With Parrot’s last major tokenomic change, we have shortened yPRT’s locking period from 12 months to 7 days, to create more flexibility for stakeholders to enter or exit their positions. Since the implementation of this measure, we’ve seen a positive reaction for PRT.
Now, we are looking to initiate another major tokenomic change, inspired by this Tweet:
Having discussed this idea in Parrot’s community Discord, with the community generally supportive of accelerating token vesting, the team will move forward with the following plan:
- Putting in a price floor for PRT to ensure market stability around the unlock
- Wait two weeks after the price floor has been put in place
- Unlocking the team and VC tokens
- Burning the tokens acquired by the price floor
Why Unlocking Unvested Tokens Is A Good Idea
There is a significant supply overhang of unvested PRT tokens for the VCs that participated in the seed round. Per the original vesting schedule, about 1/3 of these vesting tokens have already been unlocked in the first year, and a further 2/3 would be released over the next two years.
While the team and investors have a long-term commitment to the protocol, these looming supply unlocks do create uncertainties that discourage new participants to enter the parrot community, for fear of continuous selling pressure from the unlocks.
If we unlock unvested tokens earlier, it will help to reduce these uncertainties and support a more stable market for PRT tokens. This will also help to align the interests of unvested and existing stakeholders, by putting everyone in the same time-preference.
How Unvested Tokens Will Impact Current Circulation
However, unlocking unvested tokens can create challenges for the PRT markets. A sudden increase in circulating supply could lead to many people trying to sell PRT all at once, which could result in price chaos.
Therefore, employing the treasury to create a price floor would be desirable, protecting current holders from price volatilitywhen the unvested token unlocks. This price floor would be implemented a week before the unlock, so that existing PRT holders have priority access to it before the unlocked tokens enter into circulation.
The Unlocking Process
First, a price floor for PRT will be created on November 3rd, 12am HKT:
- The price floor will be set to $0.001/PRT. This is the 60 days moving average price.
- The treasury will commit $560k in USDC on Serum to create the price floor.
- The floor provides enough liquidity to absorb 10% of the marketcap ($5.6M).
- PRT acquired by the price floor will be burned.
PRT holders will have a week’s time in advance to adjust their positions before the unlock, with the price floor in place.
Then, the unlock will take place on November 16th, 12am HKT. All unvested tokens allocated to the team and seed VCs will be released.
- Whatever is left of the $560k price floor will remain at $0.001/PRT
- PRT acquired by the price floor will be burned
- About ~5.4 billion PRT will enter into circulation
- The marketcap will increase from $5.6M to $11M