PARROT FINANCE: Unlocking Value in Liquidity Tokens

Source: Parrot Finance Medium

Highlights:

A DeFi Protocol for liquidity tokens(including Eth) on Solana.

Value Proposition

The architecture of DeFi protocols today involves users approving protocols such as Uniswap, Aave and Compound to take control of their tokens and in turn, the protocols mint an equivalent amount of native tokens, generally referred to as liquidity provider tokens, to the users’ addresses. These liquidity provider tokens(LP tokens in short) represent the users’ collateral and can be redeemed in future on demand. The users’ collateral earns value through various means such as from protocol trading fees or interest when other users borrow from the asset pool their collateral comprises. This is how lenders earn value from their tokens when they supply them to Compound or Aave, or when users provide liquidity to AMMs like Uniswap. Using protocols today, you cannot fail to observe impermanent loss considering how volatile the crypto markets could be. Impermanent loss occurs when the value of tokens at time of deposit fluctuate negatively as time goes by, even when yield-adjusted, creating an opportunity for improvement in the protocol design to hedge against the market volatility. What if users could be able to unlock the value of the LP tokens they receive, allowing them to add more value and perhaps hedging against the seemingly inevitable downward skew? That’s where Parrot Finance comes in.

Parrot Finance

Parrot Finance uses LP tokens as collateral on the lending platform adding further value to previously dormant liquidity tokens. There are three main services users can get from Parrot Finance:

Utility Token, PRT

In addition to PAI token, Parrot Finance’s main utility token is PRT. Fees will be collected on Parrot Finance services:

Governance Token, gPRT

To contribute to the long-term direction of the protocol, users will be able to vote using the gPRT token. The token can be earned by staking PRT tokens.

  • 1 year: 1x (gPRT1)
  • 2 years: 1.5x (gPRT2)
  • 3 years: 2x (gPRT3)
  • 4 years: 4x (gPRT4)

Token Distribution

Token: PRT

Tokensale & community rewards

There is upcoming tokensale, of PRT token, but the date has not been established yet. To earn a whitelist spot, you can get more information on this blog post about community rewards.

App Available

Currently, users can be able to mint PAI on mainnet. Here is the app’s interface. Currently, you can mint PAI when you deposit USDC-spl at a collateral factor of 9.52 meaning you mint 9.52 PAI when you deposit 10 USDC-spl.

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