A few questions for Mona El Isa
January 24, 2020 | Is it Melon season yet?
A month ago, BlockStreetJournal put out a piece on the Melon Protocol and its pioneering leadership in Asset Management 3.0. The piece caught the attention of the Avantgarde team and was retweeted to rave reviews. Thanks for that! Now a month later and a new year upon us, we want to be able to follow up and see how their team is doing now and what its further plans on in increasing further development of the Melon Protocol.
We reached out to the head honcho, Mona El Isa, Co-founder of Melonport AG and the President of MAMA, and posed to her a few questions that could help us and other investors get more clarity around the roadmap of what we can expect going forward. From its mainnet launch last year with a Total Value Locked (TVL) in Ethereum going from $25 to a current reading of $271k, it’ll be interesting to see how the Melon protocol can keep pushing forward.
2019 was a huge year for DeFi but there is going to be things needed to push it forward on another level rather than just pure hype and excitement.
BSJ: In the September medium post, it was disclosed that a majority of the funding for the 3 year lock up period would come from alternative sources and not token sales. What type of a capital structure do you anticipate in the future?
Mona: This is correct. A large proportion of the short to medium term funding has been provided by the owners of the company. Going forward we can envision an equity round based on a number of discussions we are having.
BSJ: There have been many reports on exchanges transforming into the financial institutions of the crypto space. They are aggressively developing new products and services. Is Melon concerned of large well capitalized exchange forking the Melon Protocol and offering the same services through their own platform?
Mona: Forking would not necessarily be a bad thing. We invite anyone who thinks they can do a better job, to try and fork the protocol. However, forking the protocol to make it centralized, would take away many of the core features of Melon — the fact that it is decentralized for example.
We also believe that the value proposition of Melon is not just in the code, but also the Melon Council DAO and the community of token holders. Whilst you can fork the code, you can’t fork the Melon Council DAO or the community. We are confident that we have designed a governance system that has carefully aligned all stakeholder interests.
BSJ: The Melonomics post 1 mentioned that there is a growing alignment of interests in the ecosystems, specifically token mergers. There is a lot of speculation that 2020 will be the year of protocol and infrastructure M&A. Are there projects that are in discussion with Melon about using MLN post-merger?
Mona: Absolutely. We try to keep a close eye on the space and identify projects where this would make sense. In 2018, there was one project which we identified as a potential good fit for a token merger (in the capacity of Melonport AG). However, after some further research, we felt it wasn’t a good fit at that time. We never approached them about it but continue to keep a close eye on potential fits.
BSJ: How much capital, estimated, has already been used since inception to now?
Mona: The team is up to 11 people now and has been in full operational swing since October. Before that we were active with a smaller team. We’ve spent about £340,000 to date.
BSJ: Are Melon Council members paid through MLNs? Or are they completely voluntary?
Mona: Melon Council members are paid in vested MLN tokens for their overseeing duties (grant recommendations, maintenance upgrades and monitoring of the network parameters) . Anything which is deemed over and above a normal duty (eg. a code audit) is compensated separately at market rates. There is a fixed amount of 60,000 MLNs to go around each year (2 year vested) for Melon Council members. This number is independent of the number of people on the Council and in some ways this ensures the size of the Melon Council doesn’t get too small or too big.
BSJ: What organizations have MAMA already had discussions with?
Mona: MAMA is primarily there to support companies that are in the ecosystem for decentralised asset management. This includes the universe of DEX’s, sovereign identities, lending protocols, synthetic products and much more. We’ve also had a lot of interest from large incumbents in traditional asset management such as Credit Suisse and more recently UBS Asset Management. This shows us that forward-looking financial incumbants are aware that the foundations of asset management are changing with blockchain and want to stay abreast of how this will impact their businesses.
BSJ: Why are the Bug Bounty program rewards paid out in DAI instead of MLN?
Mona: The DAI in the bug bounty program was a pool of capital that Melonport AG made available for security purposes before dissolving the company and handing over governance to the Melon Council DAO. We felt (and still feel) that security should be of an ongoing focus and the fact that it is now in DAI is simply because the pool of capital came from Melonport and was already in fiat. We did think about converting DAI into MLN but concluded that it was probably more sensible to keep security-funds denominated in a stable-coin.
BSJ: In regards to the current 4 projects building on the Melon Protocol, how much in funds were allocated to them?
Mona: Ash Finance has received a total of about 100,000 MLN tokens so far and are entitled to an additional 50,000 if the required milestones are met.
Avantgarde Finance will be allocated 180,000 tokens each year subject to vesting schedule and various milestone report.
Additionally, Portle and Gorilla Funds entered our ecosystem via the DeFi hackathon which was organised by Kyber Network in 2019. Both Jakob (Gorilla funds) and Timur (Portle) were winners of the hackathon and received 500 MLN each. Gorilla funds has a simple mission, to give a clear overview and an easy UI for investing and redeeming in Melon funds. Portle on the other hand, enables you to visualize all your personal investments in one wallet and track their value.
BSJ: As Credit-Suisse seems to be the only large traditional bank part of MAMA, how have they incorporated on-chain asset management in their business?
Mona: Credit-Suisse is no longer the only large traditional bank which is a part of MAMA. We are pleased to announce that they were recently joined by UBS Asset Management. It is not our place to talk about how our members are incorporating on-chain asset management into their daily business but we can say that through the MAMA network, they get access to the most relevant industry changes and get to observe or participate in some of the most cutting-edge industry experiments and prototyping. I.AM, Bank Frick and MME are just some examples of MAMA members who are actively involved in prototyping on-chain asset management and figuring out how to incorporate this within the traditional regulatory infrastructure.
BSJ: When do you foresee the Melon Protocol being able to cover all initial capital investments? At what specific AUM do you see this happening? Or at what specific MLN price?
Mona: That’s an interesting question. My own personal assumptions (which you should take with a grain of salt!) is that it may take a couple of years. The dynamic we are battling against now is that new tokens are being minted to accommodate for all the new development needs required until the ecosystem “matures”. By contrast, usage is still picking up slowly as we solve for the very barriers that we believe are holding back main-stream adoption (eg. UX/UI, broader asset universe, regulator solutions etc). Once that lift-off happens, the token dynamics get very interesting. In the meantime, the Melon Council Association has decided it would make sense for all grants from the DAO to have vested conditions attached in a way that will align interests between stakeholders until usage picks up.
BSJ: What are the DeFi projects are you most excited about currently?
Mona: We are particularly excited about for-profit DAO’s like the inevitable DAO2.0, which we hope will leverage the Melon protocol. We see the potential around for-profit DAO’s two-fold. Firstly, DAO’s infrastructures (like say, Aragon) can plug in to an asset management infrastructure like Melon. The DAO framework could act as the “manager” or “management company” of the fund and the fund itself can be technology operated and regulated using the Melon framework. In other words, investment research, investment decisions and working capital flow through the DAO whilst things like fund performance, management & performance fee calculations and risk management enforcement flow through the Melon contracts.
Secondly, we imagine that there will be some DAO’s that don’t want to actively manage assets but may be interested in finding talented managers to back via historical on-chain track records that can be viewed and vetted on the Melon monitoring tool.
Another use-case we are extremely excited about is insurance protocols like Unslashed. These protocols provide infrastructure that will be critical in making DeFi main-stream because they look to cover unknown risks. Projects like Unslashed are building a market-place to underwrite risks native to web3 such as slashing risk or smart-contract risk. Inevitably, this results in the fund management of underwritten risk through credit funds. We are excited that projects like Unslashed see value of Melon as an infrastructure for the insurance industry. Melon can help them focus on nailing the needs of the insurance industry whilst accelerating their own product development cycle by leveraging asset management infrastructure.
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