Enzyme (MLN)

What is Enzyme Finance? (MLN)

Enzyme Finance, formerly known as Melon Protocol, is a decentralized platform built on the Ethereum blockchain that allows users to create, manage, and invest in custom crypto asset management vehicles. Enzyme’s goal is to decentralize and democratize traditional asset management, a field that has historically been dominated by professional financial firms, making it more accessible to a broader audience.

The platform uses the MLN token to execute various operations within the ecosystem, and through its open and transparent structure, it enables both individual and institutional investors to access, create, and invest in diversified portfolios in a decentralized and efficient manner.

Key Features of Enzyme Finance

1. Decentralized Asset Management:
   • Enzyme allows anyone to create, manage, and invest in crypto asset funds without the need for traditional financial intermediaries. This reduces the barriers to entry for investment and opens up new opportunities for users globally.
2. Customizable Funds:
   • Fund managers can create and customize investment strategies or portfolios that others can invest in. This allows for personalized crypto asset management solutions and diversified investment options.
3. Transparency:
   • Because Enzyme runs on Ethereum, all transactions, portfolios, and fund activities are transparent and can be verified on the blockchain.
4. MLN Token:
   • The MLN token is the native cryptocurrency used within the Enzyme Finance ecosystem. It serves various functions such as paying for transactions, staking, and governance. It also facilitates operations like paying fees and rewarding fund managers.
5. Smart Contracts:
   • Enzyme is powered by a collection of smart contracts, which run on the Ethereum blockchain to ensure that all fund management activities are automated, transparent, and secure.
6. Web Portal:
   • The Enzyme Finance web portal allows users to easily create, manage, and invest in funds. The platform includes a suite of tools for both fund managers and investors, including the ability to track and optimize portfolios in real-time.

Who Created Enzyme Finance?

Enzyme Finance was created by Melonport, a Swiss-based private company founded in 2016 by Mona El Isa, a former Goldman Sachs vice president, and Rito Trinkler, a mathematician.

Melonport raised $2.9 million through an Initial Coin Offering (ICO) in 2017, issuing 1,250,000 MLN tokens. After the release of the first version of the protocol in 2019, Melonport dissolved and transitioned the project’s governance to the Melon Council, a decentralized autonomous organization (DAO). The Melon Council now governs the protocol, ensuring its integrity, innovation, and development through smart contracts.

How Does Enzyme Finance Work?

Enzyme Finance is built on Ethereum, which means it leverages Ethereum’s blockchain to execute its operations and smart contracts. This design allows users to interact with the platform in a decentralized manner and provides the transparency and security inherent in blockchain technology.

The protocol itself consists of two layers:

1. Fund Layer

This is the part of Enzyme where users create, manage, and control funds that others can invest in.

• The Hub: The core component of the Fund Layer. The Hub provides the necessary tools for setting up a fund, including a user-friendly interface for fund managers. It also tracks the components that make up the fund.
• The Spokes: These are smart contracts that define the different components of each fund. Spokes provide specific services to the fund, including:
  • Vault: A component for securely storing tokens on behalf of the fund.
  • Shares: A component that tracks ownership and distribution of the fund, ensuring that the correct portion of assets are allocated to each investor.

2. Infrastructure Layer

This layer is governed by the Melon Council, a decentralized autonomous organization (DAO) that ensures the protocol’s operations and security. It handles various infrastructure-related functions such as managing the assets and computations needed for the protocol’s operations.

Key infrastructure components include:

• Adapter Contract: Links assets to price feeds for trading. It helps to integrate external price data into the platform.
• Engine Contract: Facilitates the buying of MLN tokens in exchange for ETH to help pay for computational services on the platform.
• Price Source Contract: Supplies the necessary price data for transactions within the funds, ensuring that fund managers and investors have accurate information.

Key Benefits of Enzyme Finance

1. Lower Barriers to Entry:
   • Traditional asset management services often require large minimum investments and hefty management fees, making them inaccessible to the average investor. Enzyme Finance eliminates these barriers, allowing users to create and invest in crypto funds with minimal capital.
2. Full Transparency and Security:
   • Being built on the Ethereum blockchain, all Enzyme transactions and fund activities are fully transparent and immutable. Fund management activities are governed by smart contracts, reducing the risk of fraud or manipulation.
3. Decentralized and Autonomous:
   • With governance now being handled by the Melon Council (DAO), decisions regarding the protocol are decentralized. This ensures that Enzyme evolves in a way that benefits the community, without being subject to the control of a single entity or centralized authority.
4. Customizable Investment Vehicles:
   • Fund managers have the flexibility to create custom crypto asset portfolios tailored to their specific strategies, and investors can choose funds that align with their risk appetite and financial goals.
5. Governance via MLN Tokens:
   • MLN token holders can participate in the governance of the protocol, helping to shape its future direction by proposing and voting on important protocol upgrades and changes.

Use Cases of Enzyme Finance

1. Creating Crypto Asset Funds:
   • Enzyme Finance enables users to create decentralized investment vehicles (funds) without the need for intermediaries or legal barriers. These funds can be open for others to invest in, giving managers and investors new ways to gain exposure to the crypto market.
2. Investing in Custom Funds:
   • Investors can browse through a variety of available funds, choosing one that matches their risk and reward preferences. Each fund is independently managed by a fund manager, providing investors with personalized and diversified exposure.
3. Managing and Optimizing Portfolios:
   • Both fund managers and investors can track their portfolios and manage them efficiently using the platform’s suite of tools. This allows for real-time updates, portfolio rebalancing, and the ability to optimize returns.