CGP156: Enabling MENTO Governance (#509)

CGPs/cgp-0156.md

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+---
+cgp: 156
+title: Enabling MENTO Governance
+date-created: 2024-11-25
+author: "Bogdan Dumitru <[email protected]>, Roman Croessmann <[email protected]>, Markus Franke <[email protected]>"
+status: DRAFT
+discussions-to: https://forum.celo.org/t/finalize-mento-governance-transition-and-return-celo-to-the-community/9526
+governance-proposal-id:
+date-executed:
+---
+
+## Overview
+
+Via [CGP#180 “Mento Spin-off and Launch of the MENTO token”](https://mondo.celo.org/governance/cgp-139), the Celo Community approved the transfer of governance over the Mento Protocol (smart contract, reserve, etc.) from CELO to MENTO token holders.
+
+As outlined in CGP#180, the technical transfer of governance control over the Mento smart contracts was postponed to allow for the prior distribution of MENTO tokens and thorough testing of the MENTO governance system before executing the transfer at the smart contract level.
+
+The distribution of MENTO tokens, as agreed upon in CGP#180, is now complete, and the MENTO governance system has been thoroughly tested and refined. As part of this, a first mainnet [MENTO Governance Proposal](https://governance.mento.org/proposals/103735995345693199910086363052242384161838722208226379263598180615966957884012) was successfully completed and executed on November 4th, 2024.
+
+This CGP now completes the transfer of governance over the Mento Protocol on the smart contract level. The governance control over the following Mento Protocol smart contracts is transferred:
+
+- Tokens:
+  - StableTokenV2 implementation contract
+  - cUSDProxy contract
+  - cEURProxy contract
+  - cBRLProxy contract
+  - eXOFProxy contract
+  - cKESProxy contract
+  - PUSOProxy contract
+  - cCOPProxy contract
+- MentoV2 contracts:
+  - BiPoolManager + BiPoolManagerProxy
+  - Broker + BrokerProxy
+  - Reserve + ReserveProxy
+  - BreakerBox
+  - MedianDeltaBreaker
+  - ValueDeltaBreaker
+- Legacy MentoV1 contracts:
+  - Exchange + ExchangeProxy
+  - ExchangeEUR + ExchangeEURProxy
+  - ExchangeBRL + ExchangeBRLProxy
+  - GrandaMento + GrandaMentoProxy
+- Mento Governance contracts:
+  - GovernanceFactory
+
+A Mento-related smart contract that will remain under CELO governance is the [SortedOracles contract](https://explorer.celo.org/mainnet/address/0x35a4f0C8C0B48769F036b79F9d428BeA286f6ab5). This was requested by core Celo engineers and is due to the fact that the contract is used in similar parts by Celo and Mento core contracts.
+
+This proposal also fulfills the remaining obligation of the Mento Reserve in returning the CELO it received in the Genesis Block initiated in [CGP 79](https://mondo.celo.org/governance/cgp-79) and executed in part in CGP 79 (25M CELO returned) and [GGP 118](https://mondo.celo.org/governance/cgp-118) (12.593M CELO returned) by returning the remaining 82,406,987 CELO to the Celo Community Fund. This proposal directly sends 20M CELO to the Celo Governance Proxy and transfers the remaining 62,406,987 CELO to a newly deployed Custody Reserve contract configured for Celo Governance, enabling the community to control the timing of future CELO withdrawals. This 20/62 split was suggested by the CeloPG Stewards based on anticipated ecosystem spending.
+
+Completing this handover will initiate the next phase of the Mento protocol. It will enable Mento Governance to operate independently, reducing the governance burden on Celo Governance while simultaneously enabling Mento to accelerate its growth. The increased pace of launching new Mento stablecoins and rising adoption of Mento will see many opportunities for existing and new Celo stakeholders to benefit from and participate in the Mento protocol.
+
+## Proposed Changes
+
+Check the [forum post](https://forum.celo.org/t/finalize-mento-governance-transition-and-return-celo-to-the-community/9526) for a detailed description of the proposed changes.
+
+## Verification
+
+Check the [forum post](https://forum.celo.org/t/finalize-mento-governance-transition-and-return-celo-to-the-community/9526) for a detailed description of verification steps.
+
+## Risks
+
+There are couple of risks factors to take into account as part of this proposal:
+
+- In case the MENTO governance system is technically flawed, control over the smart contracts that are transferred could be lost or attackers could take over control via an exploit.
+
+- As with every governance system that is based on token ownership, malicious actors with a combined majority voting power could take over the system.
+
+The first risk has been addressed by extensive testing and refining of the MENTO governance system as well as an external code audit of the system (see https://github.com/sherlock-audit/2024-02-mento).
+
+The second risk has been addressed by striving for a widespread and equal MENTO/veMENTO token distribution, for example via the veMENTO airdrop to CELO and stablecoin holders agreed upon via CGP#180. As of November 26, 2024, there are 550 registered MENTO voters, i.e. veMENTO delegates, see https://governance.mento.org/.
+
+## Useful Links
+
+- [Mento Homepage ](https://www.mento.org/)
+- [MENTO Governance UI](https://governance.mento.org/)
+- [Mento Spinoff CGP](https://mondo.celo.org/governance/cgp-139)
+- [Mento Docs](https://docs.mento.org/)
+- [Mento Forum](https://forum.mento.org/)