Parrot Finance is facing a redemption vote two years after raising over $80 million in a public token sale during Solana’s heyday.
The proposed redemption program seeks to end Parrot’s governance token, PRT, with more than $80 million from its treasury set to be distributed among holders at $0.0045 per token. The price would drastically devalue the investment of early backers, causing them to recoup just one-tenth of their initial investment of $0.04 per token.
Critics claim that the team behind Parrot Finance could walk away with as much as $60 million under the proposed redemption plan while leaving other investors with only $12 million.
Today in governance was a mistake news: @gopartyparrot team takes their $72m remaining in ICO funds and attempts to split it $12m to the token holders, $60m to the team.Oh they also early unlocked their tokens and will be voting it through regardless of what anybody else says pic.twitter.com/vmhDXJochQ— Spreek (@spreekaway) July 21, 2023
A glance at responses to the proposal on social media paints a picture of a divided community. Some investors see the redemption as a necessary step to curb the treasury’s mismanagement, while others consider it a robbery due to the significant loss in token value.
I think it is better to push for this than nothing, any kind of continual pushed on this could drag it on for months for holders— Adonai (@Adonaieth) July 22, 2023
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The situation has also raised concerns in the broader crypto community about the risks associated with funding projects through unregulated token offerings, particularly with the increased scrutiny from regulatory bodies like the U.S. Securities and Exchange Commission (SEC).
what annoys me is when projects like this lead to conclusions like “DAO governance doesn’t work”if they have retarded token distributions, ability to unlock their tokens, don’t ship anything etc. then they have little in common with real DAO’s if a team wants to rug,…— lito.eth (@litocoen) July 22, 2023
The proposal is currently open for voting and has six days remaining. However, there are many who are skeptical about the outcome, claiming that the team retains significant control over the PRT supply and could influence the vote in their favor.
At the time of writing, an overwhelming 97% of the votes favored the buyback.
The Parrot team has, however, disputed some of these allegations, claiming in a July 22 Twitter statement that they have not touched or voted with the treasury tokens and that suggestions they stand to make up to $60 million from the proposed token conversion are way off the mark.
will add this to thread— Rooter (@0xrooter) July 22, 2023
However, despite the team’s protestations, the absence of a decentralized autonomous organization (DAO) has prevented token holders from participating in important decisions, with the team reportedly executing major changes without formal votes.
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