- July 26, 2023
- Posted by: [email protected]
- Category:
A disputed proposal from Parrot Protocol, a Solana-based liquidity network, has ignited heated debates among its community members. The proposal, which will be voted on until July 27, describes the redemption of PRT tokens at a fixed rate of $0.0045 per token, converting them into liquid treasury value. Moreover, the plan entails a transition to a no-token protocol, eliminating the existence of PRT tokens entirely.
However, this proposal has not been well received by the community, with some calling it a potential “financial crime.” The controversy is further fueled by alarming investment statistics: since its launch in 2021, Parrot Protocol has managed to raise over $89 million, but its investors are currently facing a staggering return on investment (ROI) of -89%. A negative ROI indicates that investors have incurred significant losses on their initial investments in the platform’s Initial DEX Offering (IDO) and initial exchange offering (IEO).
Despite the intense debate surrounding the proposal, Parrot Protocol’s team has not provided a clear rationale for the drastic move. The only explanation offered is that “many PRT holders would like to redeem their PRT tokens for their Treasury value.” The situation becomes more perplexing when considering the changes made to Parrot’s tokenomics in November 2022, when the protocol significantly reduced the token locking period from 12 months to just 7 days, claiming it would offer stakeholders more flexibility to manage their positions.
The proposal’s critics have pointed out that 81% of the tokens are controlled by the Parrot team, implying a disproportionate distribution of power. However, the team has refuted these claims, asserting on Twitter that Treasury tokens have never been utilized for governance purposes or accessed in any way. A breakdown of token distribution provided by CryptoRank reveals that 35% of tokens were allocated as Protocol Incentives, 20% to teams and Angels, 10% in public sales, 20% in Seed rounds, and 15% under the Others category.
An additional area of concern raised by the community is the fate of unclaimed funds after the 8-week redemption period. Some members have voiced suspicions that insiders might be able to cash out these funds, raising questions about transparency and accountability within the protocol.
One community member expressed their frustration in the proposal discussion, stating, “The community has already explained in painstaking detail why we’re not interested in this. The pro-rata value is an extreme lowball and fails to account for many of the team’s misuses of the treasury without the community’s consent. The team also prematurely unlocked the team and VCs’ vesting tokens, so they are the majority token holders, making this vote meaningless and a total farce.”
As the voting period progresses, the Parrot Protocol community faces a critical decision that could reshape the platform’s future. The outcome will undoubtedly have profound implications for investors and the broader DeFi community, prompting discussions about governance, fairness, and the trustworthiness of liquidity networks.
