Parrot IDO Participants Upset Over Redemption Proposal
The developers behind Parrot Finance, a Solana-based DeFi lending protocol, want to transition to a tokenless system and redeem existing PRT tokens for USDC. But early investors in the project are fuming at the prospect of a significant loss.
On one side, the Parrot team wants to release the value currently locked in PRT, which has plummeted by more than 80% since the initial sale. On the other, angry investors have pointed out that they will bear the brunt of the losses. Meanwhile, insiders could take a disproportionate share of any funds raised by detokenization.
Parrot Finance Proposes PRT Redemption Scheme
On Friday, the Parrot developer team initiated a vote on whether to transition to a tokenless protocol.
If passed, the proposal will see the $50 million in funds from the Parrot treasury divided up among PRT holders. Valuing the tokens a $0.0045 each, the scheme would see IDO participants recoup just a tenth of their initial investment.
Investors Fuming at Prospect of Massive Losses
Suppose it wasn’t bad enough that early Parrot supporters have already seen the bulk of their investments wiped out. In that case, responses to the latest proposal suggest that many now feel cheated by the project’s developers.
One angry PRT owner called the proposal “pure financial crime,” arguing that the Parrot team would be able to cash out any unclaimed funds after the 8-week redemption period. This could mean they rake back significantly more than the IDO investors who supplied the original liquidity for the protocol.
To make matters worse, Parrot developers will also retain control of assets not used to fund the PRT redemption.
In total, the Parrot treasury consists of around $71 million. That means that after $50 million is redeemed in the detokenization process, $21 million would stay with insiders.
Parrot Fails to Live Up to Promise of Decentralization
Like most DeFi projects, Parrot promised early investors they would retain control over its governance. But that promise never materialized.
Ironically, the recent proposal is actually the first time Parrot has deployed its decentralized decision-making framework.
Instead of asking its Decentralized Autonomous Organization (DAO) to vote on key design issues and protocol development, time and again, Parrot developers took matters into their own hands.
For example, the team unilaterally unlocked a major cache of tokens two years ahead of schedule in November, rendering them majority token-holders. As such, community members have condemned the voting procedure as a farce.
And those concerns appear to be valid. At the time of writing, over 90% of the votes are in favor of the PRT redemption plan. Given the vocal community outrage over the proposal, it certainly seems as if Parrot insiders are swaying the vote.
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.