thankful to see lots of feedback from the community on our recent proposal
here are some of my thoughts:
1) "why not reduce the max supply such that max supply = total supply, and take a portion of each week's CAKE buybacks to be used as LP incentives?"
in running a business, consistency is important
if we remove the masterchef smart contract that consistently gives out ~22.25k CAKE per day to LPs and other products, and rely on however much CAKE we buy back each week and give a portion of that to LPs, there could be weeks where we may not be able to give out sufficient CAKE to LPs (when buybacks are weak)
this harms LPs' confidence in PCS as a venue where they can expect a steady stream of yield, which may cause LPs to migrate away from PCS, creating a negative flywheel
we don't foresee we'll have inflationary CAKE any time soon given our performance over the past 2 years, but knowing that our smart contract will consistently give out X amount of CAKE per day to our LPs as a whole gives them long-term confidence that this is a good place to provide liquidity
also, as the proposal hinted at, in the unlikely event that PCS is no longer buying back more than ~22.25k CAKE per day (i.e. inflationary), the buffer between the total supply and max supply gives the protocol some room to still meet its LPs' yield needs.
not having this buffer would mean the protocol will no longer be able to continue emitting CAKE incentives to LPs without passing an emergency proposal, which adds unnecessary burden and stress to the team in what would already be a difficult situation
2) "this proposal is useless"
partially right, but nuance is needed. on a high level, because CAKE has been deflationary for >2 years, the max supply of the token has no real impact on the tokenomics
however, certain sites/apps like
@binance and
@CoinMarketCap rely on a token's max supply to determine its FDV
so this gives users who don't pay too close attention to our tokenomics the false impression that our FDV is $916M when it should actually be $726M based on the total supply
this proposal aims to correct the difference slightly and make our token stats more accurate to users
proposal to cut CAKE's max supply from 450m to 400m
let us know your thoughts