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.