Wen? The Parrot IDO Plan

The Parrot Protocol will be conducting its IDO during the week starting on September 14th. Parrot’s PRT token is a utility token that will enable community participation in many aspects of the Parrot Protocol. A total of 10% of the PRT supply will be auctioned during the IDO process.

There will be two auctions:

  1. Auction 1 starts at September 14th, HKT 9AM; PST 6PM; EST 9PM. 1,680,000,000 PRT tokens available (8% of supply)
  2. Auction 2 starts at September 16th, HKT 9AM; PST 6PM; EST 9PM. 420,000,000 PRT tokens available (2% of supply)

The auctions is accessible at the url: ido.parrot.fi

What is Parrot?

Parrot is a liquidity network for borrowing and lending. Since its mainnet launch in June, it has grown to $150M in TVL, offering a suite of DeFi products:

  • The stablecoin PAI
  • Synthetic BTC (pBTC)
  • The Parrot stake pool token (prtSOL)
  • Synthetic SOL (pSOL)
  • +EARN vaults, where the deposited collateral is used to generate yield for borrowers

Together with our ecosystem partners, Parrot has found adoption and use cases for these products. There are many ways for users to generate yield through Parrot:

  • Participate as a stable swap LP for PAI, pBTC, and pSOL on Mercurial and Saber
  • Deposit PAI and pSOL in lending protocols
  • Deposit LP tokens as collateral to mint PAI, pBTC, and pSOL, while generating yield on the LP
  • Using PAI to trade with leverage

Although the Parrot Protocol is still extremely early in its development, it has enjoyed the support of a loving community. The Parrot Team loves you all, dear parrots!

The IDO process is designed to put a high percentage of the initial circulating PRT supply into the hands of the Parrot community. The PRT tokens will open the way to community governance, as well as being a productive asset, offering useful services within the Parrot Protocol (see below).

The Dual Auction IDO Process

The Parrot IDO will follow a similar process as the Mango Markets token launch. Participants will contribute USDC to an IDO pool to determine the price, and the PRT tokens will be distributed to all contributors in proportion to the amount of USDC they have put in.

The one adjustment we are making is that Parrot will hold two auctions, instead of just one. The first auction will be given 80% of the IDO allocation, and the second auction 20%. The second token auction will give the community a chance to participate in the IDO with more information.

A total of 2,100,000,000 PRT tokens (10% of the total supply) will be distributed through the two auctions:

  • Auction 1 (80%): 1,680,000,000 PRT
  • Auction 2 (20%): 420,000,000 PRT

Suppose that in Auction 1 the total contributed amount is $10,000,000 USDC. Then the PRT token price would be $0.00595238 (i.e. 10,000,000/1,680,000,000). If you contributed $10,000 USDC, you would receive 1,680,000 PRT tokens.

Auction 2 will start immediately after Auction 1 ends. Participants in Auction 2 will have an informational advantage to make decisions but will have a smaller allocation.

Once the two auctions have concluded, all participants will be able to claim their PRT and an official PRT/PAI trading pair will be set up on Serum to facilitate liquidity.

Auction Mechanic

Each auction will last 48 hours.

  • Unrestricted Period: 24 hours (first half, participants can both deposit or withdraw)
  • Withdraw Only Period: 24 hours (second half, participants can only withdraw)

Each auction will happen over the course of two days. The auction contract will have two vaults, one with PRT tokens and the other starting with 0 USDC.

The two days will be split into periods: Unrestricted and Withdraw Only. During the Unrestricted period, any participant can deposit or withdraw their USDC from the auction vault. The Unrestricted Period ends in 24 hours and transitions into Withdraw Only, where buyers can only withdraw their USDC.

At the end of both auctions, all USDC depositors will get PRT tokens in proportion to their share of the USDC vault and the USDC will be moved into the Parrot DAO treasury.

The Parrot auctions will be using the proven code from Mango Markets:

https://github.com/blockworks-foundation/ido-pool/blob/main/programs/ido-pool/src/lib.rs

https://github.com/blockworks-foundation/mango-docs/blob/8b2ab79dd14f19fc4fa2460b46ded8a5427a212d/litepaper.md#mechanism

Token Distribution

  • Protocol incentives: 35%
  • Team & Angels: 20% (3 year bi-monthly unlocks)
  • IDO: 10%
  • Ecosystem & Partnerships: 10%
  • Seed: 20% (3 year bi-monthly unlocks)
  • Protocol Controlled Reserve: 5%

10% of the Team and VC allocations will be unlocked at token genesis. The initial circulation will be: 10% IDO, 2% VC, 2% team, and about 1% unlocked protocol incentives.

The Protocol Controlled Reserve (PCR) will be used for liquidity provisioning within the Parrot Protocol.

Uses for the PRT Token

The PRT token is a governance token as well as a utility token that will provide services to the protocol.

By holding the PRT Token, PRT holders will maintain and drive the development of Parrot’s platform. As such, incentives will be distributed to PRT holders for their time, expertise, and effort.

Some ways in which staking PRT can provide useful services to the protocol include (but are not limited to):

PRT Liquidity Pool

Parrot’s collateral model does not allow direct redemption of its synthetics. If user A mints 100 PAI from SOL and transfers the PAI to user B, there is no way for user B to directly redeem the SOL collateral locked in the protocol.

A PRT liquidity pool would create a shared source of liquidity to allow the direct redemption of all the synthetics Parrot offers.

PRT Exchange Pool

There is currently no way to directly swap between different forms of synthetics.

A shared PRT collateral pool can provide zero-slippage conversion between the Parrot synthetics.

For example, suppose a holder would like to exchange 100 PAI for an equivalent amount of pSOL. Suppose that the price of SOL at the time of the exchange is $50, the way that this transaction would work is that the exchange pool would receive $100 PAI into its treasury, and generate 2 pSOL of debt. The new pSOL debt would be collateralized by the whole PRT pool, and the pool earns a fee for providing this exchange.

PRT Liquidation Pool

Parrot is a lending protocol, and liquidation is important for maintaining the solvency of the system. However, it takes both capital AND technical knowhow to operate liquidation bots. This problem narrows the range of people who can protect the network’s solvency.

The liquidation pool would be a trustless, permissionless pool of capital that any bot operator can leverage to liquidate vaults. The liquidation fees would pay the pool participants on a pro rata basis, yet it would not require them to operate bots on an individual basis.

It will be sufficient for only a handful of participants in this pool to have the technical ability to operate bots.

Protocol Fees

The Parrot Protocol already earns fees from the services it provides. The source of fees are:

  • Stability fees collected on the outstanding debt
  • A percentage of the earnings from the + Earn products

These fees will be used to incentivise the services outlined above provided by PRT holders.

Conclusion

The Parrot Protocol has a long way to go. The Parrot IDO marks a step forward in a decade-long journey. The future is already here, albeit unevenly distributed. It’s an exciting time for the Solana ecosystem. Let’s make DeFi great together, and onboard the next 1 billion blockchain users!

It’s never too late to join the party.

Liquidity Network for Lending & Borrowing