PancakeSwap Plans to Pass 88% of Fees to LPs, Slashing Daily CAKE Emissions by Nearly 70%

TechFlow Summary:PancakeSwap wants to retain liquidity with real trading fees instead of newly minted CAKE, marking another signal of a DEX token economy shifting from “subsidies for scale” to “revenue-led performance.” For CAKE holders, the massive cut in emissions is positive, but since v3 will no longer allocate fees toward burns, whether deflation can be sustained will depend on v2’s trading volume.

This proposal, still under discussion, would redirect the remaining fees from v3 and Infinity pools to the treasury while leaving v2’s CAKE burn mechanism unchanged.

The Kitchen team at PancakeSwap has proposed increasing the share of trading fees allocated to liquidity providers (LPs) across v3 and Infinity pools on all 11 supported chains for this decentralized exchange to 88%, while simultaneously cutting CAKE’s effective emission rate by approximately 69%.

Named “The Flip,” this plan would direct the remaining 12% of these trading fees to the treasury and reduce the effective emission rate from 22,500 CAKE daily to 7,000 CAKE. The proposal is currently open for community discussion before proceeding to a Snapshot vote.

Kitchen estimates that based on 2025 trading volumes, LPs in v3 and Infinity pools could have earned an additional $62 million in fees. This proposal aims to make trading fees the primary incentive for attracting liquidity to PancakeSwap, while reducing reliance on newly issued CAKE.

Larger Share, With Infinity as an Exception

According to PancakeSwap’s fee documentation, the liquidity provider share in EVM (Ethereum Virtual Machine)-compatible v3 pools is 66–68%, while Solana v3 pools stand at 84%. Therefore, after the hike to 88%, the increases will vary across different pools.

Figure: Comparison of current and proposed fee distribution for PancakeSwap v3. EVM liquidity providers currently receive 66–68%, while Solana liquidity providers receive 84%. All pools will be adjusted to 88%, with 12% going to the treasury and no dedicated allocation set aside for burning.

For v3, traders’ fee tiers will remain unchanged, but a larger portion of each fee will flow to liquidity providers. The proposal states that the new distribution ratio will automatically apply to all positions without requiring additional staking or locking.

The mechanism for existing Infinity pools differs: their LP fees are fixed at creation, so reducing the protocol cut will directly lower the total trading fees. The proposal gives an example where a pool fee of 1% would drop to approximately 0.76%, with 0.67% still going to the LP and roughly 0.091% to the protocol. In this scenario, LPs gain a larger slice from a smaller pie, rather than experiencing proportional revenue growth like v3 LPs do.

The treasury’s fee share will decrease on the two lowest tiers of EVM v3 pools but increase on the 0.25% and 1% tiers as well as on Solana v3. The proposed distribution will no longer reserve a dedicated v3 fee share for CAKE burns.

Reduced Emissions Alongside Decreased Fee-Driven Burns

Under the proposal, the emission cut means 15,500 fewer CAKE tokens will enter circulation daily, equivalent to roughly 5.7 million annually. The remaining 7,000 CAKE per day will be directed into a new ecosystem fund called Pantry, which Kitchen can utilize for marketing, partnerships, and liquidity incentives.

PancakeSwap v2 will remain unchanged because its fee structure is hard-coded. v2 will continue allocating 23% of trading fees toward CAKE burns. Based on average activity over the previous ten weeks, Kitchen calculates that under this proposal, v2 burns alone will sustain CAKE net deflation, reducing circulating supply by approximately 190,000 tokens weekly after accounting for emissions.

Kitchen stated that a final proposal will be published for a Snapshot vote after reviewing community feedback. If approved, implementation is scheduled to begin within two weeks of approval—in November 2026—and complete the roughly three-month deployment process by the end of January 2027.

Join the official Coincamps community:

X: https://x.com/coincamps

Telegram: https://t.me/coin_camps