This proposal aims to spin-off Mento Governance and launch a MENTO token to further support the development of the Mento Protocol. The MENTO token breakdown, which includes an airdrop to the Celo Community Treasury, CELO holders, and early Mento stablecoin users, is included. If this proposal passes, Mento Governance will be established. In the future, a follow-up proposal will be submitted to hand over the control of all Mento smart contracts from Celo Governance to Mento Governance.
In recent years, Mento has cemented its role as the largest Celo-native project, with four stablecoins issued and over 2.4M active users, as of March 2024. To further propel Mento towards its vision of onboarding a billion Web3 users through adopting digital assets worldwide, it is essential to further evolve the Mento Protocol and establish an ecosystem of Mento builders, dApps, and service providers.
This CGP proposes to launch the MENTO token and separate Mento Governance to accelerate the development and increase the resilience of the Mento Protocol. This transition will allow Mento stakeholders to focus even more on its development and create pathways toward self-sustainability. The community discussion around the launch of a Mento-specific governance token was kicked off in Nov. 2023 (link 3), and the topic has already been discussed in previous community calls.
If Celo Governance votes in favor of this proposal, the MENTO token will be deployed and distributed to stakeholders of the Celo and Mento ecosystems.
The Mento Protocol consists of the following elements:
Mento Governance will receive control over all of the pieces mentioned above as part of the governance transition process. This proposal will only create the token and governance system, so we can test it before we fully transition.
MENTO token will have a maximum total supply of 1,000,000,000 (one billion) tokens. Overall distribution was defined by the Mento Community and will be as follows:
Purpose: The Mento community can spend tokens from the treasury to foster the Mento Platform’s development. The tokens can be spent on grants, liquidity incentivization programs, etc. The decision to spend tokens from the Treasury is always subject to Governance. To incorporate the will of the community the Mento Protocol Foundation will be set up.
Distribution: 450M tokens (45% of total supply) with 50M available at Genesis Block. The tokens will be emitted to the Treasury via exponential decay with a half-life of 10 years.
Voting rights: No
Purpose: Reward core contributors, investors, and advisors. Get the best talent to contribute to the Mento Protocol in the future.
Distribution: 300M tokens (30% of total supply). Existing Mento Labs employees, investors, and advisors will receive their MENTO tokens split into two parts:
Voting rights: Yes, with the veMENTO portion.
Purpose: The purpose of the Mento Liquidity Support is to support the Mento ecosystem through funding mission-aligned initiatives. The focus of this allocation is to support the liquidity of the MENTO token and the Mento Platform stablecoins.
Distribution: 100M (10% of fully diluted supply)
Voting rights: No
Purpose: Reward existing community members and users for their past contributions to developing and using Mento stable assets and the Celo ecosystem.
Distribution: 50M tokens (5% of the fully diluted supply). Eligible address owners can claim their allocation, which they will receive as a veMENTO locked for 2 years with linear unlock. Further details about the eligibility criteria are provided below.
Voting rights: Yes.
Purpose: Long-term incentive alignment between the Celo and Mento communities.
Distribution: 50M (5% of fully diluted supply) with a 2-year delay followed by a 6-year linear vesting period via Hedgey 5 token vesting platform.
Voting rights: No
Purpose: An allocation to the Mento Reserve will be used as stablecoin collateral in the worst-case scenario of a loss-of-value in primary collateral (USDC, DAI, etc.) through credit default events, hacks, etc.
Distribution: 50M (5% of fully diluted supply)
Voting rights: No
The MENTO token will be non-transferable at the genesis block (token and governance deployment block). Holders can claim their allocation, lock it as veMENTO, and participate in governance, but not transfer the token. At some point in the future, when certain milestones to be decided by the community are reached, the transferability of the token can be turned on through a Mento governance proposal.
Having been incubated primarily by the Celo ecosystem, Mento recognizes this support and aims to reward CELO stakeholders to keep them involved and continue to have a strong relationship with Celo.
A total of 100M (10% of the total supply) Mento Tokens, equivalent to 16.67% of the initial supply, is allocated for Celo stakeholders between the Celo Community Treasury allocation and the CELO holders and cStables user airdrop.
At Genesis, 50M MENTO will be allocated to the Celo Community Treasury (unlocking over 8 years). This allocation aims to provide the Celo ecosystem with long-term upside and influence in the Mento Protocol. It can also be used to support cStable and other Mento stable token utilities further on the Celo network.
The distribution of the MENTO token will start with an airdrop to CELO holders and early cStable users. Mento recognizes that their early support has been pivotal for the protocol, and these users are well-suited to govern it, given the history of Mento Improvement Proposals that have been voted on in Celo Governance.
50M MENTO will be distributed in the initial airdrop to users based on the following criteria:
Claimable amounts are concave (think square root) in the balances of locked CELO and Mento stablecoins, as well as the Mento stablecoin volumes:
The airdrop period will last for 8 weeks. After it finishes, an unclaimed part of community allocation will be returned to Mento Treasury for future airdrops.
At the start, the Mento protocol will establish a watchdog group to oversee the protocol’s governance process and ensure technical parts of the governance proposals (execution code) match what’s written in the proposal.
The group is controlled by a 3 out of 9 SAFE multi-signature wallet (multisig) with a special right to veto (meaning to cancel the execution of) any governance proposal within 48 hours after it passes.
The following criteria are considered for the first proposal of watchdog members. A watchdog committee member should:
List of proposed members of the Mento watchdog committee:
The watchdog multisig was deployed with address 0xE6951C4176aaB41097C6f5fE11e9c515B7108acd.
The spin-off and Governance transition plan will be executed in two steps:
This allows the system to spin up and allows us to test governance in isolation before executing the full transfer.
The governance spin-off, which is the subject of this proposal, happens through the factory contract, which can be found here.
Through the createGovernance method, the factory contract does the following:
To support the on-chain Mento Protocol DAO a Mento Protocol Foundation is being established which is supposed to support Mento ecosystem growth - a foundation that is helping to execute the will of the community. To finance this foundation during times in which the MENTO token is non-transferable, this proposal suggests that a loan of 800k USD and a maturity of 1 year is provided by the Mento Reserve to the Mento Protocol Foundation. The loan amount is to be financed from the BTC and ETH part of the Mento Reserve and will be used to cover entity setup costs, legal costs as well as early foundation expenses required for fostering Mento ecosystem growth. It is expected that the foundation will receive funding from the Mento Community Fund going forward to repay the loan and to cover future expenses.
The whole deployment code has been audited, intent can be verified by reading the code. There is a single function call in the proposal:
createGovernance:
Multisigs receiving an allocation, defined in the MentoAllocationParams: 0: 0x655133d8E90F8190ed5c1F0f3710F602800C0150: Mento Labs multisig which receives the 30% discussed in the propsal. 1: 0xA74Ac93de1A209957E62391B01E09161277a9ffC: Mento Liqudity SPV (Mento Liquidity Support) multisig which receives 10% 2: 0x3468D23A0B1aB3Ab9A537813166A8f7ff1947014: Mento Protocol Foundation multisig which will then set up the 5% vesting allocation for the Celo Community Fund 3: 0x87647780180B8f55980C7D3fFeFe08a9B29e9aE1: Mento Reserve multisig which receives a 5% Mento Reserve Safety fund allocation
There are additional parameters that are staticially defined in the GovernanceFactory contract:
// Airgrab configuration
uint32 public constant AIRGRAB_LOCK_SLOPE = 104; // Slope duration for the airgrabbed tokens in weeks
uint32 public constant AIRGRAB_LOCK_CLIFF = 0; // Cliff duration for the airgrabbed tokens in weeks
uint256 public constant AIRGRAB_DURATION = 10 weeks;
uint256 public constant FRACTAL_MAX_AGE = 180 days; // Maximum age of the kyc for the airgrab
uint256 public airgrabEnds;
// Governance Timelock configuration
uint256 public constant GOVERNANCE_TIMELOCK_DELAY = 2 days;
// Governor configuration
uint256 public constant GOVERNOR_VOTING_DELAY = 0; // Delay time in blocks between proposal creation and the start of voting.
uint256 public constant GOVERNOR_VOTING_PERIOD = 120_960; // Voting period in blocks for the governor (7 days in blocks CELO)
uint256 public constant GOVERNOR_PROPOSAL_THRESHOLD = 10_000e18;
uint256 public constant GOVERNOR_QUORUM = 2; // Quorum percentage for the governor
This proposal doesn't change anything in the Celo Protocol, it just seeds Mento Protocol Governance, therefore it currently poses no risk. After the proposal passes and the airdrop starts, we will do more testing to ensure that the governance system works as intended and reaches equilibrium before transferring Mento Protocol ownership as described in the Governance scope section.