A proposal put forward by Parrot Protocol’s team, a liquidity network based on the Solana blockchain, has caused controversy within its community. The proposal, open for voting until July 27th, suggests the redemption of Parrot Protocol’s PRT tokens for their liquid treasury value and the transition to a no-token protocol.
According to the proposal, the redemption price for PRT tokens has been set at $0.0045 per token. Data from CryptoRank reveals that Parrot Protocol has managed to raise over $89 million since its launch in 2021. However, investors in its Initial DEX Offering (IDO) and initial exchange offering (IEO) have experienced a negative return on investment (ROI) of -89%, indicating that they have lost money on their investment.
Criticism of the proposal has arisen due to concerns over the distribution and control of PRT tokens. Community members claim that 81% of the tokens are controlled by the Parrot Protocol team. In response, the team has denied these claims, stating on Twitter that treasury tokens are never utilized or accessed for governance purposes. A breakdown of the distribution of tokens provided by CryptoRank indicates that 35% were allocated as Protocol Incentives, 20% to the Team & Angels, 10% through public sales, 20% in Seed rounds, and 15% to Others.
The proposal itself does not provide a detailed explanation for the move, only noting that “many PRT holders would like to redeem their PRT tokens for their treasury value.” This proposal follows a change in Parrot Protocol’s tokenomics in November 2022, when the token locking period was reduced from 12 months to 7 days, purportedly to allow for more flexibility for stakeholders to enter or exit their positions.
One concerning aspect of the proposal is the lack of clarity regarding the fate of unclaimed funds after the 8-week redemption period. Community members have expressed concerns that insiders could potentially cash out these funds. Some community members have voiced their opposition to the proposal, arguing that the pro-rata value of the redeemed tokens is significantly undervalued and fails to account for alleged misuse of the treasury by the team without community consent. They also highlight the early unlocking of the team and venture capital fund’s vesting tokens, which results in the team and VCs holding the majority of the tokens and rendering the vote meaningless.
The controversy surrounding Parrot Protocol’s proposal reflects the challenges and complexities of governance in decentralized protocols. It remains to be seen how the community will vote on the proposal and whether any changes will be made to address the concerns raised.