Adding USDT and EURT to the Mento Reserve

Hi all,

some of us Celo and Mento community members were lately chatting more about how we could strengthen diversification of the stablecoin basket of the reserve. I personally believe that USDT and EURT (both provided by Tether) could be a good addition and would love to get actionable on that. Please find more background on the exact proposal below.

Background and Proposal Details

The Mento Reserve represents a diversified portfolio of on-chain assets crucial for supporting the Mento Protocol’s ability to adjust the supply of Mento stable assets according to user demand. From community discussions, there seems to be consensus to further enhance the Reserve’s diversification. CGP #150, recently approved, endorsed diversifying into low-risk, reward-generating protocols. Consequently, the Reserve has already integrated staked ETH (Lido), stEUR (Angle Protocol), and sDAI (Spark Protocol) into its mix. Building upon the directives of CGP #150, the Reserve now aims for a 1:1 backing of cUSD and cBRL in USDC and sDAI (at a 50/50 weighting), as well as a 1:1 backing of cEUR in EUROC and stEUR (at a 75/25 weighting).

Ever since CGP 62, the main priority of the Mento Reserve has been to keep a 100% backing in other stablecoins (USDC and DAI initially, plus the later additions of EUROC and stEUR via CGP 127 and CGP 150 respectively.

I propose expanding the diversification of this stablecoin basket further by incorporating USDT and EURT into the mix. Specifically, I suggest adjusting the Reserve mandate to back cUSD and cREAL 1:1 in USDC, sDAI, and USDT (equally weighted at ⅓ each), while backing cEUR and eXOF 1:1 in EUROC, stEUR, and EURT (also equally weighted at ⅓ each). The CELO, BTC and ETH allocation of the Reserve, considered mostly backup-collateral at this point, shall remain passive unless it needs to be touched to regain a 1:1 backing in stablecoins or unless instructed otherwise via on-chain governance.

Since Tether’s USDT and EURT are not currently native to Celo, the Mento Reserve would hold them on Ethereum. Should Tether deploy native versions of USDT and EURT on Celo in the future, these would be utilized and Mento broker pairs against them could potentially be created.


Every asset bears risks. For USDC, USDT, EUROC and EURT the predominant risk is credit risk. At this point Tether is audited by BDO Global, which is confirming that the Tether reserves overcollateralize outstanding stable tokens (see Tether Reserves and Audits for more details). Tether has also recently decreased collateral risk: 90% of the collateral are now held in cash and cash equivalents. I therefore believe that Tether has a beneficial risk profile and that diversifying the stablecoin basket further through the addition of Tether stablecoins, can decrease the overall risk of the reserve portfolio.

Please let me know what you think about this suggestion!



Quick addition: With the amazing news of native USDC now being live on Celo that came out yesterday, I would suggest to also migrate from axlUSDC (Axelar) in Mento to native USDC to avoid the now unnecessary bridge risk as part of this proposal. More precisely, I propose to set up the same broker pairs Mento has right now for axlUSDC (which are cUSD/axlUSDC, cEUR/axlUSDC and cBRL/axlUSDC) agains native USDC and use the same exact parameters for these three new pairs as we currently have for the respective axlUSDC pairs. To slowly fade out support for axlUSDC, the reserve shall then, going forward, only refill the ReserveProxy with native USDC (and not axlUSDC).

Please share your thoughts on this below if you have any!


Supportive of both ideas/proposals. :raised_hands:


One more addition actually: The Mento Reserve should also migrate the 20m cUSD/USDCet(Portal) Curve pool to cUSD/USDC(native) to get rid of the now unnecessary bridge risk here too. Feels like a no-brainer and I would suggest to add this to this CGP as well. So overall, this proposal would be about adding Tether stablecoins to the reserve mix and migrating all reserve holdings from bridged USDC to native USDC.


I’m a big fan of these changes, as they reduce risk across the board!


As the creation of new pairs against native USDC on Mento is a bit more in involved, we decided to separate things out - one CGP for the creation of the native USDC pairs on Mento and a second one for adding tether stablecoins to the reserve and migrating the 20m cUSD/USDCet curve pool to native USDC.

The technical details for the first one, i.e. the creation of native USDC pairs on Mento, have just been shared here for review:

The plan is to submit this as a CGP on Monday and submit another one regarding tether colletaral and the 20m curve pool shortly after.

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Is the plan to migrate the existing 20mm cUSD/USDCet in Curve to a new Curve pool? Or to remove liquidity from Curve altogether?

The plan is to migrate to a new 20mm Curve pool, cUSD/USDC(native).

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Looks like more volume has been on Uni v3 cUSD/USDCet pair recently, even though it has only ~$100k TVL.

Perhaps some of the Curve liquidity should be shifted to Uni v3 or other venues?


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