PancakeSwap’s new Tokenomics v3 proposal promises “true ownership, simplified governance and sustainable growth” by overhauling the platform’s incentive and governance mechanisms.
The proposal seeks to deprecate the current veCAKE model, shifting towards direct emissions management and implementing a maximum one-year token lock period. Central to this shift is the aim to boost capital efficiency and simplify participation. The new model intends to cut CAKE token emissions by 43% and redirect incentives to liquidity pools with higher trading volume and fees.
However, critics warn that the proposal sets a dangerous precedent. Curve founder Michael Egorov called it a “governance attack at its finest,” arguing that CAKE insiders effectively wipe out governance rights of existing veCAKE holders and could force-unlock their own tokens after the vote. Egorov cautioned against the upgradability of ve-governance systems, especially in relation to lock mechanisms, suggesting it poses risks to governance integrity. “Upgradability is a bug,” Egorov warned. “Don’t make your veGovernance upgradable, especially the lock part.”
Others, like forum member Hubert, criticized the motivation behind the change, pointing to the influence of third-party platforms such as Magpie Finance, which offers Convex-style yield aggregation that allegedly siphons incentives away from PancakeSwap without adequate benefit. Magpie Finance uses mAssets, or synthetic assets derived from user deposits, which may become unstable (depeg) due to insufficient liquidity or limited redemption options. Critics suggest that rather than removing veCAKE, PancakeSwap should focus on capping emissions to these depegged synthetic pairs and restructuring rewards based on exchange fee generation.
Supporters of the v3 model counter that the existing veCAKE system has not prevented sell pressure on CAKE and contributes to inefficiency and lack of transparency. They argue that the new model will simplify governance and ensure sustainable growth for PancakeSwap by cutting emissions and redirecting incentives to high-volume, high-fee pools.
The proposal process entails initial community discussion, with the potential for a formal vote on PancakeSwap’s Governance Portal if enough support or consensus is observed. Within the first day of discussion, the proposal attracted significant engagement, accumulating around 150 comments from some 50 unique users.