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Mento-fi

Transparent. Over-Collateralized. Decentralized. Permissionless. Multi-Currency. Sustainable. Stable. Assets. On Celo.
Category
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Finance
Blockchain
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Celo
Currency
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CELO
Publisher
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Celo Inc.
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What is Mento-fi?
Mento's origins are on the Celo blockchain, where the creation and redemption of stable assets is possible as well as several decentralized exchanges (DEXs) are available for trading.
For interacting with a blockchain, you need a cryptocurrency wallet. A popular choice among users is MetaMask or Valora.

Decentralized Exchanges
Decentralized exchanges (DEXs) are the primary way of exchanging assets in the decentralized finance community. There are multiple DEXs on Celo where you can exchange Mento stable assets:
Uniswap
Curve
Sushi
Ubeswap

High-liquidity Curve Pool for cUSD
The Mento reserve maintains a high-liquidity Curve pool with 20 million USD in liquidity, split between cUSD and USDCet. USDCet is USDC bridged from Ethereum via Wormhole and the Portal Token Bridge.

Mento
The Mento web app is a direct gateway to the Mento protocol. The web app is maintained by the Mento Core team and allows the exchange of stable with collateral assets. Depending on the direction of the trade, stable assets are either created or burned directly by the reserve. Please be aware, that for large orders against non-USDC collateral assets, slippage might increase since the mechanism protects itself against oracle manipulation risk. For larger amounts, USDC pairs or the high-liquidity Curve pool are good places to trade.

Centralized Exchanges
Mento stable assets and collateral cryptocurrencies trade on several centralized exchanges (CEXs). CEXs are a good way to get started with crypto and to on-ramp or off-ramp from and to the fiat money world, for example the US Dollar or the Euro. To use centralized exchange services, you will have to create an account and provide identity verification.
A good way to find out where an asset is trading is Coinmarketcap.com.
As an example, for the Celo Dollar, you can go to the Celo Dollar Markets section on Coinmarketcap.com and view a list of available exchanges.

Exchange Mechanism
In economic terms, Mento stable assets follow an elastic coin supply rule. The Mento Exchange Mechanism sets incentives to allow everyone to stabilize the value of the asset by adjusting supply to match demand. The over-collateralized, decentralized & transparent reserve of crypto-assets bears the risk of a decrease in stablecoin demand. In essence, the protocol shifts volatility risk from the stable asset holders to the reserve of crypto-assets.
Let us dive into an example with the Celo Dollar: When demand for the Mento Dollar rises and the market price is above the $1 peg, arbitrageurs can profit by purchasing $1 worth of CELO or bridged USDC, exchanging it with the protocol for one Mento Dollar, and selling that Mento Dollar for the market price, pocketing the difference. Similarly, when demand for the Mento Dollar falls and the market price is below the peg, arbitrageurs can profit by purchasing a Mento Dollar for the market price, exchanging it with the protocol for $1 worth of CELO or bridged USDC, and selling the reserve asset to the market. These actions drive the market price of the Mento Dollar back towards $1.
Information
Type
Automated Market Maker
Blockchain
Celo
Currency
CELO
Platform
Windows, macOS
Publisher
Celo Inc.
Version
Version 1.5.1
FAQ
Granda Mento, described in CIP 38, is a mechanism for exchanging large amounts of CELO for Celo stable tokens that aren't suitable for Mento or over-the-counter (OTC). Mento has proven effective at maintaining the stability of Celo's stable tokens, but the intentionally limited liquidity of its constant-product market maker results in meaningful slippage when exchanging tens of thousands of tokens at a time. Slippage is the price movement experienced by a trade. Generally speaking, larger volume trades will incur more slippage and execute at a less favorable price for the trader.
A Granda Mento exchange requires rough consensus from the Celo community and, unlike the instant and atomic Mento exchanges, involves the exchanger locking their funds to be sold for multiple days before they are exchanged
Refer to CIP 46 for information surrounding processes.

The easiest way create an exchange proposal on-chain is using the celocli grandamento:propose
The exchanger of an exchange proposal can cancel the exchange proposal if the proposal has not yet been approved. This can be done using the celocli grandamento:cancel command (docs).
The amount of the token being bought in an exchange proposal is calculated when the exchange proposal is created according to the current oracle price and the spread. To view the amount of the token being bought that a hypothetical exchange proposal would receive for a provided amount of the token sold
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