Greetings to the Celo Community,
The cLabs protocol economics team would like to submit CGP-40 to Mainnet soon to reduce exchange spreads.
Since the activation of cUSD and cEUR, Mento has charged a 0.5% fee. With the recent increased demand for cUSD and cEUR it is time to lower the fee to support a tighter peg. We want to reduce the fee to 0.25% to tighten the peg, which will encourage larger total trading amounts. This reduction of the feel will also help boost on-chain trading, as more arbitrage circles with other DEX will now be profitable. Community member Zviad wrote about the impact of these changes here and an analysis about the current situation here.
Given this is impactful to the stability mechanism with the increased DeFi activity on the protocol, we will be submitting the CGP-40 by Wednesday, October 6th to on-chain governance so that the Celo community can begin voting on it.
We will go over the proposal and the decisions made behind it during the next governance call scheduled for October 14th, 2021 here.
The cLabs Team