Proposal to Launch veCAKE

Proposal to Launch veCAKE Gauges System

Vote-Escrowed CAKE Overview

Over the next few days, the Kitchen is proposing to introduce veCAKE. This update is designed to empower CAKE holders with increased governance influence, boost liquidity across our pools, and supercharge rewards for CAKE stakers.

As announced in our Q4 Roadmap, PancakeSwap will be shortly launching vote-escrowed CAKE (veCAKE) and voting gauges. Voting gauges allow for veCAKE holders to vote on where future CAKE farm emissions will be directed.

Launching voting gauges will allow existing CAKE holders, stakers and protocols to begin accumulating veCAKE.

At a high level, veCAKE holders will be able to:

1️⃣ Direct Gauge Emissions - veCAKE holders will be able to directly impact how CAKE emissions are distributed within each pool, rewarding specific liquidity pools and projects. Rewards and gauge weights are determined through voting power, which will be determined by veCAKE balance.

2️⃣ Enable 3rd Party Protocols through Delegation - external protocols, such as veCAKE managers and bribe markets, will compete to earn a share of veCAKE voting rights in order to direct CAKE rewards and receive voting incentives for doing so. veCAKE holders can opt to delegate their CAKE to automate their voting and potentially earn boosted rewards. However, direct participation is highly encouraged!

Voting gauges are planned to be launched in phases, beginning with all liquidity pools on BNB Chain, Ethereum and Arbitrum. Voting gauges on other chains will be added in progressive steps as we roll out all features related to the gauges.

The initial phase of veCAKE will include gauges for all farms that are currently receiving CAKE emissions across these three deployments. This means that every liquidity pool that currently has emissions is eligible to receive veCAKE votes.

The Kitchen’s Participation in veCAKE

Initially, the total rewards available for farm emissions on BNB Chain, Ethereum, and Arbitrum will be ~0.99 CAKE/block. This allocation will be taken from the existing CAKE Syrup Pool (~0.35 CAKE/block) and the Farm Emissions on BNB Chain, Ethereum, and Arbitrum (~0.64 CAKE/block).

As part of the voting gauges design, the Kitchen proposes to retain a 40% voting share of total veCAKE votes currently allocated to these farms.

There are two key reasons:

• To ensure a smooth transition for liquidity providers from farms managed by the Kitchen to farms which are managed by veCAKE voting, without affecting their APRs significantly in the initial rollout
• To ensure that core liquidity pools continue to receive sufficient incentives, so that liquidity depth and fee generation are not significantly affected. This will ensure the continuity of CAKE burns from trading fees, which drives deflationary CAKE tokenomics.

Note: “core liquidity pools” include major LPs like BNB, ETH, BTC, stablecoins, and CAKE.

In the initial rollout phase, the Kitchen will distribute these votes based on the following principles:

• Ensuring core liquidity pools are provided a competitive return on their LP positions
• Ensuring that existing Syrup Pool partner arrangements are met before migrating them fully to the veCAKE gauge voting system
• Ensuring that any of the smaller farms which did not receive any votes after the launch of veCAKE will receive at least some allocation in the initial rollout, capped at their current emission levels.

With the proposed vote allocation, the Kitchen will distribute its share of votes at the end of each voting epoch after all voting participants have voted.

In other words, the Kitchen will apply its voting share (at maximum, translating to ~0.4 CAKE/block) as far as needed to smoothen out any possible abrupt changes in the Farms, while allowing veCAKE participants to get used to the gauge voting mechanism.

If the gauge voting results will not affect any core liquidity pools and trading volumes significantly, the Kitchen will abstain from voting in that particular voting epoch or vote in alignment with existing votes.

Over time, the Kitchen aims to reduce the portion of CAKE emissions directly managed by the Kitchen as all veCAKE participants become familiar with the process.

Proposal Details

If this proposal closes with the community in favor of these recommendations, the proposed changes will be enacted and veCAKE launched shortly after this vote concludes. Additionally, the Kitchen will provide CAKE holders a comprehensive FAQ on participating in veCAKE and the voting gauges.