Hello,
I’d like to share some thoughts regarding the strategic direction of PancakeSwap and the management of CAKE. Observing the current numbers, it seems that the market cap of CAKE does not reflect the value the platform provides. In my opinion, this is primarily due to the token’s price, which is heavily influenced by scarcity.
While deflation through the burning rate is important, I believe locking is equally crucial. At the moment, the veCAKE model underperforms, offering just a 5% return for a 4-year lock, making it less competitive compared to other DEXs.
In my view, a major missed opportunity is the use of third-party incentives. Unlike other DEXs, PancakeSwap has not fully invested in this. Third-party platforms do not operate efficiently, as seen in the incentives-to-emissions ratio offered to LPs. If such incentives were managed internally by PancakeSwap, they would be more effective, benefiting users who lock their CAKE and, in turn, increasing the total locked supply while reducing the circulating supply.
To reach this conclusion, I have recorded and studied the following KPIs: Total locked CAKEs, circulating supply, CAKE price, and CAKE/BNB ratio, Hiddenhand & StakeDAO incentives / Emissions ratio.
I believe deflation alone will have minimal long-term impact if lockings decrease and the circulating supply continues to grow.
Thank you for considering this!