The Mento Reserve has received 120M CELO in the Celo genesis block to bootstrap the cUSD reserve. It speaks for the efficiency and robustness of the Mento system that, despite the market crash, the Mento Reserve today holds more CELO than it initially received (~125M CELO as of April 20, 2023) while cUSD, cEUR and cREAL are about 140% collateralized in non-CELO assets alone (>100% in DAI and USDC plus an additional ~18M USD in BTC and ETH as of April 20, 2023). Since cStables are significantly over-collateralized through external assets, most of the Reserve CELO are, at this point, not required anymore as collateral safety cushion.
This gives us the opportunity to propose that the Mento Reserve returns up to 120M CELO to the On-Chain Celo Community Fund in a stepwise process. These CELOs can then be used by the Celo community where they are needed the most. As suggested by @timmoreton, the usage of funds could be structured into temporary use of funds (e.g. liquidity provision) and permanent use of funds (funding projects and initiatives on Celo) and initial proposals for both of these usages are already beeing discussed in the Celo Forum.
This CGP asks for a vote regarding two aspects:
Should the Mento Reserve work towards moving up to 120M CELO out of the Mento Reserve and into the Community Fund, stepwise over time with the total amount potentially reduced if the Mento Reserve would run uncomfortably low in CELO by doing so? Every removal of CELO from the Reserve would be accompanied by a respective reduction in the CELO reserve target weight to make the removal permanent and every stepwise removal will require an additional CGP.
Should the Mento Reserve execute a first such transfer by adjusting the CELO target weight downwards to 45% (from 50%) and move the respective CELO (approx. 25M CELO at price levels as of April 20, 2023) over to the Community Fund?
The idea behind 1. is to create some certainty around the funding that will become available to the Community Fund in the future whereas 2. is aiming to incentivize folks to come up with first concrete proposals on temporary and permanent uses of funds through making some CELO immediately available.
Voting YES on the proposal means support for both aspects. If you disagree with 1. or 2. or both, please vote NO.
No on-chain changes. This proposal is simply adjusting the Mento Reserve mandate which is enforced off-chain.
No on-chain changes. After execution of the proposal, the Mento Reserve is instructed to send CELO to the on-chain Community Fund (more precisely, the governance proxy contract address: 0xD533Ca259b330c7A88f74E000a3FaEa2d63B7972) such that the Mento Reserve moves to a 45% CELO allocation. To verify whether this transfer was conducted, review the CELO allocation shown via the Mento Reserve homepage and verify that an equivalent amount of CELO has been sent to the governance proxy.
Removing CELO from the reserve reduces the collateralization ratio of cStables. cStables are backed >100% by USDC and DAI but in the case of a significant depeg of USDC and/or DAI, having a larger amount of CELO as additional collateral could be beneficial to stability of the system.