PancakeSwap Proposes Major Fee Shift to Benefit Liquidity Providers

PancakeSwap proposes major overhaul of fee structure and token emissions

PancakeSwap, a leading decentralized exchange, has put forward a significant governance proposal called "The Flip." The plan would raise the share of swap fees going to liquidity providers (people who lock up tokens to enable trading) to 88% on its v3 and Infinity pools across all 11 supported blockchains.

At the same time, the proposal would cut daily CAKE token emissions by roughly 69%, reducing the amount of new CAKE entering circulation from 22,500 to just 7,000 per day.

The proposal is currently in the community discussion stage, ahead of a formal Snapshot vote.

Key numbers behind the proposal

• LP fee share on v3 and Infinity pools would rise to 88%, up from 66–68% on EVM pools and 84% on Solana pools
• The remaining 12% of swap fees would go to the protocol treasury
• CAKE emissions would drop from 22,500 to 7,000 tokens daily — a reduction of 15,500 per day, or about 5.7 million per year
• The Kitchen estimates v3 and Infinity liquidity providers would have earned roughly $62 million more in fees based on 2025 trading volume
• 15,500 fewer CAKE entering supply daily would leave 7,000 CAKE per day for a new ecosystem fund called the Pantry
• v2 pools would be unchanged, continuing to direct 23% of fees to CAKE burns, which the Kitchen says alone could keep CAKE net deflationary by about 190,000 CAKE per week

What the proposal changes and what it does not

Under the proposal, trader fee tiers on v3 would remain the same — more of each fee would simply go to liquidity providers instead of the protocol. The change would apply automatically to positions without requiring additional staking or locking.

Infinity pools work differently because their LP fees are fixed when created. Lowering the protocol charge would reduce the total fee instead. For example, a 1% pool would fall to roughly 0.76%, with 0.67% still going to liquidity providers and about 0.091% to the protocol. In that case, LPs receive a larger share of a smaller fee rather than the same increase in earnings as v3 LPs.

The treasury's share would fall on the two lowest EVM v3 tiers but rise on the 0.25% and 1% tiers and on Solana v3. No dedicated fee share would remain for CAKE burns on v3.

PancakeSwap v2 would remain untouched. Its fees are hard-coded, so the existing mechanism that sends 23% of swap fees to CAKE burns would continue operating as it does now.

Timeline and next steps

The Kitchen will review community feedback before publishing a final proposal for a Snapshot vote. If approved, implementation would begin within two weeks of passage, targeting a start in November 2026, with the roughly three-month rollout expected to finish by the end of January 2027.

What is confirmed

The proposal, its key figures, and the stated timeline are drawn directly from the Kitchen's published document on the PancakeSwap forum. The claim that v2 burns alone could keep CAKE net deflationary is based on the Kitchen's calculation using the preceding 10 weeks' average activity.

Why this matters for PancakeSwap

The proposal aims to shift how PancakeSwap attracts liquidity. Rather than relying heavily on newly issued CAKE tokens, the exchange would make trading fees the primary incentive for liquidity providers. The move could also reduce annual CAKE emissions by roughly 5.7 million tokens while strengthening the existing burn mechanism on v2.

Sources

• The Defiant