Introduction of veCAKE on PancakeSwap
PancakeSwap, the leading decentralized exchange on the BNB Chain, has passed a significant proposal introducing veCAKE (vote-escrowed CAKE) and gauge voting. This strategic move aims to empower CAKE holders with more governance influence, improve liquidity, and enhance rewards for CAKE stakers.
Functionality and Benefits of veCAKE
veCAKE lockers will now have the ability to vote on governance proposals and direct CAKE token emissions towards their preferred liquidity pools. Users can lock their CAKE tokens for up to four years, receiving veCAKE in return. This model, inspired by Curve’s veCRV, has gained popularity among DeFi protocols.
veCAKE Voting and Chain Support
At launch, veCAKE holders can vote on farms on Ethereum, BNB Chain, and Arbitrum. PancakeSwap plans to extend support to additional chains gradually. This feature is expected to boost engagement in the governance process.
Emissions Allocation for Protocol Health
To maintain protocol health, 40% of emissions from gauges are allocated to provide liquidity for core LP pairs, including ETH, BTC, BNB, stablecoins, and CAKE. PancakeSwap aims to reduce this allocation as governance participation increases.
Third-Party Incentives and Bribes
Similar to models seen in Curve and Convex, veCAKE holders can earn third-party ‘bribes’ by providing incentives to specific liquidity pools. This mechanism is designed to attract more liquidity providers and enhance the overall ecosystem.
PancakeSwap’s Gaming Marketplace and DEX Volume
PancakeSwap recently launched a gaming marketplace, further expanding its ecosystem. As the second-largest DEX by volume, it processed over $3.22 billion in trades in the past week, illustrating its significant market presence.
Proposal Goals and Kitchen’s Participation
The proposal’s goals include ensuring smooth transitions for liquidity providers and maintaining core liquidity pools’ incentives. The Kitchen, PancakeSwap’s governing body, will initially retain a 40% voting share in veCAKE votes to manage these transitions effectively.
Future Plans for veCAKE and Governance
PancakeSwap’s long-term aim is to decrease direct management of CAKE emissions as veCAKE participants become more familiar with the gauge voting mechanism. The proposal’s success marks a significant step in evolving PancakeSwap’s governance and tokenomics.
