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Decentralized cryptocurrency exchange PancakeSwap’s CAKE token began to rise following the community’s strong support for a voting proposal. The trigger for the altcoin’s price increase was the start of the voting process for a proposal to reduce CAKE’s supply by 300 million.
Significant Support for Voting Proposal: CAKE’s Price Is On The Rise
As is known, the decentralized autonomous organization (DAO) controlling the governance of PancakeSwap had proposed a vote to reduce the maximum CAKE supply from 750 million to 450 million. The voting period for the proposal began early today and will continue until 11:00 AM tomorrow.
So far, over 70,000 votes have been cast in the voting, with more than 99.95% of CAKE holders approving. If the critical proposal for the CAKE token is accepted, the reduction of the supply from 750 million to 450 million will be implemented by January 4, 2024.
A PancakeSwap team member commented to Coindesk after the start of the voting that reducing CAKE’s supply would positively reflect on the project and position it for continued growth in all distributions.
On the other hand, PancakeSwap’s President Chef Mochi, in a message shared on Telegram, said, “With the current circulating supply of 388 million CAKE, the team believes this new and lower limit will be sufficient to gain market share across all chains and sustain CAKE’s model.”
Following the submission of the voting proposal to reduce the supply quantity, the high support led to an increase in CAKE’s price. PancakeSwap’s native asset is currently trading at $3.73, up 7.38% in the last 24 hours.
Supply and Price Relationship
The relationship between supply and price is considered within the framework of the law of supply and demand, a fundamental concept in economics. According to this law, the price of a good or service (in the case of PancakeSwap, CAKE’s supply and price) is determined at the equilibrium point between demand for that good or service and its supply. The supply of a good or service can increase if producers want to provide more of it. If the increased supply does not rise in tandem with demand, excess goods or services accumulate in the market, which can lower prices. Moreover, producers may reduce prices to offload excess products.
When the supply of a good or service decreases, producers offer less of it. If demand remains constant or increases, the reduced supply can lead to higher prices. With less quantity of the good or service available, consumers may be willing to pay more to obtain it.
