My thoughts after the Mento call on Discord today 5-25.
-
I really like the idea of moving toward an external stable coin backing target of over 100%.
-
Given the ‘active management’ required by the real people involved in the multi-sig needed to manage Celo’s Reserve, it seems prudent that a management range for that ‘bucket of value’ be set over 100%. I’m going to suggest that range be something akin to: a minimum of 105% and a maximum of 115% of the value of all outstanding Celo Stable coins.
-
In the short term, until an on chain circuit breaker can be implemented, I do think that a ‘governance instruction’ should be crafted that instructs all the appropriate responsible persons to act as a ‘circuit breaker’ and monitor the status of the reserve the ensure that the non-Celo based assets (BTC, ETH, Dai, …) do not fall below 150% of the value of all the outstanding Celo Stable coins in circulation. At that point the reserve should be ‘locked’ and held for the sole purposes making Celo stable coin holders ‘whole’. The reason for choosing 150% is to ensure there is money available to cover all the overhead costs involved in getting the stable coin holders paid in full.
-
As discussed I am suggesting that in all marketing and reporting about the status of the reserve that there be made a distinction between Celo and non-Celo assets so that a hard distinction can be made from the Terra/Luna reserve in that at Celo ‘outside’ assets alone can cover Celo’s obligation to the Celo stable coin holders.
-
While Dai IMO is a reasonable interim tool for maintaining the 1:1ish ratio, I think Celo’s reserve needs to work diligently toward holding a significant amount assets that are not correlated to the rise or fall of any crypto project and that are proportionally and directly correlated to the real world currencies of the countries where Celo offers stable coins.