This provides a summary of the transcript from “Governance Call 13.” The call covers various topics related to the Celo protocol, including CVP 40, the Stellar Brazil Real proposal, and increasing mentor bucket sizes. The goal of this tutorial is to provide a clear understanding of the discussed topics and their implications.
The facilitator welcomes everyone to the governance call and introduces the agenda, which includes the following items:
- CVP 40: Discussion on reducing the exchange spec for Celo Dollars (cUSD) and Celo Euro (cEUR) in the mentor mechanism.
- Stellar Brazil Real Proposal: Activation of stable tokens for the Brazilian Real on the Celo network.
- Mentor Proposals: Proposals for mentor related to improving its functionality and liquidity.
The discussion begins with an overview of how the mentor mechanism works in the Celo protocol. The mentor is an automatic market maker that refreshes liquidity every five minutes based on oracles’ price feeds. Currently, the spread in mentor is set at half a percent, which some participants believe is too high and limits trading volume.
Considering the growing demand for Celo Dollars and Celo Euros, the proposal suggests reducing the spread to 0.25%. This change aims to make it cheaper to mint these stable tokens, increase supply, and improve arbitrage cycles on the chain. Additionally, it is noted that the fees collected through the spread have minimal impact compared to price changes in the reserve. The proposal has been made on-chain and is scheduled for execution within a few hours.
The Stellar Brazil Real proposal aims to deploy stable tokens for the Brazilian Real on the Celo network. The process involves deploying proxies and core contracts for the stable tokens and exchange. The proposal also highlights the importance of testing these deployments in the staging testnets before deploying on the mainnet. The objective is to support algorithmic stable coins in regions with limited financial freedom and encourage similar initiatives in other Latin American countries.
This proposal suggests increasing the bucket sizes in the mentor mechanism to accommodate higher demand. Although the details are still being finalized, the proposal aims to address eventual dips in price due to demand exceeding supply. Further analysis and testing will be conducted to determine the optimal bucket sizes, taking into account trading activity, volatility, and market conditions.
The discussion touches upon rebalancing the reserve to align with the target allocation. Currently, the reserve is overweight in Celo due to previous trades and fluctuations in the price of Celo. Freezing a portion of the Celo in the reserve is proposed as a method to rebalance it over time. This approach minimizes the need for frequent trading, which incurs fees and spreads. The proposal aims to optimize reserve value and minimize the impact of price volatility.
The call concludes with an invitation to ask further questions on the proposals and continue the discussion asynchronously on the forum. Links to the relevant forum posts are provided, and participants are encouraged to contribute to the ongoing discussions.
By following the provided links, participants can find additional details and engage in the proposal discussions, ensuring a collaborative and inclusive decision-making process.