Yesterday a friend left a message asking for an explanation of soft cap, hard cap and deflation. This article will explain it in a simple and easy-to-understand way.

Before writing about the soft cap and hard cap, let me tell you that tonight is Cake’s fourth quarter AMA. Some interesting things will come out and you can take a look at it in the evening.

Let me first tell you about an interesting thing I discovered this morning. A Cake user wanted to withdraw Cake from Binance, but Binance did not allow him to do so. The reason given was that Binance’s hot wallet was out of Cake and needed to be replenished (it had been sold out).

Customer service reply:

Hello, we have verified it for you. We are very sorry. As the current balance replenishment process has not been completed, it will take longer. The customer service here recommends that you wait patiently for 1-8 hours and then try to withdraw the amount you want. If you currently want to use the APT chain to withdraw, the current relevant department recommends that you can withdraw an amount of 13,000 Cake. Therefore, if you are in a hurry to use it, you can try to withdraw this amount first, or wait patiently. Thank you.

You can understand that in the short term, a large amount of funds flowed into Cake, and all the Cake in Binance Exchange was bought up, resulting in the inability to withdraw cash. This is still a good thing in terms of capital inflow. Now everyone in Cake's Telegram group wants to buy Cake from the chain, because the exchange now has only a small amount of inventory. Of course, you can also buy it on the exchange, anyway, you can withdraw cash sooner or later.

Okay, let’s get back to the topic and talk about soft-cap and hard-cap deflation.

In fact, there is not much difference between the soft cap and the hard cap, because the current circulation is close to 400 million, that is, the soft cap is close to 400 million (more than 200 million in circulation plus more than 100 million LP pledges). Although the total circulation shows 750 million, the project has said in many ama and community: 400 million is the hard cap. What does 400 million is the hard cap mean? It means that the actual circulation of Cake in this life will not exceed 400 million, and will gradually decrease.

Because the current circulating part is close to 400 million, it means that it is in full circulation and there is no further issuance. Although farms and other rewards are still producing cakes, it has to be calculated like this. Suppose 200,000 cakes are produced every week, but the project party repurchases and destroys 250,000 cakes through the handling fees earned this week, then it is not counted as output. In a real sense: cakes are getting less and less every week (this is deflation).

Therefore, the real situation of cake is that it is now fully circulated, there is no such thing as additional issuance to crash the market, and the amount of cake in circulation is getting less every week.

To put it bluntly, cake is following the model of bnb10u. The project owner is now eager to deflate. To put it bluntly, the good news has been given to the market. It depends on how the market chooses. Of course, this kind of good news is a subtle influence, not a sudden one. The most important thing now is to exchange time for space. Maybe in a month or two, everyone will look back and see that this is a gold mine.

Thoughts on the gold pit: Cake hit new lows a while ago, which coincided with the time when the project was about to cut production. My understanding is: because the project cut production, many LPs were sold and other coins were bought elsewhere for staking, hoping to get higher returns. So in my understanding, all the chips that should have been smashed a while ago have been smashed, and now there is really no chips left to smash. Besides, Binance has no way to withdraw Cake today, and all the Cakes in Binance's hot wallet have been bought out. #一起来跟单 #带你看看币安Launchpad #注意资金安全 $CAKE $BNB $BTC