Streamlining Mento Reserve Pairs

Governance Governance Proposals
1

Summary

This proposal seeks to optimize the current set of trading pairs within the Mento Protocol by simplifying the asset routing architecture. Specifically, we propose to deprecate several lower-utilization pairs that have become operationally burdensome and instead consolidate liquidity routing through a cUSD-centric model. Additionally, this proposal introduces new core pairs with cUSD and updates several protocol parameters (like spreads, limits, circuit breakers, etc.) following a holistic review of the current system.

Motivation

As the number of assets and pairs supported by the Mento Protocol has grown, maintaining them individually—especially those with lower usage—has introduced increasing operational and technical complexity. Additionally, many of these pairs require dedicated oracle feeds and liquidity calibration, which do not yield commensurate utility.

We propose a shift toward a more streamlined architecture where all major assets are routed through cUSD, which is already the most liquid and widely used stable asset on Celo. This shift allows us to:

  • Improve maintainability and monitoring across the Mento Protocol

  • Unify swap paths over cUSD (e.g., cREAL → cUSD → USDC instead of cREAL → USDC directly)

  • Minimize redundant oracle dependencies

  • Preserve the ability to swap between any two assets via composed two-hop routes

Importantly, these changes will not remove any user-facing functionality; all swaps will remain possible through the updated routing logic.

Specification

Pairs to Remove

The following pairs are proposed for deprecation:

  • cEUR / CELO

  • cREAL / CELO

  • eXOF / CELO

  • cREAL / USDC

  • cEUR / USDC

  • cEUR / axlUSDC

  • cREAL / axlUSDC

  • eXOF / axlEUROC

These pairs will no longer be directly maintained, but all swaps will remain executable through intermediate routing via cUSD.

Pairs to Add

To enable complete swap coverage via cUSD, we propose adding the following base pairs:

  • cUSD / cEUR

  • cUSD / cREAL

  • cUSD / eXOF

These additions ensure that all stable assets in the Mento Protocol can route to one another in two hops or fewer.

Parameter Review

In conjunction with this proposal, Mento Labs has conducted a comprehensive review of all active pair parameters. Based on this analysis, we will propose adjustments to:

  • Trading spreads

  • Trading limits

  • Oracle circuit breakers

  • Reference asset volatility thresholds

These parameter changes are intended to enhance market efficiency, reduce slippage, and strengthen Reserve robustness.

Next Steps

We plan to present this proposal in more detail during the upcoming Celo Governance Call and share the exact proposed parameters in a follow up forum post. Feedback from the community will be incorporated before submitting the on-chain governance proposal.

We look forward to engaging with the Celo community on this proposal and welcome your thoughts, questions, and suggestions in the forum thread below.

4 Likes
2

Hi @n-mlabs is this a Mento governance proposal or a proposal aimed only for the Celo Governance?

3

Hey @0xGoldo, this will be a Celo Governance proposal only

1 Like
4

One question regarding fees, is the user charged twice if there are two hops, or just once per trade?

1 Like
5

Good question @martinvol!

6

I understood the idea but it is important to review the financial consequences!

7

Fees in pools will function similarly to any other DEX, where using a router to perform multiple hops will incur multiple pool fees. With this update, we’re focusing on security first and improving the way we can offer these pools without risk to the LPs (currently the Mento Reserve, but in the upcoming Mento V3, anybody will be able to provide liquidity).

We will explore fee optimisation further in V3, depending on how this impacts our users. However, in general, and also in off-chain FX markets, most trading occurs through a unified quote currency, and when hopping, you will incur a spread from both A/USD and B/USD. The alternative is liquidity fragmentation across many-to-many asset pools; however, for high-throughput paths, we can explore spinning up specialized pools.

6 Likes