Enzyme Finance, formerly the Melon Protocol is a Protocol built on Ethereum where investors can invest in crypto assets and manage them on the platform. The protocol aims to completely decentralize traditional asset management. What was initially in the hands of financial advisors and other government agencies is now being made accessible to the average investor. Enzyme wants to lower the threshold so that everyone has the opportunity to expand and manage their assets.
What is Enzyme Finance?
More and more people are discovering the importance of investing. They want to put their money to work to ensure that they have a bright financial future. But there are now many ways to invest. Beginning investors often have insufficient knowledge of the possibilities, as well as of the financial market. And once they have invested, they actually have to follow up all of them. This is usually on different platforms. Spreading your investments is an important part of your risk management, but managing all this via different platforms is often very difficult and intensive.
Enzyme is an on-chain asset management protocol in which investors determine their own course based on asset under management. Choose your own investment strategies based on different assets, risk and performance. You are in control of your own capital at all times, whereby transparency is central. The protocol provides full transparency on how strategies perform as well as how they function and how they are composed.
That is why asset under management is a popular way to invest. By looking for the most promising strategies, based on your own wishes and possibilities, investors are prepared to make their assets available to a so-called ‘vault manager’. These are under asset managers who have set their own strategy and make it available to other potential investors. They have put together a strategy where they invest in various assets to increase their returns. Does this match your own vision and wishes? Then you can use their personal strategy, in a safe and transparent way, whereby you as an investor retain control over your own assets at all times.
In the traditional financial world, many large companies use this investment method, but it is expensive and involves legal procedures and a lot of administrative tasks. When we talk about under asset management, we immediately come across large investors who make millions of dollars of their assets available to a portfolio manager who will invest for them in the most favorable way possible.
As a result, this asset management in the traditional financial world is only accessible to larger investors and smaller players therefore have little or no opportunity to use this investment method.
Enzyme Finance is an open source protocol that allows management without the use of intermediaries. The process is automated by means of smart contracts where transparency is central. This gives you immediate insight into the previous return, which assets are involved in which strategy and you can always choose to get your own investment from this pool.
Asset under management
Assets under management, also abbreviated as AUM, is the total market value of investments made by an individual or organization on behalf of investors. This could be a hedge fund, a portfolio manager or other financial services. They obtain a capital from investors which they invest in various funds. These asset managers manage different funds for these companies or individuals, with the aim of growing their portfolio. Catherine Wood is perhaps one of the most famous portfolio managers. The American had no less than 52 million dollars under her management in March 2021.
In the traditional financial world, this mainly concerns stocks and bonds, where the crypto market offers many more possibilities. Each strategy is specified with its own wishes and can therefore focus on NFTs, ETFs or DeFi pools. It is the asset manager who manages your portfolio and makes informed choices to maximize your return.
How does Enzyme Finance work?
The essence of Enzyme Finance is to create funds for everyone. Enzyme smart contracts are responsible for preserving these assets, as well as performance, transaction execution, and various calculations. It is controlled by the asset manager and is bound by predefined rules. These are also included in the smart contracts.
The Enzyme protocol is an on chain asset management where everyone can create their own under asset management (UAM). This is completely composed by the asset manager, whereby everything is completely transparent. The manager determines which crypto he wants to include in his strategy and what share it deserves in this. It determines its own strategy entirely. In the overview you immediately get a list with all the different AUMs with the corresponding price shifts.
Each administrator must predefine several parameters to ensure transparency. Think of compensation structure, performance and management. Once these are passed, the contract is implemented in Ethereum ‘s network and thus has a unique token address. From that moment on, the fund is not checked by auditors, accountants and fund managers, but everything is done through smart contracts on the Ethereum blockchain .
You can filter on this for your interesting AUMs. For example, you may only be interested in game-related projects or a specific investment aimed at Automated Money Makers (AMMs). In the image above we see an example of such a vault. As we navigate further, we gain access to all additional information.
At the top left we immediately see the full dollar value of all assets under management, with the monthly return on investment at the top right. In the current example an average of 5.77%. It is of course the most important thing for an investor or investor to grow his or her portfolio and will therefore make a careful choice.
Centrally we see which assets are actually in this holding. Among other things, we see several trading pairs with Uniswap , as well as Wrapped Bitcoin . At the very bottom you can also navigate to the rulesets, but also to the fees.
Each vault, or asset vault, is put together by the vault manager himself. This means that he can determine for himself whether there are costs involved and, if so, how much. Usually these costs are around 1%, but it can also happen that participation in this vault is completely free. As a user, you also still pay gas fees, separate from these potential entrance fees.
Enzyme Finance was originally Melon Protocol, so the ticker is still set at $MLN. The ERC20 utility token works as a continuous burn and mint model. Every year, 300 600 tokens are minted by default to reward developers and administrators of the protocol through this native coin.
The utility token is twofold. Users pay to use the network in MLN tokens. In addition, developers can receive MLN tokens when they provide grants to Enzyme Finance. The token is used for setting up and executing funds, requesting investments, and exchanging digital assets.
This ensures that as more people use the protocol, more transactions take place and thus more MLN tokens go into circulation. These gas fees, paid in MLN tokens, are burned to determine the value of the token.
To regulate inflation, new tokens are released on a regular basis to determine the price. The protocol does this on the basis of a fixed schedule until provisionally going until September 2026. Over the years, the number of tokens of the team also decreases and these tokens are mainly used to control inflation.
The past period was mainly dominated by the launch of their mainnet. This was realized in the spring of 2019 under the then known Melon protocol. At the end of 2019, Enzyme Finance published a new roadmap for the next 3 years. They did this at the DeFi Summet in London by the way. We discuss the main developments on their roadmap.
Interoperability for this on chain data management is essential for the further growth of Enzyme Finance. They are investigating how to access assets in other chains. One possibility is building parachains. They are going to use a Polkadot framework here and if it is successful, it will be implemented.
Only through this development, Enzyme Finance can add more assets to their protocol to appeal to an even larger community.
What was on their roadmap, and has already been realized, is the integration of various DeFi protocols. Think of UniSwap and Aave Lending where vault managers can use these integrations. By broadening their horizons, they go beyond investing in digital assets to leverage lending protocols such as compoud.finance and Dharma.
Safety comes first at Enzyme and that is why they will additionally hire 2 independent auditors to do further audits on the source code. If positive and sufficient capital, they want to invest in an internal security professional who can guarantee security again and again.
Melon was founded in 2016 in Zug, Switzerland. Their vision was to develop wealth management on the Ethereum network through the use of smart contracts. The team sees more and more developments and a wider range of assets that can be tokenized. Therefore, Enzyme Finance goes beyond just crypto investments, but becomes an infrastructure for cross-asset investment management.
Mona El Isaac
Mona is CEO and founder of Avantgarde Finance, based in Switzerland. A financial organization that aims to provide investors with easier access to new financial infrastructures. From Avantgarde Finance, they provide blockchain-based financial tools that allow developers to implement various technologies to take advantage of the rapidly evolving Web3 economy.
Since 2016 they have also been active in the world of DeFi with Avantgarde Finance and have therefore launched Enzyme Finace under the parent company Avantgarde Finance.
Mona was previously a portfolio manager at Jabre Capital Partner, among others, where she was promoted to vice president at the age of 26 and also earned her top 30 position in Trader Magazine and Fobres Magazine in 2008.
CTO at Avantgarde is Jenna Zenk. Jenna is a software engineer with a background in finance and wealth management. Before her adventure at Avantgarde, she worked in the hedge fund sector in both Paris and New York. Her expertise is therefore indispensable in the further development of Enzyme Finance.
Enzyme Finance has very remarkable advisors. One of them is Gavin Wood, a good friend and co-founder of Ethereum, among others. It was Wood who made history by developing the programming language Solidity, which made the realization of smart contracts possible.
How can I buy Enzyme?
Since September you can now also buy Enzyme (MLN) on Bitvavo . Enter below how much (MLN) you want to buy on Bitvavo
We are increasingly recognizing the importance of investing and certainly with the accessibility of crypto. Managing your wealth is often a complicated and expensive affair. Especially if you decide to use a hedge fund or a portfolio manager. This requires a series of administrative tasks that are time-consuming, complicated and also entail the necessary costs. This limits access to only investors who are already wealthy. Enzyme Finance aims to make this on chain asset management available to every investor who wants to enjoy these different investment strategies.
They make this possible thanks to the use of smart contracts on the Ethereum blockchain. This eliminates intermediaries so that anyone can create funds and investors can invest. The future of Enzyme Finance already depends on deploying new assets to expand its capabilities even further. They are well on their way and have a lot of knowledge and expertise on board to make Enzyme Finance a successful project!
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com