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PancakeSwap DAO Proposal to “Reduce Block Rewards” Passes with 57.77% Vote

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On April 29th, it was reported on the governance page that the vote on the PancakeSwap DAO proposal to \”reduce block rewards\” has ended. The \”actively reducing\” proposal received a

PancakeSwap DAO Proposal to Reduce Block Rewards Passes with 57.77% Vote

On April 29th, it was reported on the governance page that the vote on the PancakeSwap DAO proposal to “reduce block rewards” has ended. The “actively reducing” proposal received a vote of 57.77%. According to the proposal, “actively reducing” means immediately adjusting the release of CAKE Syrup Pool from 6.65 CAKE/blocks to 3 CAKE/blocks. Afterwards, the monthly reduction of 0.5 CAKE/blocks lasted for 5 months, The release of CAKE Syrup Pool decreased to 0.35 CAKE/block (approximately 2% APR) in the 6th month.

PancakeSwap’s proposal to reduce block rewards has been voted through

Introduction

On April 29th, 2021, the governance page of PancakeSwap announced that the vote on the DAO proposal to “reduce block rewards” had ended, receiving a vote of 57.77%. This proposal will now have a significant impact on the way that the CAKE Syrup Pool is released.

What Does “Actively Reducing” Mean?

According to the proposal, “actively reducing” means immediately adjusting the release of CAKE Syrup Pool from 6.65 CAKE/blocks to 3 CAKE/blocks. This reduction will be followed by a monthly decrease of 0.5 CAKE/blocks for the next five months. By the sixth month, the release of CAKE Syrup Pool will have decreased to 0.35 CAKE/block, which equates to approximately 2% APR.

How Will This Affect PancakeSwap and Its Users?

The reduction in block rewards will have significant effects on the liquidity provision in the PancakeSwap ecosystem. Traders who are incentivized through liquidity provision will now receive fewer rewards than they once did. This reduction in rewards may discourage some traders from providing liquidity, which could lead to a decrease in the total liquidity of PancakeSwap.
On the other hand, the reduction in block rewards will provide significant benefits for the PancakeSwap ecosystem as a whole. For example, the reduction will allow PancakeSwap to better manage its inflationary pressures. Furthermore, this reduction may lead to a more sustainable distribution of rewards, ensuring that traders are incentivized for the right reasons.

Potential Drawbacks

However, there are potential drawbacks to this proposal. These drawbacks include a decrease in daily trading volumes, a decrease in the total liquidity of PancakeSwap, and the potential loss of traders to other DEXs that offer higher rewards.

Conclusion

The decision to “actively reduce” block rewards on the PancakeSwap DEX will have a significant impact on the PancakeSwap ecosystem and its users. While there are potential drawbacks to this proposal, its immediate implementation will provide significant benefits for PancakeSwap in the long term.

FAQs

1. Why did PancakeSwap decide to reduce block rewards?
Ans: The reduction in block rewards will allow PancakeSwap to better manage its inflationary pressures and provide more sustainable rewards to traders.
2. How will the reduction in block rewards affect users?
Ans: Users who are incentivized through liquidity provision will now receive fewer rewards. This may discourage some traders from providing liquidity, leading to a decrease in the total liquidity of PancakeSwap.
3. What are the potential drawbacks of “actively reducing” block rewards?
Ans: The potential drawbacks include a decrease in daily trading volumes, a decrease in total liquidity, and the potential loss of traders to other DEXs that offer higher rewards.

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