Discussion on Granda Mento: Enabling Larger Stablecoin Mints

Governance
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Hey everyone, today @albertw, @asa , @Tobi, @thezviad and I had a call to discuss ideas around Granda Mento.

A recap of the discussion:

Though an auction-based system is attractive because they are open to everyone, with auctions come a lot of complexities and assumptions. Ultimately, we felt like an auction is not the way to go.

We began with clarifying what Granda Mento would aim to solve. One of the major concerns in this thread is that this could provide an unfair rate for special players to buy/sell CELO from the reserve. Two categories of users were discussed:

  1. Those who own significant amounts of USD and wish to mint cUSD
  2. Those who own significant amounts of CELO and wish to mint cUSD

Granda Mento is designed to focus on (1). The complete trade would look like: USD → CELO → cUSD. It became clear that a large purchaser would likely come to the Celo Foundation, who could broker the deal by making that CELO → cUSD trade with the protocol, and a purchaser making a USD deal with the Foundation.

Zviad had a neat idea (please correct me if this is off):

A contract is created and owned by the Celo Foundation that must be pre-approved by Governance to have the ability to trade X CELO or cUSD with the Reserve. Trades can now occur via this contract to trade with the Reserve. A trade is not atomic – it must be “kicked-off” and has a delay before being executed. The price of the trade is provided at the trade kick-off time. During the time between trade kick-off and trade execution, the community can decide to veto the trade. If the trade has not been vetoed and the appropriate delay has elapsed, the trade can be executed as long as it passes some safety checks, like the originally specified trade price being within Y% of an oracle TWAP over period Z.

Some thoughts on this:

  • While this is centralized, the process would be transparent.
  • The optimistic approval of trades results in lower effort from voters-- ie Governance only has to approve the contract once, and then subsequent trades can be approved without voting.
  • Governance is slow and painful - it may make sense to have the veto process not necessarily be through the existing Governance setup.
  • A desire of this is to provide just enough friction to the trade where it won’t undermine the real market. Eg fees, having to deal with the Foundation, and time delays.

As for the time horizon of this, it’s unclear whether or not “Mento 2.0” would include a mechanism to make this process obsolete. If/when cUSD hits a higher level of total supply, the need for USD → cUSD trades going through Granda Mento may disappear. However, for a less popular future cXXX that may not have as high demand as cUSD, the process could be helpful even in the long term.

I still have some questions:

  • What would fees on the trade look like?
  • What would the veto voting look like? The required governance period feels very long to rely upon for a veto
  • Did I miss anything from our call related to Granda Mento worth mentioning?
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