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DeFi protocol Parrot Finance will begin implementing an activist investor-led plan to phase out the platform’s PRT token, with redemptions set to begin as early as Monday.
The redemption is the result of a highly contentious vote that returns a portion of Parrot Finance’s treasury to token holders.
A Controversial Vote
Two years ago, Parrot Finance had raised over $80 million during the public token sale of its PRT tokens. Cut to 2023, and the DeFi protocol is holding a controversial vote to buy its investors out. The proposal in question calls for the end of Parrot’s governance token through a redemption program which will see $50 million from its treasury be divided among PRT token holders, priced at $0.0045 each. If passed, the vote would be catastrophic to Parrot’s earliest investors, who shared the protocol’s vision of building a powerful stablecoin and lending market.
Early investors would end up recouping only one-tenth of their initial investment, despite the fact that Parrot’s treasury would retain around $73 million. The proposal has angered investors who argue that the DeFi protocol’s team could walk away with millions of dollars, despite never following up on their promise of giving PRT token holders more control over the protocol and often being absent from the protocol entirely. According to early investors, the Parrot team had promised them a protocol that they would be able to govern. Instead, they are being asked to leave for pennies on the dollar.
Going Ahead With Token Buyback
According to multiple posts on its Discord server, Parrot Finance is moving ahead with its plan to purchase its PRT tokens from sellers at a price of $0.0045 each. The purchase will be carried out through a stablecoin market set up on the OpenBook decentralized exchange. According to the company, the redemption period will last for eight weeks, concluding with the sunsetting of the PRT token.
The greenlighting of the plan comes after the results of a community vote to return a chunk of the DeFi protocol’s treasury to token holders came out. The vote passed with 99% voting in favor but faced significant backlash from smaller investors who accused the Parrot team of keeping a major chunk of the treasury for themselves. According to pseudo-anonymous on-chain sleuth Ashpool, the vote was a premeditated sham, pointing to the “dress rehearsal” vote, which was held a week prior to the final proposal. According to a thread by crypto reporter Danny Nelson, the Parrot team, along with activist investors, are likely to make millions in future payroll, a huge share of the treasury, and complete ownership of the protocol.
“gopartyparrot raised nearly $90 million during the height of Solana’s 2021 bull market. But its plans to build new kinds of crypto lending markets never caught fire. After nearly a year of pressure from activist investors, the protocol held a contentious vote to buy out all PRT holders. The now-passed plan earmarks just a slice of Parrot’s remaining treasury for normal investors.”
Original Investors Obliterated
Nelson called the Parrot team the real winners of the exercise, stating,
“Parrot’s developer team walks away with millions of dollars in future payroll runway and a massive share of the treasury, not to mention full ownership of the protocol. They’re almost certainly the big winners here. Activist investors will also likely make a bundle. Some of them have likely been buying the token for months at prices well below the buyback rate in preparation for the redemption program.”
Nelson stated that the original investors in the project would be obliterated. As things stand, the original investors in Parrot and its PRT token can expect to recover only about a tenth of their actual investments.
“But the original retail investors in Parrot are getting absolutely obliterated. Anyone who bought Parrot’s IDO and stuck it out to the end will recoup around 1/10 of their capital.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.