Mento Spin-off and Launch of the MENTO token

Summary

This proposal aims to spin-off Mento Governance and launch a MENTO token to further support the development of the Mento Protocol. The MENTO token breakdown, which includes an airdrop to the Celo Community Treasury, CELO holders, and early Mento stablecoin users, is included. If this proposal passes, Mento Governance will be established. In the future, a follow-up proposal will be submitted to hand over the control of all Mento smart contracts from Celo Governance to Mento Governance.

Motivation

In recent years, Mento has cemented its role as the largest Celo-native project, with four stablecoins issued and over 2.4M active users, as of March 2024. To further propel Mento towards its vision of onboarding a billion Web3 users through adopting digital assets worldwide, it is essential to further evolve the Mento Protocol and establish an ecosystem of Mento builders, dApps, and service providers.

This CGP proposes to launch the MENTO token and separate Mento Governance to accelerate the development and increase the resilience of the Mento Protocol. This transition will allow Mento stakeholders to focus even more on its development and create pathways toward self-sustainability. The community discussion around the launch of a Mento-specific governance token was kicked off in Nov. 2023 (link), and the topic has already been discussed in previous community calls.

If Celo Governance votes in favor of this proposal, the MENTO token will be deployed and distributed to stakeholders of the Celo and Mento ecosystems.

High-Level Design Components

  1. MENTO Token: An ERC-20 token on Celo is the core of the system. It can be locked in exchange for veMENTO to participate in voting on Mento Governance proposals.
  2. veMENTO locker: A locking contract where users can lock their MENTO tokens, in exchange for Mento Governance tokens (veMENTO).
  3. Governor: A contract that allows any user to create new Mento Governance proposals.
  4. Governance Executor: The main governance contract serves two functions:
  • Executing queued proposals that have passed governance voting
  • Community treasury that stores the governance allocation for future initiatives
    It is time-locked to allow the Mento Watchdog Multisig to veto proposals that are deemed malicious. It will also hold Mento Community Treasury funds.
  1. Emission Contract: A contract that emits MENTO tokens from its allocation to the Mento Governance Executor on a predefined schedule. It follows an exponential decay function, which means that new emissions will get smaller and smaller until the entire allocation has been emitted around the year 2060.
  2. Governance Factory: The smart contract that deploys the entire governance system with all relevant contracts. It is used only once to set up the system and can’t be used again after governance exists.
  3. Watchdog Multisig: a multisig that consists of technical community members responsible for making sure that the execution code of the proposals matches their description (described further in this proposal below).
  4. Proxy Admin: An admin contract owned by the Mento Governance Executor that can upgrade the following contracts in the system:
  • Mento Labs Treasury
  • Mento Governance Executor
  • Mento Governor
  • veMENTO Locking

Governance Scope

The Mento Protocol consists of the following elements:

  • A suite of Smart Contracts deployed on the Celo Mainnet:

    • StableTokenProxy & StableToken
    • StableTokenEURProxy & StableTokenEUR
    • StableTokenBRLProxy & StableTokenBRL
    • StableTokenXOFProxy & StableTokenXOF
    • ReserveProxy & Reserve
    • BrokerProxy & Broker
    • BiPoolManagerProxy & BiPoolManager
    • BreakerBoxProxy & BreakerBox
    • MedianDeltaBreaker
    • ValueDeltaBreaker
  • Reserve funds which are held on Celo, Ethereum, and Bitcoin blockchains in a variety of ways:

    • Custodians;

    • Multi-signature wallets;

    • LP tokens on Reserve positions in various pools;

    • ReserveSpenderMultisig rights

Mento Governance will receive control over all of the pieces mentioned above as part of the governance transition process.

Initial Token distribution

MENTO token will have a maximum total supply of 1,000,000,000 (one billion) tokens. Overall distribution was defined by the Mento Community and will be as follows:

Mento Community Treasury

Purpose: The Mento community can spend tokens from the treasury to foster the Mento Platform’s development. The tokens can be spent on grants, liquidity incentivization programs, etc. The decision to spend tokens from the Treasury is always subject to Governance. To incorporate the will of the community the Mento Protocol Foundation will be set up.

Distribution: 450M tokens (45% of total supply) with 50M available at Genesis Block. The tokens will be emitted to the Treasury via exponential decay with a half-life of 10 years. The emission schedule over time is visualized in the graph below:

Voting rights: No

Mento Labs Team, Investors, Future Hires, Advisors

Purpose: Reward core contributors, investors, and advisors. Get the best talent to contribute to the Mento Protocol in the future.

Distribution: 300M tokens (30% of total supply). Existing Mento Labs employees, investors, and advisors will receive their MENTO tokens split into two parts:

  1. veMENTO portion (25% of the allocation)
    To seed voting power to the team and investors, 25% of the allocation will be distributed as veMENTO locked for 1 year starting at the token distribution event. The allocation will allow team members to vote from day one using delegation. However, the beneficiary will only get full control of the lock after their cliff period has passed.

  2. MENTO portion (75% of the allocation)
    75% as MENTO with a 1-year delay and 3 years linear vesting starting at the token distribution event via the Hedgey token vesting platform. This means the plan will kick in 1 year later, and linearly unlock for the subsequent years.

Voting rights: Yes, with the veMENTO portion.

Mento Liquidity Support

Purpose: The purpose of the Mento Liquidity Support is to support the Mento ecosystem through funding mission-aligned initiatives. The focus of this allocation is to support the liquidity of the MENTO token and the Mento Platform stablecoins.

Distribution: 100M (10% of fully diluted supply)

Voting rights: No

Initial Airdrop to CELO holders and Mento stable assets users

Purpose: Reward existing community members and users for their past contributions to developing and using Mento stable assets and the Celo ecosystem.

Distribution: 50M tokens (5% of the fully diluted supply). Eligible address owners can claim their allocation, which they will receive as a veMENTO locked for 2 years with linear unlock. Further details about the eligibility criteria are provided below.

Voting rights: Yes.

Airdrop to Celo Community Treasury

Purpose: Long-term incentive alignment between the Celo and Mento communities.

Distribution: 50M (5% of fully diluted supply) with a 2-year delay followed by a 6-year linear vesting period via Hedgey token vesting platform.

Voting rights: No

Mento Reserve Safety Fund

Purpose: An allocation to the Mento Reserve will be used as stablecoin collateral in the worst-case scenario of a loss-of-value in primary collateral (USDC, DAI, etc.) through credit default events, hacks, etc.

Distribution: 50M (5% of fully diluted supply)

Voting rights: No

Transferability

The MENTO token will be non-transferable at the genesis block (token and governance deployment block). Holders can claim their allocation, lock it as veMENTO, and participate in governance, but not transfer the token. At some point in the future, when certain milestones to be decided by the community are reached, the transferability of the token can be turned on through a Mento governance proposal.

What’s in it for CELO stakeholders

Having been incubated primarily by the Celo ecosystem, Mento recognizes this support and aims to reward CELO stakeholders to keep them involved and continue to have a strong relationship with Celo.

A total of 100M (10% of the total supply) Mento Tokens, equivalent to 16.67% of the initial supply, is allocated for Celo stakeholders between the Celo Community Treasury allocation and the CELO holders and cStables user airdrop.

Airdrop to Celo Community Treasury

At Genesis, 50M MENTO will be allocated to the Celo Community Treasury (unlocking over 8 years). This allocation aims to provide the Celo ecosystem with long-term upside and influence in the Mento Protocol. It can also be used to support cStable and other Mento stable token utilities further on the Celo network.

CELO Holders and cStables user airdrop eligibility criteria

The distribution of the MENTO token will start with an airdrop to CELO holders and early cStable users. Mento recognizes that their early support has been pivotal for the protocol, and these users are well-suited to govern it, given the history of Mento Improvement Proposals that have been voted on in Celo Governance.

50M MENTO will be distributed in the initial airdrop to users based on the following criteria:

  • Staked at least $10 (US dollars) worth of CELO (amount based on avg. over 16 monthly snapshots, taken between November 15th, 2022, and February 15th, 2024);
  • Held more than $10 (US dollars) worth of any of Mento’s decentralized stable assets (amount based on avg. over 16 monthly snapshots, taken between November 15th, 2022, and February 15th, 2024);
  • Transacted in any of Mento’s decentralized stable assets with a volume greater than $100 (US dollars) (volume calculated as the cumulative sum over the 16 monthly snapshots between November 15th, 2022, and February 15th, 2024).

Claimable amounts are concave (think square root) in the balances of locked CELO and Mento stablecoins, as well as the Mento stablecoin volumes:

  • 50% allocated to locked CELO holders
  • 50% allocated to Mento stablecoin holders

The airdrop period will last for 2 months. After it finishes, an unclaimed part of community allocation will be returned to Mento Treasury for future airdrops.

Watchdog

At the start, the Mento protocol will establish a watchdog group to oversee the protocol’s governance process and ensure technical parts of the governance proposals (execution code) match what’s written in the proposal.

The group is controlled by a 3 out of 9 SAFE multi-signature wallet (multisig) with a special right to veto (meaning to cancel the execution of) any governance proposal within 48 hours after it passes.

The following criteria are considered for the first proposal of watchdog members. A watchdog committee member should:

  • be mission-aligned with Mento Protocol and Celo community;
  • be an active contributor to one of the projects in the Celo ecosystem;
  • have a technical background, given that the one and only responsibility is to review the proposal’s execution code.

List of proposed members of the Mento watchdog committee:

  1. Bogdan Dumitru (CTO, Mento Labs).
  2. Bayo Sodimu (Head of Engineering, Mento Labs).
  3. Phillip Paetz (Software Engineer, Mento Labs).
  4. Baransel Tekin (Software Engineer, Mento Labs).
  5. Luuk Weber (Founder, Kolektivo Labs).
  6. Martin Chrzanowski (Software Engineer, cLabs).
  7. Martin Volpe (Software Engineer, cLabs).
  8. Silas Boyd-Wiziker (CTO, Valora).
  9. Marek Olszewski (CTO, cLabs).

Proposal implementation details

The spin-off and Governance transition plan will be executed in two steps:

  1. This proposal spins up the MENTO token, governance, locking, and airdrop contracts.
  2. A follow-up proposal will come later, and governance rights will be transferred over the above-mentioned contracts.

This allows the system to spin up and allows us to test governance in isolation before executing the full transfer.

The governance spin-off, which is the subject of this proposal, happens through the factory contract, which can be found here: mento-core/contracts/governance/GovernanceFactory.sol at develop · mento-protocol/mento-core · GitHub

Through the createGovernance method, the factory contract does the following:

  1. Deploys an OpenZeppelin ProxyAdmin.
  2. Deploys the Mento Token which during construction mints the initial allocation following the distribution above.
  3. Deploys the Emissions contract which will be responsible for the minting of the MENTO tokens to the Treasury according to the minting schedule.
  4. Deploys the Airdrop contract which community members will be able to redeem against.
  5. Deploys the Locking contract which will be used to lock MENTO for veMENTO to participate in the Governance.
  6. Deploys the OpenZeppelin TimelockController which will manage the timelock for the Governance proposals and ultimately act as the ProxyAdmin controller and treasury for the protocol.
  7. Deploys the MentoGovernor, an instance of OpenZeppelin’s Governor configured for our needs. It will use the TimelockController from step (6).
  8. Sets ownership of all the contracts deployed in steps 1-5 to the TimelockController from step (6).

Next steps

  • We would like to present the Mento Spin-off proposal in Celo Governance Call #45 to discuss the proposal with the community;
  • In case of positive feedback, a governance proposal to deploy MENTO token and governance smart contracts will be created (see proposal implementation details above);
  • If this governance proposal passes, an airdrop app will be launched to allow community members to claim their allocations;
  • Another Celo Governance Proposal will be created to transfer ownership of the Mento Protocol from Celo Governance to the newly created Mento Governance body;
  • A standalone web application to create, review, and vote on Mento Governance Proposals will be launched.
18 Likes

It’s great to see how Mento has matured on all fronts. With USDC and USDT deployed on Celo, I think the timing is perfect for Mento to spin off and explore the universe beyond the initial set of Celo stables.

Having a separate Governance process and Treasury will likely speed up development and help Mento realize more opportunities.

I also want to note that Mento sets a great example by distributing a significant share of its Tokens to the early users of Celo, CELO holders, and the Celo Community Treasury. I hope other spin-offs will follow their example! :heart_hands:

6 Likes

https://www.notion.so/Airdrop-56c80c00e5d04285b34c9abd517473dd?pvs=21

The page cannot be opened, due to permission issue maybe.

This looks like a well planned next step. Looking forward to the progress.
The notion link regarding the airdrop criteria doesn’t work for me: “Either this page doesn’t exist or you don’t have permission to access it.”

Thanks for the feedback. Feel free to also join next community call to participate on the discussion.

Airdrop criteria are described in the document in this section of the post. That link was from an older work in progress version of the document. Thanks for catching it. I have removed a link.

1 Like

A lovely journey from cLabs to Mento Labs…with the on-boarding of millions in Africa i support the governance proposal. Let the token come once L2 is completely out…A lovely family to be part of.

3 Likes

Can you confirm that Moola contracts like mcUSD will have a mechanism to claim MENTO from the airdrop contract?

Also, it looks like KYC will be required to claim MENTO tokens, is this correct?

  • @dev Allows msg.sender to claim amount tokens if the merkle proof and kyc is valid.
    • @notice This function can be called by anybody, but the (msg.sender, amount) pair
    • must be in the merkle tree, has to not have claimed yet, and must have
    • an associated KYC signature from Fractal. And the airgrab must not have ended.
    • The tokens will be locked for the cliff and slope configured at the contract level.

Same question on stCELO please

Hi @Patrick, @tomfutago,

We put together a handy FAQ document that answers these and hopefully other questions that may arise.

Yes, to comply with local regulations in various jurisdictions, there is a need to make sure that owners of eligible addresses are not on the AML sanctions list and are not residents of one of the restricted regions. Please see linked document for more details.

There won’t be a mechanism for contracts like mcUSD or stCELO to claim MENTO. More detailed reply is provided in the linked document.

Hope that helps.

Please also signup for Celo Community Call #45 next week.

1 Like

The snapshot link is broken: https://github.com/mento-protocol/airgrab-snapshot

The document says:

Smart contract addresses are excluded, except for ReleaseGold addresses (here, we would use the beneficiary address) and Gnosis Safes. Mento stablecoins held in liquidity pools, etc. will not be counted directly (simply not feasible to account for all pools, etc., on all DeFi protocols on Celo), but since depositing stablecoins in liquidity pools leads to volume, they are counted indirectly.

Can you please help me understand why counting smart contract addresses is not feasible?
And how they are counted indirectly?
Thanks.

Are community members who staked via stCelo excluded by the Airdrop criteria?

2 Likes

There won’t be a mechanism for contracts like mcUSD or stCELO to claim MENTO.

The above on me does not make sense. Celo is the first mobile blockchain for phone users. Moreover, stcelo is a kind of staking protocol supporting mobile dapp, web3 that was made by clabs.

2 Likes

Why don’t we calculate the stCELO contract address? I think the existing on chain governance cannot involve ordinary community members at all. Only by simplifying the voting process through stCELO can we participate

2 Likes