CAKE Tokenomics 3.0: Centralized Governance Flips DAO?

CZ A "holy decree" allowed the seemingly "autonomous" DAO to be quickly "nationalized by power". The community, under the tough intervention of capital, seems helpless. (Synopsis: Seven mainstream DEXs Recent earnings at a glance: Jupiter, PancakeSwap earnings are stable, Raydium has declined significantly) (Background supplement: Binance Web3 wallet "4 times a month", how much yield does users invest in BNB? Must earn? CZ a "holy decree" so that the seemingly "autonomous" DAO was quickly "nationalized by power". The community, under the tough intervention of capital, seems helpless. Written by: Alex Liu, Foresight News On April 8, PancakeSwap announced its CAKE tokenomics 3.0 proposal at X, which is intended to completely reimagine the issuance of CAKE tokens, inflation mechanisms, and governance models. Since its release, the proposal has sparked widespread attention and heated discussions in the market and community. From the background and specific content of the proposal, to the impact on the interests of all parties, to the core points of dispute and the diverse perspectives of the community, the development of events is full of complexity and drama. Cause and effect of the incident On March 19, an industry insider said on X that the current veCAKE lock-up mechanism design of PancakeSwap token CAKE is too complicated, which not only increases the threshold for user participation, but also biases the balance between long-term governance rights and short-term incentives. In his comments on the X platform, Changpeng Zhao agreed that "PancakeSwap should replace the ve-token model with a buyback model", and said that "many 'models' are too detouring now, and the sales are the most direct." And @PancakeSwap official. In less than 20 days, PancakeSwap proposed a new tokenomics proposal to replace the previous multi-year ve scheme. The Tokenomics 3.0 proposal mainly includes the following core aspects: First, the proposal proposes to achieve an annual deflation target of about 4%, and the total supply of CAKE is expected to be reduced by 20% by 2030. To this end, PancakeSwap plans to adjust its daily emissions from about 40,000 CAKES to 22,500. This adjustment is intended to further enhance the scarcity and long-term value of CAKE by reducing the supply of new coins. Second, the proposal explicitly calls for the elimination of existing CAKE staking, veCAKE, and Gauges Voting and revenue sharing mechanisms. The original intention of this initiative is to "simplify" the governance process, so that CAKE tokens truly belong to holders, avoiding the marginalization of some users due to multiple lock-ups and complex distribution mechanisms. Proponents argue that this would reduce governance costs and improve the transparency and operational efficiency of the entire system. At the same time, in order to compensate for the incentive gap that may be caused by the adjustment, the proposal also plans to introduce a new buyback and sale mechanism. By regularly using part of the transaction fees and other proceeds to buy back CAKE and sell it, the deflationary effect is further realized, thereby providing long-term support for the token price. Impact on key stakeholders For some of the core players and long-time supporters of the ecosystem, this proposal is undoubtedly devastating. In particular, Cakepie, as the main beneficiary of the veCAKE mechanism, has locked up more than 10 million CAKE in the past few years and obtained stable governance rights and dividend income through this mechanism. If the proposal is passed, Cakepie DAO may face the following impacts: The cancellation of veCAKE and related revenue-sharing mechanisms means that the governance model built by Cakepie DAO for a long time will be broken, and its core asset CKP will lose its value by relying on the dividends and governance benefits of the mechanism for a long time. (The relationship between CKP and CAKE is similar to PNP and PENDLE, recommended reading: Reread the Penpie protocol mechanism, the impact of theft should not be overstated) After PancakeSwap made the proposal, the value of the CKP token fell sharply On-chain operation core controversy The controversy of the proposal is not only reflected in the adjustment of the economic model, but also in the abnormalities in the process of on-chain operation and governance. According to multi-party on-chain data monitoring, before and after the formal discussion of the proposal, multiple large addresses associated with Binance or PancakeSwap suddenly locked a large number of CAKE tokens (25 million, accounting for nearly 50% of the total CAKE locked-up volume). These addresses can be unlocked immediately after the proposal ends, allowing for a low-cost operation to quickly regain governance and reconfigure incentives. This "vote and withdraw" operation model has caused widespread doubts in the community. Critics argue that this will make the governance process unfair, and that a small number of whales and centralized addresses can manipulate the direction of the entire proposal through short-term actions, to the detriment of the majority of retail investors. At the same time, some people pointed out that such operations are the epitome of the frequent "on-chain coups" in the current crypto market, showing the loopholes and risks of centralized governance in practice. Community Divergence and Authoritative Voices In the heated debate sparked by this proposal, the voices of different groups are different. The Cakepie DAO launched an outcry on social media, accusing the reform of "betraying the original purpose of long-term incentives and ecological co-construction" and proposing alternatives that include partial adjustments rather than the complete elimination of veCAKE. The DAO believes that the governance rights and dividend mechanism formed by long-term lock-ups are the key to the sustainable development of PancakeSwap, and once canceled, its losses will not only be reflected in economic gains, but also will deal a fatal blow to the trust base of the entire ecosystem. At the same time, some industry experts have also expressed different views on the proposal. For example, the founder of Curve said that although decentralized governance needs to be continuously optimized, the interests and incentive structure of early contributors should be fully respected, and simply canceling the mature mechanism is extremely risky, which may lead to the collapse of the long-term value system in the ecosystem. At the same time, he called the proposal a "governance attack" and suggested not to make the veGovernance contract upgradeable. On April 16, official members of PancakeSwap revealed that they were in close communication with Cakepie DAO and were willing to provide $1.5 million to compensate CKP holders, and the post was applauded by Changpeng Zhao. But even after the crash, CKP still had FDV of more than $10 million, and a circulating market value of $4 million was higher than the $1.5 million compensation amount. At present, the proposal voting has been officially launched, and the supporters have won more than 70% of the votes. And even if the Cakepie DAO and retail investors do not support the proposal, it seems that it will not be able to compete with the latest "whale" with 50% of the voting power. Changpeng Zhao once said 2 years ago that "letting the masses vote is not the same as letting capital vote." But this time, he seems to stand on the side of capital and become the one who decides the life and death of community projects with capital advantages. Summary In general, PancakeSwap's tokenomics 3.0 proposal is controversial, but it also reflects the current DeFi ecology in the governance machine.