The PancakeSwap decentralized exchange community has opened a governance discussion on a proposal to permanently reduce the maximum supply of its native CAKE token by 50 million units. If approved, the hard cap would decrease from 450 million CAKE to 400 million, representing an 11% reduction in the maximum supply.
The proposal, announced on January 13, 2026, follows the successful implementation of CAKE Tokenomics 3.0 in April 2025. That earlier upgrade removed the veCAKE staking model and slashed daily token emissions from approximately 40,000 CAKE to about 22,500. As a result, the protocol has maintained a net deflationary trend since September 2023. PancakeSwap reports achieving a net burn of ~8.19% of CAKE's token supply in 2025, reducing the circulating supply from roughly 380 million tokens at the start of the year to around 350 million currently.
According to ChefMaroon, PancakeSwap's business development lead, the ~50 million CAKE gap between the current circulating supply and the proposed new max supply is intended as a buffer. "We don't foresee ourselves needing to use it, though if extenuating circumstances require, we may still tap on," they stated. The protocol's Ecosystem Growth Fund, holding about 3.5 million CAKE, is expected to cover future growth needs before any consideration of increased emissions. The team emphasized it is "unlikely that the protocol will ever revert to an inflationary state."
The proposal comes amid strong platform performance. PancakeSwap processed $2.36 trillion in trading volume during 2025, a 619% year-over-year increase, securing a 37.84% market share to become the largest DEX by volume. It has sustained the number one DEX ranking since May 2025.
The market reacted positively to the news. CAKE's 24-hour trading volume surged roughly 30% on January 13, with the token's price climbing around 2% to trade near $1.98. Analysts suggest the supply reduction could act as a major catalyst for a price rally, though technical indicators show the token trading near a neutral equilibrium with potential for volatility.
