sam_dev 
PancakeSwap proposes an 88% increase in transaction fees for liquidity providers, reducing daily CAKE issuance by 69%.
pancakeswap
PancakeSwap is considering a proposal to overhaul the transaction fee distribution mechanism and CAKE token issuance, aiming to increase income for liquidity providers (LP) while reducing the number of new tokens introduced to the market. According to the plan proposed by the PancakeSwap Kitchen team, the swap fee rate for LPs on versions v3 and Infinity will increase to 88% across all 11 supported blockchains, while the remaining 12% will be transferred to the Treasury. The fee distribution mechanism on version v2 will remain unchanged.
If approved, the proposal could help liquidity providers earn an additional approximately $62 million in fees based on the 2025 trading volume. This is one of the notable changes to the PancakeSwap ecosystem as the platform seeks to enhance the appeal of liquidity provision amid DeFi protocols competing for users and capital.
According to the proposal, the fees traders have to pay will not change. Instead, PancakeSwap plans to adjust the revenue allocation from token swap activities to transfer a larger portion to liquidity providers. The team forecasts that this change could increase liquidity depth by up to 30%, while reducing price impact by about 20–25%.
Liquidity depth is a crucial factor for decentralized exchanges (DEX), as greater liquidity means high-value transactions are less likely to cause significant token price fluctuations. If PancakeSwap’s forecasts come to fruition, users could benefit from executing trades with lower price impact, while LPs have more incentive to contribute assets to liquidity pools.
However, the 30% liquidity increase and 20–25% price impact reduction are currently projections presented in the proposal, not confirmed results. The actual effectiveness will depend on the response of liquidity providers, trading volume, and the level of capital allocation among pools on each blockchain.
In addition to adjusting transaction fees, PancakeSwap also proposes a significant reduction in daily CAKE issuance. Specifically, the issuance is expected to decrease from 22,500 CAKE to 7,000 CAKE per day, equivalent to a reduction of about 69%. All 7,000 CAKE issued daily under the new mechanism will be allocated to the Pantry, a fund supporting ecosystem growth.
With the new issuance level, the number of CAKE created annually will decrease by approximately 5.7 million tokens compared to the current mechanism, if issuance levels remain stable throughout the year. Reducing token issuance could limit new supply pressure, but the impact on CAKE’s price will still depend on market demand, the number of tokens in circulation, and the actual usage of the protocol.
This proposal follows the tokenomics changes that PancakeSwap implemented from April 2025 through Tokenomics 3.0. According to data presented in the proposal, the CAKE supply has decreased by 11.5% since then. The new plan aims to maintain a supply reduction target of about 20% by 2030.
