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Alameda-backed Parrot Protocol team to rage quit after vote

Alameda-backed Parrot Protocol team to rage quit after vote
Alameda Research was an early investor in Parrot Protocol, which is now instigating a rage-quit.
  • The Parrot Protocol team may walk away with a $47.5 million payday after rage quitting.
  • Aggrieved investors say the team’s actions are duplicitous.

The team behind the Solana-based DeFi enterprise Parrot Protocol is close to engineering a rage-quit of the project that could see them $47.5 million richer.

Rage quitting means the forced dissolution of a project’s treasury by a community vote to return the reserves to investors.

This distribution happens on a pro-rata basis with token holders receiving a share of the pool proportional to their ownership.

Aggrieved investors are seething at the team and venture capital investors’ payday as retail investors may be left holding only cents on the dollar of their initial outlay.

Parrot Protocol currently has $74 million in its treasury. It raised $90 million — $5 million in a private seed round from VC backers including Sam Bankman-Fried’s bankrupt Alameda Research and $85 million from a public token sale — both in 2021.

With at least $47.5 million going to the team, this leaves investors with only $27 million to share among themselves, a far cry from what they invested in the public sale, a so-called initial decentralised-exchange offering.

The investors have accused the project team of duplicity since the public sale two years ago, and critiqued its expenditures.

“From day one post-IDO, the team worked on syphoning IDO funds to related entities in their ecosystem with no benefit to PRT token holders,” Tmnxeq, a pseudonymous investor in the project and vocal critic of the team, told DL News.

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Neither the Parrot Protocol team nor its VC backers responded to requests for comment.

DeFi rage quits are trending as projects from 2021 that failed to achieve product-market fit are crumbling after they proved unable to survive a protracted bear market.

The team behind fellow DeFi project Hector Network recently instigated a rage quit of its own.

A farcical vote

DeFi rage quits usually involve intense debate within a project’s community, but Parrot’s case differs in significant ways.

For one, Parrot Protocol did not have a decentralised autonomous organisation structure because the team did not create that type of governance architecture for the project.

That was despite granting governance rights to PRT token holders was part of its roadmap.

The vote to liquidate the treasury and distribute the funds to token holders is the first-ever vote in the project’s two-year history.

“I have no other option than to vote yes due to the risk associated with staying in this protocol any longer,” said a community member on the voting forum.

Several forum members echoed similar sentiments, venting frustration at the outcome, but said they had little choice but to vote for it.

The vote, which ended on July 28, had over six billion yes votes in favour of liquidating the treasury against 15 million in opposition.

Parrot Protocol’s treasury redemption will begin on Monday and will last for eight weeks following the conclusion of the vote.

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The team set a redemption price of $0.0045 per PRT token, with some investors claiming they will lose about 80% of their original investments.

Parrot Protocol will transition to a no-token protocol once the liquidation is complete, the team has proposed. It will instead exist as a lending market with its stablecoin called Parrot USD or PAI.

There is no indication of how long the project might remain viable post-liquidation with no treasury funds.

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