Parrot Protocol, Built on Solana, Proposes Tokenless Model – Investors Warned of Potential -89% Returns

The Proposal to Go Tokenless

A recent proposal from the team behind Parrot Protocol — a Solana-based liquidity network — has sparked controversy among its community members. The proposal, up for a vote until July 27, calls for the redemption of its PRT tokens for liquid treasury value and the transition to a no-token protocol.

PRT Redemption Price and Investor Returns

Based on the proposal, the PRT redemption price was established at $0.0045 per token. According to data from CryptoRank, the protocol 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 have lost money on their investment.

Reasons Behind the Move

The protocol’s plan does not explain the reasons behind the move, only mentioning that “many PRT holders would like to redeem their PRT tokens for their treasury value.“ The proposal also follows changes in Parrot’s tokenomics from November 2022 when the protocol shortened its token locking period from 12 months to seven days, claiming it would “create more flexibility for stakeholders to enter or exit their positions.“

Community Concerns and Token Distribution

Comments from community members indicate that the team controls 81% of tokens. However, on Twitter, Parrot’s team has refuted these claims by stating that treasury tokens are never touched or used for governance purposes. A breakdown provided by CryptoRank indicates that 35% of tokens were distributed as protocol incentives, 20% to the team and angels, 10% as public sales, 20% as seed rounds, and 15% as others.

Fate of Unclaimed Funds

Additionally, the proposal does not clarify the fate of unclaimed funds after the eight-week redemption period, with community members suggesting the funds could be cashed out by insiders.

Community Member’s Response

“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,” wrote one community member on the proposal discussion.