LPs would keep $880:

The higher share applies automatically to every v3 and Infinity position on every chain. There is nothing new to claim, stake or lock: fees accrue to positions exactly as they do today; there are just more of them.

For traders: same fees, better execution

Fee tiers stay the same, so traders pay what they pay today. What changes is the depth of liquidity behind each trade.

Today, LPs on most pools keep 66–68% of the fees they generate. At 88%, they earn roughly a third more from the same trading volume. LPs tend to add capital until returns settle back to a competitive level, so that extra income can support up to ~30% more liquidity in the same pools. For traders, that means:

• Less price impact: the same trade moves the price less, up to ~20–25% less.

• Less MEV: sandwich attacks and similar MEV profit from price impact, so deeper pools leave them less room.

• Better prices wherever they swap: aggregators and wallets route to the deepest pools, so traders benefit whether they swap on PancakeSwap directly or through another front end.

A self-reinforcing cycle

The benefits build on each other. A higher LP share attracts more liquidity, deeper liquidity gives traders better prices, better prices bring more volume, and more volume means more fees for LPs, which attracts more liquidity again.

What it means for CAKE

CAKE is ahead of schedule on its Tokenomics 3.0 targets and stays on track for a 20% supply reduction by 2030 under this proposal.

CAKE Tokenomics 3.0, passed in April 2025, targeted a ~20% supply reduction by 2030. Eighteen months in, supply is already down 11.5% (Dune dashboard).

Emissions cut and the Pantry

With LPs keeping 88% of fees, we no longer need emissions at today’s level. We propose cutting post-veCAKE emissions from 22,500 to 7,000 CAKE per day, so 15,500 fewer CAKE are minted every day (~5.7M per year).

The remaining 7,000 CAKE per day goes to a new ecosystem fund, the Pantry. Like a kitchen pantry, it keeps ingredients on hand to use where they are needed most. The Kitchen will deploy it flexibly, for example on marketing, partnership deals and bootstrapping liquidity in new pools.

Supply outlook

v2 alone keeps CAKE net deflationary. Using the average of the past 10 weeks, total supply falls by ~190k CAKE per week after emissions, about 9.9M CAKE or ~3% per year. At that pace, the remaining ~31.6M CAKE to reach the 2030 target is cleared around the end of 2029, before the end-of-2030 deadline.

Why “The Flip”

Over successive tokenomics proposals, the community has brought CAKE supply firmly under control, with supply down 11.5% since Tokenomics 3.0 alone, well ahead of schedule. The Flip shares the same goal, a stronger CAKE, and turns to what drives its value from here: how much people use PancakeSwap.

Liquidity is what brings people to PancakeSwap. Traders go where they get the best price, and the best prices come from the deepest pools. LPs provide that depth, so rewarding them more is the most direct way to make PancakeSwap better for everyone who trades on it.

Growth funded by fees, not new supply. The Flip cuts emissions by 15,500 CAKE a day and makes real trading fees the main way PancakeSwap attracts liquidity. Growth is paid for by activity on the platform, not by minting more CAKE.

Growth that comes back to CAKE. As liquidity deepens and volume grows, PancakeSwap becomes larger and busier, and that is the strongest long-term support for CAKE and the community that holds it.

Rollout plan

Implementation begins in November 2026, within 2 weeks of the proposal passing, and is expected to take about three months, finishing by the end of January 2027.

We will announce each chain as it goes live.

Share your feedback

We’re sharing this proposal on the forum for community discussion before it goes to a Snapshot vote. Whether you provide liquidity, trade or hold CAKE, we want to hear from you: what you like, what concerns you, and anything we may have missed.

Please leave your thoughts in the comments below. The Kitchen will review all feedback before publishing the final proposal for voting.

[marcra]

great idea. Hope will send $cake to 10 $

[0nebukadnezar0]

Nice proposal, go for it

[matrdolfo]

Good afternoon,

As a long-term investor who has held a significant position in CAKE since 2021, I approach PancakeSwap the same way one analyzes a traditional business. My investment thesis is based entirely on the belief that the protocol can generate sufficient profit to deliver real returns to token holders, primarily through buybacks and burns.

Having reviewed the current proposal in its entirety, I am fundamentally opposed to the final outcome. The net effect of this move over a trailing 12-month period would result in 10,433,528 fewer CAKE tokens (3.16%) being allocated to buybacks. Essentially, the Kitchen is choosing to reduce the protocol’s operating profit in order to increase “sales expenses”—in this case, LP emissions.

Over the last 12 months, the combined CAKE burn from v3 and Infinity totaled approximately 16,091,028 tokens. Meanwhile, your proposal to reduce emissions by 15,500 daily yields an annualized reduction of just 5,657,500 tokens.

The argument that we have “already reached a significant portion of the target” and therefore should reduce the burn is misleading. The core issue facing the protocol is not the absolute number of tokens burned or how close we are to a specific milestone; the real issue is the PRICE of CAKE. If the average price of CAKE had been twice as high over the last 12 months, we would have organically hit that 3% target.

The reality is that CAKE trades at a severe discount compared to its peers, largely due to years of uncontrolled emissions and constant, unpredictable changes to the tokenomics. For comparison, BNB’s burn rate sits around 3%, and Raydium (on Solana) is roughly 5%. What this proposal will actually accomplish is DRIVING DOWN THE PRICE OF CAKE, forcing the new burn volume to align with the historical yield premium that the market demands for holding the token (around 8%).

In other words, if we reduce the buyback/burn yield from 8% to 4%, we are effectively halving CAKE’s price from $2.30 to $1.15. The market DEMANDS an 8% annualized yield/burn rate for CAKE; if there is less CAKE allocated for burning, the token price will drop to compensate and restore that equilibrium.

Once again, we are facing unnecessary changes to the tokenomics. Just as the ecosystem begins to stabilize, another convoluted idea is introduced that ultimately extracts value from loyal CAKE holders. It is truly a shame, and it is exactly why the market demands such a high risk premium for holding CAKE in the first place.

[PancakesLover]

I agree with the above. The change is unnecessary and would result in less value being retained by both the treasury and token holders.

It also tarnishes CAKE’s value proposition as an incentive vehicle. A higher CAKE price allows PancakeSwap to incentivize LPs more cheaply, in a way that simply cannot be achieved through trading fees alone. This is possible because of CAKE’s liquidity. Since CAKE is a traded token and only a small portion of its supply is actually held in liquidity pools, pushing its price higher is cheaper than distributing actual $$$ generated from trading fees.

I would personally vote against this change. PancakeSwap is undeniably the leading DEX on BNB Chain, capturing most of the crypto on-chain trading volume alongside Uniswap. The PancakeSwap team is doing a wonderful job advancing the protocol and growing its market share.

[Juapia]

The proposal is interesting. But there is a problem: v3 and Infinity stop burning CAKE. Why don’t you state this clearly?

This can easily be fixed in the proposal.

Allocate a portion of that 12% destined for the treasury to the burn mechanism. That way, the proposal will also be beneficial for CAKE holders.

I suggest 90% though it could be 50%, 30%, or 60% of that 12%:

Proposal Burn 90%:
Lp fees - > 88%
Treasury → 2%
Burn - > 10%

Proposal Burn 50%:
Lp fees - > 88%
Treasury → 6%
Burn - > 6%

Proposal Burn 30%:
Lp fees - > 88%
Treasury → 8%
Burn - > 4%

Comparing:

The important thing is for CAKE holders to also benefit from the burn—driven by the increased liquidity resulting from higher payouts to LPs. As it stands, it’s just CAKE holders once again footing the bill for LP benefits.

What is the point of improving liquidity, swap efficiency, volume, and everything else if CAKE holders don’t benefit from the increased volume in these pools?

Ps: We need to reduce supply more fast we can and not slow down the pace now. It is better if the supply is less than 300M in 2027 rather than 2030.

[matrdolfo]

I have an alternative proposal that the team should seriously consider.

Building on @Juapia’s points below, a sustainable protocol demands acting with constancy regardless of the market cycle, rather than shifting the burden entirely onto the community. The Kitchen should reduce the treasury allocation—showing real skin in the game—paired with a more conservative, measured reduction in LP emissions. This balanced structure would preserve a 5% revenue share directly for token holders.

Furthermore, either alongside this proposal or immediately prior to it, we need to officially reduce the Total Max Cap to 350,000,000 CAKE. This action would immediately lower the FDV (Fully Diluted Valuation) and provide the market with a hard, undeniable guarantee that supply will not expand beyond this threshold.

Under your current proposal, we are looking at an exaggerated ~40% reduction in operating profit allocated to buybacks. My counter-proposal limits this buyback reduction to a maximum of 20%, successfully offset by the treasury and LP adjustments outlined above.

[jeff1]

this proposal will at least reduce 2 percent of token burn per year. this is disaster for cake holders. for lp providers is different. i will not vote for this proposal and i don’t think any true cake holder will vote for this. i’m sure there are other ways to keep the rate of burning steady as it is and reduce emmision responsibly.

[matrdolfo]

Furthermore, the protocol fee allocation to the treasury for Raydium (RAY) on the Solana network is a mere 4%. What justifies PancakeSwap’s (CAKE) 12% rate?"

[FacuCake]

Porfavor no lo implementen soy holder de cake y esto afectará nuestra billetera, queremos un token bien escaso y con mucho valor, aumenten las quemas ! Y todo el mundo se peleara por tener cake! Miren a su competencia UNI!!!

[Age4]

So you basically propose reducing weekly cake burn from around 380k to 190k as if cake price is roaming around ATH..are you aware that cake is way below 1b mcap?..even below some stupid nonsense useless coins…ATH mcap of cake was above 7b in 2021..we need much much more cake burn weekly instead of diminishing it and we should increase fees n revenues reported in defillama as investors mostly look at those lists to make crypto investments in defi..you should either introduce sophisticated meme launchpad on cake like pump.fun/pons or a high quality prediction market like polymarket/kalshi on cake platform instead of decreasing weekly burn and doom cakes price below 1 usd

[jeff1]

we need to offset future price jump and reducing cake burn by 1) allocating 10% of trading fees of v3 to burning just like what @Juapia said 2) reducing the emmision 88% not just 69%. in this way when cake goes to 10$ we have 1.5 m less token entering the circulation and comfortably reach 5% supply reduction each year.

[Chef_Mustard]

Thanks everyone for reading The Flip and sharing your views, especially the concerns. This is exactly the discussion we wanted before taking it to a vote. Instead of replying one by one, here is a single response to the main theme so far: the burn rate.

Deflation is a means, not the goal. What CAKE holders ultimately care about is price, and supply is only one side of that. Scarcity matters, but scarcity alone won’t get CAKE where we all want it to be. Price also depends on how much people use the platform behind the token.

Since Tokenomics v2.5 in April 2023, the Kitchen has spent more than three years bringing inflation down. September marked 37 consecutive months of net supply reduction, and more than 60 million CAKE has been removed net since peak supply, about 15% of it, funded by real buybacks. Under Tokenomics 3.0 we are ahead of schedule on the 20%-by-2030 target. We believe the inflation problem has been solved, and the job now is to keep it solved.

You’re right that weekly net burn would be lower under The Flip. But CAKE stays deflationary every week, and based on recent averages we still reach the 2030 supply target around the end of 2029.

The other half of the equation is growth. Markets value a DEX token on the size and growth of the business behind it: trading volume, fees generated, and market share. Deep liquidity and the best prices for traders are what grow those numbers. Today PancakeSwap is the leading DEX on BNB Chain. If deeper liquidity helps us lead on two or three more chains, PancakeSwap becomes a much bigger business, and we believe CAKE’s price will reflect that. Scarce supply plus a growing platform is how CAKE gets to its true value.

Treasury income will also be lower under this proposal. We see that as a deliberate short-term sacrifice for long-term growth, and we think it’s worth making.

[PancakesLover]

While I do understand that, I still believe tying V3 and Infinity fees to CAKE should be a mandatory part of the proposal. Otherwise, PancakeSwap can continue growing as a platform without that growth being reflected in the token’s value capture.

I would even suggest allocating 4% of V3 and Infinity fees to CAKE holders (meaning LPs would still earn 84%), either through buybacks or a staking pool that earns USDC, without the 500 CAKE per wallet limit. This would also help remove CAKE supply from the market.

If this is implemented, I will support the proposal and vote yes. Otherwise, I don’t see a path for our foundation to continue holding the token while remaining bullish on PancakeSwap.

[jeff1]

until cake shows the token has become scarce out of useful products meaning the price shows it clearly the burn needs to continue even more aggresively. right now it is clear the token is not scarce and only duty of the team is to make sure they achieve this goal. not being content by 2028 they achieve 20% supply reduction.

[matrdolfo]

Well, if the issue is that we need to grow on other chains, then I agree with you. However, as you yourself mentioned, we are already the leaders and well-established on the BSC. Why would this proposal apply to ALL chains—including the BSC—rather than just the ones where we need to grow? That seems rather foolish to me, doesn’t it?

Once again, the market is already pricing in a premium for CAKE; the 3% annual yield—projected to reach 20% by 2029—will arrive much sooner, not because there will be more token burns (in USD terms), but because the price will collapse, allowing the market to achieve its previous risk premium.

[Juapia]

Hi sir!
thanks for the feedback. But I have some consideration about your words.

You said: "Deflation is a means, not the goal. What CAKE holders ultimately care about is price, and supply is only one side of that. "

Okay, but deflation is a means to reach the goal regarding the price of CAKE.
Burning and deflation serve as the mechanism through which the PancakeSwap platform captures value for CAKE holders. There is no other mechanism quite like it.

You might say: “Scarcity matters, but scarcity alone won’t get CAKE where we all want it to be. Price also depends on how much people use the platform behind the token.”

However, platform usage alone does not cause the CAKE token to appreciate in value. That is precisely why we previously had staking, and now have mechanisms like burning, etc.

The mechanism of burning a portion of the fees functioned dynamically—meaning that as platform usage increased, more value was captured for CAKE through deflation. By eliminating the burning of fees (even a minimal amount) from v3/Infinity, it no longer matters how much the PancakeSwap platform is used; its two primary products fail to capture value for CAKE holders. You might counter that v2 still involves burning—which is true—but as liquidity shifts toward v3/Infinity, an increasing share of the volume will flow through those channels rather than the legacy v2.

So, what’s the point here? The treasury’s total value decreases, sure—but couldn’t a portion of that be allocated toward burning for v3/Infinity? Are the costs associated with PancakeSwap really that high? What is the annual operating cost of the protocol? How much goes toward R&D?

We don’t have access to this information, so we can’t judge whether 12% for the treasury is too much or too little.

I believe it is entirely feasible to split this—6% to the treasury and 6% toward burning—based on the figures I’ve presented here: [Proposal Discussion] The Flip: Liquidity Should Get Paid More - #6 by Juapia

This would allocate 8M per year to the v3/Infinity treasury, while nearly doubling the CAKE burn rate and the impact on inflation (assuming these figures remain constant). Since I share the “Kitchen’s” [PancakeSwap team’s] view that these measures will boost liquidity, volume, and PancakeSwap’s market share, these figures could end up being much higher—ultimately benefiting the treasury, liquidity providers (LPs), and CAKE holders alike.

[litekoiner]

It is an absolute shame to see the chefs promote a proposal that will be detrimental to the price of $CAKE and we’re already seeing many sell their $CAKE because of this proposal being suggested. It’s also a shame to see how the titles and promotions are manipulative to hide the negative aspects of this proposal. According to this proposal, everyone including the devs will get a pay rise at the cost of tanking the price of $CAKE by significantly reducing the weekly burns. I can’t see why any $CAKE holder would vote yes unless they have a bigger stake in LPs than in $CAKE in which case they shouldn’t have much $CAKE or voting power. I hope the chefs listen to the majority of the feedbacks and comments and amend the proposal before more $CAKE holders decide to sell.

[Russell]

The most concerning part of this proposal is that the PancakeSwap team seems to believe that deflation and value capture are no longer that important for CAKE’s price.
I believe CAKE’s price has remained relatively stable largely because of its strong deflationary mechanism. If the deflation rate drops this much, I honestly don’t see a clear path for CAKE to reach $10.
Growing the protocol is important, but that growth needs to translate into value for CAKE holders. Otherwise, what’s the point of holding CAKE?

[cryptoeater]

Could we please clarify if the 12% to treasury will be used for buyback and burns or goes to fund daily operations?

I saw a message on the Pancakeswap Telegram general channel that states the 12% to “treasury” will still be used for buyback and burns, whereas the 3 stablecoin pairs revenue will continue to be used for daily operations.

If this is the case, then I would support this proposal, whereas if the 12% will be used for daily operations I cannot support this proposal, unless there is an urgent need and rationale for additional team funding.