How to use Party Parrot: A step-by-step guide

Compared to DEX and Yield farming protocol, Lending in Solana seems to have lots of space to grow. Among many Lending projects on Solana, Party Parrot is the project that received much attention from the community when successfully raised $84M after 2 IDO rounds in September 2021. In this article, let’s find out which features this protocol offers and how to use Party Parrot effectively.

Party Parrot Overview

Party Parrot can be seen as MarkerDAO on Solana. It is a liquidity network for lending and borrowing, allowing users to mint stablecoin by depositing a certain amount of their digital assets. Besides that, Party Parrot also adds more use cases for LP tokens to make value locked in DeFi more accessible.

Preparation for trading on Party Parrot

What are the prerequisites for trading on Party Parrot?

First, users need to download and create an account (optional) on Coin98 Wallet.

Coin98 Mobile Wallet version X is available for download.

Read the detailed instruction on how to use Coin98 Wallet or watch the tutorial video below to install the Coin98 Mobile Wallet:

Coin98 Extension: Follow these steps to install the Coin98 Extension Wallet on Chrome:

Step 1: Find and select the Coin98 Extension Wallet on Chrome Web Store.

Step 2: Click Add to Chrome.

Step 3: A pop-up notification will be displayed on the screen, please read it carefully. To approve, click Add extension.

Step 4: To use the extension, click the extension icon to the right of the address bar. If the Coin98 Extension Wallet shows up in the drop-down menu, it has been installed and enabled successfully.

Create a Solana Wallet on Coin98 Wallet

Before using Party Parrot, users need to create a Solana (SOL) wallet. Users can create a new Solana wallet on Coin98 Wallet or import an existing Solana wallet from other wallets to Coin98 Wallet. Creating a Multi-chain wallet on Coin98 Wallet will also include a Solana sub-wallet.

Preparing SOL as gas fee

Party Parrot uses SOL for gas fees. Therefore, to trade on Party Parrot, users must have SOL in their wallets. Users can buy SOL on a centralized exchange such as FTX and send it to the Solana wallet address on Coin98 Wallet.

How to use Party Parrot with Coin98 Extension Wallet 

Connect the Coin98 Extension Wallet to Party Parrot

Step 1: Go to the Party Parrot app at: https://parrot.fi/mint/

Step 2: Click Connect Wallet at the top right corner. Select Coin98 Wallet. 

Mint 

Step 1: Navigate to Mint.

Step 2: Choose a trading pair, and enter the trading amount. In this case, I’m using 1 USDC to mint 0.5 PAI so the collateral ratio is 200%.

Step 3: Click Mint and you have successfully minted PAI.

Repay

Step 1: Navigate to Repay.

Step 2: Enter the amount of the collateral asset you want to withdraw and PAI you want to repay. In this example, I’ll choose to withdraw the maximum amount of USDC and repay all PAI. Therefore, after repaying, the vault will be empty.

Step 3: Click Repay to complete Repaying PAI.

Note: To manage your liquidation position, you can adjust the collateral ratio as follows:

1. If you want to increase the collateral ratio, you can Repay PAI without withdrawing the collateral. In this case, I’m repaying 0.25 PAI without withdrawing USDC so my collateral will increase from 200% to 400%.

2. If you want to decrease your collateral ratio (in case you already have sufficient collateral), you can Mint more PAI without the need of depositing additional collateral.

Stake

Step 1: Navigate to Stake then click Deposit to pool.

Step 2: Enter the amount of SOL you want to Deposit then click Deposit. With each deposited SOL, you’ll receive 1 prtSOL so you can earn interest from deposited SOL and use prtSOL to earn rewards at the same time.

How to use Party Parrot with Coin98 Wallet dApp browser

After connecting Party Parrot with the Coin98 dApp browser, you can apply the same steps as with the Coin98 Extension Wallet above.

Connect the Coin98 Wallet dApp browser to Party Parrot

Step 1: Open the Coin98 Mobile Wallet. Select Browser and search: https://parrot.fi/mint/

 Step 2: Click the wallet symbol at the bottom right corner. Then choose the Solana Network and your preferred wallet.

Mint 

Step 1: Navigate to Mint.

Step 2: Choose a trading pair, and enter the trading amount. 

Step 3: Click Mint and you have successfully minted PAI.

Repay

Step 1: Navigate to Repay.

Step 2: Enter the amount of the collateral asset you want to withdraw and PAI you want to repay.

Step 3: Click Repay to complete Repaying PAI.

Stake

Step 1: Navigate to Stake then click Deposit to pool.

Step 2: Enter the amount of SOL you want to Deposit then click Deposit. 

FAQ about Party Parrot

How much should I borrow to avoid liquidation?

To avoid being liquidated, you should pay attention to:

• Collateral ratio: deposited value/ minted value.
• Liquidation price: if the price of your deposited asset falls below this level, your vault will be liquidated.

Therefore, it is advisable that you maintain a safe collateral ratio to avoid the liquidation risk:

• If your collaterals are stable assets (USDC, USDT,..): Party Parrot will never liquidate your vault.
• If your collaterals are volatile assets (SOL, SRM,..): The recommended collateral ratio is at least 160%.

However, just take this ratio as a reference. It hugely depends on the volatility of your collaterals to determine the safe ratio. When you are about to reach the liquidation position, you should consider depositing more of your collateral or repaying part (all) of your borrowed assets to avoid a liquidation situation.

How much do I have to repay after minting (borrowing)?

When you mint certain assets, you are borrowing assets from the protocol so you will need to pay some interest rate. It is currently really cheap to borrow from Party Parrot. Most of the vaults just charge you 0.1% - 0.2% per year.

What are the use cases for PAI?

PAI can be considered as an effective stablecoin to leverage your position in the Solana ecosystem:

• Deposit SOL,  borrow  PAI, and use PAI to buy more SOL. You now have a leveraged long position with SOL.
• Deposit SOL,  borrow PAI and deposit PAI into Mercurial and Port to earn fees and rewards.
• Deposit LP tokens from Raydium, borrow PAI, and use them to earn yield.

Conclusion

Congratulations, now you know all the steps of how to use different features on Party Parrot. Hopefully, you have found this article helpful to start the basic steps and explore other features on Party Parrot yourself.

If you have any questions, please feel free to comment below for further discussion.