|Leading multichain DEX on BNB Chain, Ethereum, Aptos, Arbitrum, zkSync, Base, Polygon zkEVM, Linea, and opBNB
|30 Nov 2023
To boost liquidity, reduce slippage, and increase volumes for axlUSDC pairs on PancakeSwap, we are proposing US$100,000 worth of AXL tokens to be exchanged for CAKE tokens and locked up as veCAKE for 4 years.
Notably, this is not a token spend as the veCAKE will remain the property of Axelar. They will be used to vote for axlUSDC gauges across various chains on PancakeSwap every 2 weeks.
PancakeSwap has launched a new veCAKE gauge system, similar to Curve’s veCRV and Balancer’s veBAL. Users can lock up CAKE for a maximum of 4 years, and then vote for gauges on PancakeSwap every 2 weeks. Based on the amount of vote each gauge receives, the underlying liquidity pair (e.g. axlUSDC-USDT) will receive a pro-rata amount of CAKE emission. This CAKE emission is used to attract users to deepen liquidity for the specific pair, reducing slippage and encouraging higher trading volumes for that pair.
In our previous round of incentivization with axlUSDC on the BNB Chain, the total transfers of axlUSDC increased from 256,090 to 489,842, while the daily average volumes increased from ~US$880k to >US$2M, highlighting an effective campaign.
By having veCAKE to vote for axlUSDC gauges across various chains regularly, axlUSDC will continue to improve its utilization and market metrics. Importantly, there is no token spend in this proposal, as the locked CAKE tokens will belong to the AXL community.
If the results of incentivizing via veCAKE are favorable, Axelar can increase the amount of veCAKE accumulated, up to a maximum of $1,000,000 (inclusive of the original $100,000).
This proposal aims to grow the Axelar ecosystem by:
Replacing incentive spend: Instead of spending ~US$650,000 worth of AXL tokens (converted US$40,000 per 90 days to 4 year period) to incentivize axlUSDC liquidity, Axelar can accumulate veCAKE instead, which will be used repeatedly over 4 years to deepen axlUSDC’s liquidity.
Increasing liquidity: By incentivizing liquidity provision in axlUSDC pairs on various chains, it will reduce slippage and enhance trading volume, making (cross-chain) swaps involving axlUSDC more attractive.
Proposal amount: PancakeSwap is proposing US$100,000 worth of AXL tokens to be exchanged for CAKE, and locked for 4 years as veCAKE. This is not a token spend as the veCAKE will remain the property of Axelar.
Use of veCAKE: veCAKE will be used to vote for axlUSDC gauges (currently, there’s significant liquidity on BNB Chain, Linea, and Base) on PancakeSwap every 2 weeks.
Re-lock mechanism: To ensure the voting power remains high, the veCAKE may be re-locked regularly for 4 years. The community may enact another proposal if they wish to stop the re-lock process.
Primary: Trading volume and TVL of the relevant axlUSDC pairs on PancakeSwap should at least maintain or improve from the current levels.
Secondary: axlUSDC transfer count should increase meaningfully from current levels.
Axelar team to send US$100,000 of AXL to the Squid team
Squid to exchange the AXL tokens for CAKE tokens
Squid to lock all the CAKE for 4 years as veCAKE and vote for axlUSDC gauges every 2 weeks, relocking the entire amount of veCAKE for 4 years regularly
If the results are favorable, Axelar may commit an additional $900,000 of AXL to this veCAKE programme, and repeat Steps 2 and 3 of the process
PancakeSwap’s veCAKE system involves smart contracts, which inherently carry smart contract risks. However, this is heavily mitigated by our audits, which are regularly updated in our documentation.
As an essential component of the DeFi landscape, PancakeSwap aims to support emerging and established projects by hosting their liquidity and fostering their adoption. Establishing this veCAKE arrangement also benefits CAKE holders and the broader PancakeSwap community.