Hello Crypto Apes, this is the parrot calling. We are excited to introduce you to the Parrot Protocol, a DeFi network built on Solana that will include the stablecoin PAI, a non-custodial lending market, and a margin trading vAMM. These are all use cases designed to solve one single problem: making value locked in DeFi systems accessible.
Today billions of dollars of value are locked in hundreds of DeFi systems, and converted into different yield generating tokens, such as the Uniswap LP tokens, or the AAVE interest bearing tokens. There aren’t many use cases available for these LP tokens. The value locked in DeFi as LP tokens are inaccessible, because their risks are opaque, and their units of account unsuitable for human consumption.
The Parrot Protocol is setting out to make value locked in LP tokens accessible, by creating a liquidity & lending network collateralized by these LP tokens. The Secret Parrot Master Plan (just between you and me):
- Create the PAI stablecoin, backed by LP tokens as collaterals. This creates a common unit of account to make it easy for holders of different types of LP tokens to transact with each other.
- Create the Parrot Lending market, taking LP tokens as collaterals. This allows LP holders to access their locked value by borrowing against lender liquidity.
- Create a margin trading product (virtual AMM) using PAI as the common unit of account. This allows the Parrot community to collect fees, and feed the family.
One Little Step For Parrot
The first product is the PAI stablecoin, built on Solana. It is available on devnet for testing, go rock it!
A use case that the PAI stablecoin will enable:
- Stake your ETH/BTC on an L1 swap to earn LP yields.
- Bridge your LP tokens to Solana.
- Mint PAI using your LP tokens as collaterals.
- Buy moar ETH or BTC with PAI on Serum.
- Numba go up.
- (Repaying PAI is optional).
So you will be able to continue yield farming on ETH Layer 1, as well as participating in new yield farms on Solana with PAI.
WOW, MUCH CAPITAL EFFICIENCY!
Total Supply: 1,000,000,000
- Protocol incentives: 35%
- Team & Angels: 17.5% (1–3 year lockup)
- Ecosystem & Partnerships: 20%
- Seed: 17.5% (1–3 year lockup)
- Protocol Controlled Reserve: 10%
Protocol Business Model
Yields don’t grow on trees. For the long-term viability of the protocol, there must be a healthy business model that can earn fees and sustain the protocol participants in a positive feedback loop.
The Parrot protocol will collect fees from the services it provides, use the fees to buy back PRT on the open market, and cycle back the PRT as protocol incentives. The three main sources of protocol fees are:
- Stability fees collected on the stablecoin PAI.
- Borrow interests on the PAI supply.
- Liquidation penalties.
- Borrow fees collected on the lending market.
- Trading fees for the vAMM. Note that the vAMM does not require LPs, so it’s possible for the protocol to capture the entire trading fees.
To secure the solvency of the system, the PRT token will be used to incentivize an insurance pool, which may be used to backstop any shortfall in the lending market. In extreme market conditions, PRT tokens may be minted to write off bad debts.
The Law of The Jungle: gPRT
To encourage long-term community participation in the governance, PRT holders who choose to lockup their tokens will received the governance token gPRT in return. The longer the lockup period, the greater the amount of gPRT tokens are minted for the supply locked.
- 1 year: 1x (gPRT1)
- 2 years: 1.5x (gPRT2)
- 3 years: 2x (gPRT3)
- 4 years: 4x (gPRT4)
These gPRT tokens will entitle their holders to additional voting power, as well as protocol incentives boost.
(Note: Exact multiplier effects of the gPRT tokens are pending economic audit, and are subject to change.)
- 2021 Q2 April-June: Stablecoin with LP collaterals.
- 2021 Q3 Solana DeFi Summer: Crypto lending with LP collaterals.
- 2021 Q4 -2022-Q1： Margin trading with vAMM, using PAI.
Building For Scale & Usability
DeFi is just getting started, and in 10 years there will be one billion DeFi apes.
We need a web scale blockchain to build a web scale experience. The Parrots emphatically agree with Serum’s Ultimate Vision, that to serve the future well, a platform is needed that possesses the following potentials:
1) Ability to process tens of thousands of trades per second and hundreds of thousands of orders per second
2) Ability to process 10 billion social media interactions per day, which is around 100k per second
3) Gas costs of less than $0.001
4) Scaling with the world
As the world’s technology grows, the blockchain’s throughput has to grow
5) Ability to process all submissions on a human-reaction-time scale.
Speed is a pre-requisite for usability. The Solana blockchain provides 10000x the capacity improvement, and 100x the latency improvement over L1, which makes it possible to create seamless dapps that are almost indistinguishable from a typical web app.
Join The Parrot Party
The Parrots can’t wait to tell you more about the exciting plans ahead. There will be meme contests, airdrops, IDOs, liquidity mining programs, etc. etc. etc.
Join The Parrot Party, it’s never too late!