PancakeSwap proposes to introduce veCAKE to strengthen governance influence and liquidity

Multi-chain decentralized exchange PancakeSwap has proposed launching fiduciary CAKE (veCAKE) and vote meters in the next few days with over 100,000 votes Currently 98% of the votes are in favor of the launch.

The move is intended to “give CAKE holders more influence over governance, increase liquidity in our pools, and increase rewards for CAKE stakers,” the proposal says.

As part of PancakeSwap's Q4 roadmap, voting meters allow veCAKE holders to vote on the distribution of emissions from CAKE farms. This means that CAKE holders, stakers and protocols can start accumulating veCAKE and use their holdings to influence the reward distribution in different liquidity pools on the decentralized exchange.

In particular, holders could decide how CAKE emissions are divided within each pool, with their voting rights depending on their veCAKE balance. Holders could also delegate their voting rights to external protocols and potentially earn additional rewards.

The Vote-Escrowed (ve) model was developed by Curve Finance and later adopted by many DEXs. It allows users to lock their tokens for a set period of time during which they cannot be traded. In return, they receive “ve” tokens, which grant them greater voting rights in governance decisions and often higher protocol rewards. The aim is to encourage long-term engagement and align user interests with the success of a protocol, moving away from short-term speculation and towards sustainable participation and decision-making.

Phased start and initial allocations

According to the proposal, the rollout of voting indicators will occur in phases, initially covering liquidity pools on the BNB chain, Ethereum and Arbitrum, with rewards of approximately 0.99 CAKE per block. There will be expansions to other chains in later phases.

The “Kitchen” team, which manages the PancakeSwap platform, proposes maintaining a 40% voting share in the initial launch, which they say is necessary to “provide a smooth transition for liquidity providers from farms managed by Kitchen , to farms managed through veCAKE voting.” “without materially impacting their APRs” and that “core liquidity pools continue to receive sufficient incentives so that liquidity depth and fee generation are not significantly impacted.”

The Kitchen's voting strategy would focus on maintaining competitive returns for large liquidity pools, ensuring existing partner agreements are honored and providing some allocation to smaller operations as part of a phased transition to a new veCAKE metric voting system, it said.

“If the voting results do not have a material impact on the core liquidity pools and trading volumes, the Kitchen will abstain from voting in that particular voting period or vote in line with the existing votes,” the Kitchen team added. “Over time, the kitchen aims to reduce the proportion of CAKE emissions managed directly by the kitchen as all veCAKE participants become familiar with the process.”

Next Steps

Voting on the proposal is scheduled to end tomorrow at 5:30 a.m. ET. If approved, the proposal will be adopted and veCAKE will be launched shortly after voting is completed.

According to its website, PancakeSwap currently offers DEX trading on BNB Chain, Ethereum, Polygon, zkSync Era, Arbitrum, Linea, Base, Aptos, and opBNB.

This latest proposal follows PancakeSwap’s move to share trading fee revenue with CAKE token stakers in July. PancakeSwap also launched its own gaming marketplace last week.

Update from November 22nd: Voting is now complete and the proposal has been approved with over 99% support, with veCAKE and voting tools officially launched on the platform.

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