Thus, increases in cUSD would imply they need to liquidate CELO to acquire their desired collateral. Any selling of CELO by Mento would put downward pressure on CELO (in addition to folks selling CELO after converting from cUSD).
Is there any on-chain or governance evidence that Mento has been selling CELO from the reserve into the market?
Mechanically, minting ~9,041 cUSD per epoch is collateralized by an equivalent USD value of CELO being transferred into the Mento Reserve; validators receive the cUSD. That part is clear. What’s not clear is whether the reserve later dumps that CELO for either rebalancing or any other purpose.
Also, the epoch rewards doc you quoted earlier was superseded by the “Great Celo Halvening” proposal; have you factored it into your arguments?
Keep in mind that the same validators have been running this network, actively participating in governance during the pre-delegation phase, and ensuring a smooth transition to Celo L2 for the past five years. Proposing to “gut” the validator set simply to save ~5.5M CELO annually being transferred into the Mento Reserve is not just shortsighted; it undermines the very operators who have secured and stewarded the chain since launch.
Validators will not necessarily be here in perpetuity, but if the community does decide to downscale the set, the rationale must be sensible, transparent, and backed by actual current data. Anything less risks eroding trust for marginal short-term accounting gains.