I tend to avoid calls, so I’ll offer a quick rebuttal here – I’m not convinced by your argument:
The core mandate of the Mento Reserve is to protect stablecoin holders
Strengthening the demand factors of the largest collateral in the Mento Reserve – CELO – protects these holders. Above the threshold of high quality liquid collateral that already exists in the reserve – i.e. a minimum 100% backing of all cStables outstanding by other stables or blue chips, as is policy today – one could argue overprotection is in place. Maintaining this floor makes sense, but above that floor, protection is economically inefficient – there’s better things that can be done with these profits (e.g. Mento is today considering a governance token – why not evaluate different types of patronage earning mechanisms?)
The Mento Reserve has been a massive net buyer of CELO since inception in any case.
To my understanding, this isn’t really the case. Mento pulls CELO out of circulating supply to a degree, but it’s not “buying” assets; that collateral is still available for price-balancing arbitrage (folks can still trade cStables against CELO in the reserve). Again: to my understanding, existing CELO in the reserve is more like a liquidity pool than anything else.
If anything, it seems that Mento has been a large net seller of CELO ever since the rebalancing, and one could make the argument that pocketing excess yields as collateral above the threshold needed to be adequately “protected” means that the Reserve essentially is profiting from these previous trades vis-a-vis CELO holders. This being said, in order to understand this completely, it’d be helpful to understand the full history of the Mento Reserve and the winners/losers of its rebalancing exercises.