A recent proposal from the team at Parrot Protocol, a Solana-based liquidity network, has sparked controversy among its community members. The proposal, up for vote by July 27, calls for the redemption of its PRT tokens for liquid treasury value and a transition to a no-token protocol.
Based on the offer, the PRT redemption price was set at $0.0045 per token. According to data from CryptoRank, the protocol has raised over $89 million since its inception in 2021, with a current return on investment (ROI) of -89% for investors in its Initial DEX Offering (IDO) and Initial Exchange Offering (IEO). Having a negative ROI indicates that investors lost money on their investments.
Today came the news of a mistake in governance: @gopartyparrot The team takes the remaining $72 million in ICO funds and seeks to split it among $12 million token holders, a $60 million team.
oh they also unlocked their tokens soon and will vote on this no matter what anyone else says pic.twitter.com/vmhDXJochQ
— spreek (@spreekaway) 21 July 2023
The protocol’s plan does not explain the reasons behind the move, mentioning only that “many PRT holders will want to redeem their PRT tokens for their treasury value.” The proposal also follows Parrot’s changes to Tokenomics since November 2022, when the protocol reduced its token lock-in period from 12 months to 7 days, claiming that this would “create greater flexibility for stakeholders to enter or exit their positions.”
Comments from community members indicate that 81% of the tokens are controlled by the team. However, Parrot’s team has denied these claims. They said Twitter states that Treasury tokens are never touched or used for governance purposes. Analysis provided by CryptoRank shows that 35% of tokens were distributed as protocol incentives, 20% as teams and angels, 10% as public sales, 20% as seed rounds, and 15% as others.
Additionally, the proposal does not clarify what will be the fate of unclaimed funds after the 8-week redemption period, with community members suggesting that funds may be redeemed by insiders.
“The community has already explained in detail why we are not interested in this. The proportional value is too low and does not account for the many misuses of the team treasury without the consent of the community. The team has also prematurely unlocked the vested tokens of the team and VCs, so they are the majority token holders, making this vote meaningless and completely ridiculous,” wrote a community member on the proposal discussion.
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