Aug 24, 2020
Mona El Isa is the founder of the Melon protocol. Melon is an Ethereum-based protocol for decentralized on-chain asset management. Melon empowers anyone to set up, manage, and invest in customized on-chain investment vehicles. The process of setting up an investment fund on Melon costs less than $60 and takes ten minutes using the Melon terminal.
Why you should listen:
After spending a decade building a career as a successful trader at Goldman Sachs and at a hedge fund, Mona was approached to set up and run her own investment fund. It did not work out. Mona realized that successful traders at investment funds were shielded from the many administrative processes required. Companies like Goldman hire entire teams of people to look after the many legal and financial requirements needed to run a fund. This means that setting up a new fund is out of reach except for those with the resources to do so.
Melon is a decentralized protocol to set up and manage on-chain investment funds. By automating the back and middle office processes of fund management through the use of smart contracts, Melon enables fund managers to create their own tokenized funds.
Managers can write a fund prospectus in code. Mona says “You can think of Melon as a technology that helps managers customize the set-up of their fund. You can pre-define all sorts of rules from fees, to number of positions, types of assets, risk management etc.”
The protocol takes care of investments and redemptions, it takes care of the NAV calculations, it enforces any of the rules that managers have in their funds. And everything is automated using smart contracts. Users can write as many rules as they want, so they can create uniquely individual funds.
The process of setting up an investment fund on Melon costs less than $60 and takes ten minutes using the Melon terminal.
Key takeaway:
The Melon target market is what Mona describes as the “long tail of investment managers”. This could be any fund below $150 million dollars. 90% of new funds in this category fail, many due to the high level of compliance, fees and processes involved.
It will soon be possible to set up a Melon fund that has a yield-farming strategy, or lends to market-making pools, or a DAO that invests in other Melon funds, or can interact with synthetic assets.
No other protocol is permissionless in the way that Melon allows any non-technical person to set up an on-chain investment fund in a matter of minutes.
Ethereum Gas prices are putting a strain on DeFi. The Melon team is slimming down contracts to make them more efficient and less gas-intensive for V2. Medium-term the team are looking at layer two solutions to mitigate against high gas prices.
Supporting links:
If you enjoyed the show please subscribe to the Crypto Conversation and give us a 5-star rating and a positive review in whatever podcast app you are using.