Melon Council workshop & handover takes place before announced at M-1

Two weeks ago, MAMA and Melonport brought together over a hundred technologists, regulators and asset managers at the M-1 conference in Zug to reflect on the latest developments in the on-chain asset management space and talk about the future of finance. The conference included talks and panel discussions from some of the leading players in the space. Here’s a quick round-up of some of the main highlights:

A growing ecosystem. M-1 brought together dozens of innovative projects working to build the financial operating system of the future. It was inspiring to learn about so many exciting new projects, applications and developments. Even though asset management 3.0 is still in its infancy, it’s clear that the ecosystem is growing and going from strength to strength!

Melon protocol prepares for v1.0 main-net release. The team outlined a vision and path for the disintermediation of financial services, reversing the historical trend which has seen the unit cost of financial intermediation increase over the last 130 years. Melonport’s CTO Jenna Zenk teased the audience with a sneak preview into the v1.0 main-net release. Travis Jacobs, our lead blockchain developer presented an overview of the Melon protocol. Gautham Nekkanti highlighted the challenges of integrating DEX’s into Melon and announced that to date Melon has integrated 0x, Kyber Network, Oasis Dex and Ethfinex. John Orthwein described how risk engineering was one of the essential components of the Melon protocol and how to use blockchain tools to mitigate or eliminate certain types of risk at the point of portfolio creation. The front end lead Simon Schmid presented the architecture surrounding it as well as the approach taken to aggregating order books to provide best execution and liquidity to users. Later in the day, Ryan Zurrer and Mona El Isa battled out Melonomics which clearly showed how the token holder and future maintainers of the protocol would be looked after through direct linking of network usage to the purchasing power of the token. Finally, the Melon Council was unveiled making Melon the first protocol to be released which will operate in a truly decentralized manner and by design will look after the most important stakeholders in the asset management ecosystem — the users. Excitingly, the operations of the Melon council will be run on AragonOS, which was beautifully demonstrated by its CTO, Jorge Izquierdo!

The team outlined a vision and path for the disintermediation of financial services, reversing the historical trend which has seen the unit cost of financial intermediation increase over the last 130 years. Melonport’s CTO Jenna Zenk teased the audience with a sneak preview into the v1.0 main-net release. Travis Jacobs, our lead blockchain developer presented an overview of the Melon protocol. Gautham Nekkanti highlighted the challenges of integrating DEX’s into Melon and announced that to date Melon has integrated 0x, Kyber Network, Oasis Dex and Ethfinex. John Orthwein described how risk engineering was one of the essential components of the Melon protocol and how to use blockchain tools to mitigate or eliminate certain types of risk at the point of portfolio creation. The front end lead Simon Schmid presented the architecture surrounding it as well as the approach taken to aggregating order books to provide best execution and liquidity to users. Later in the day, Ryan Zurrer and Mona El Isa battled out Melonomics which clearly showed how the token holder and future maintainers of the protocol would be looked after through direct linking of network usage to the purchasing power of the token. Finally, the Melon Council was unveiled making Melon the first protocol to be released which will operate in a truly decentralized manner and by design will look after the most important stakeholders in the asset management ecosystem — the users. Excitingly, the operations of the Melon council will be run on AragonOS, which was beautifully demonstrated by its CTO, Jorge Izquierdo! Technology alone won’t change the world of finance. Even though there are a whole range of incredible innovations being built which have the potential to disrupt traditional finance, people were quick to point out that technology alone won’t be a sufficient driver of change. We need to get all the pieces of the jigsaw to fit at the same time — and this means continuing to work with regulators to ensure that laws and regulations are fit for purpose (such as the work by MAMA), improving liquidity and the user experience of decentralised exchanges, ensuring the safety of smart contracts and carrying out lots of small-scale tests and pilots.

Even though there are a whole range of incredible innovations being built which have the potential to disrupt traditional finance, people were quick to point out that technology alone won’t be a sufficient driver of change. We need to get all the pieces of the jigsaw to fit at the same time — and this means continuing to work with regulators to ensure that laws and regulations are fit for purpose (such as the work by MAMA), improving liquidity and the user experience of decentralised exchanges, ensuring the safety of smart contracts and carrying out lots of small-scale tests and pilots. Testing, testing! When asked how many asset managers at M-1 would be keen to pilot test the Melon protocol and other TROFs, a wave of enthusiastic hands shot up. So it looks like the next 18 months is going to be busy! Once the Melon protocol is launched on the Ethereum mainnet, we’ll be looking for users to help us test, iterate and refine the protocol. Similarly, MAMA will be continuing its work with regulators to try and help pilot “Technology Regulated and Operated Funds” (TROFs) in a number of jurisdictions, most notably Liechtenstein and Malta. Please get in touch to find out how you can get involved.

When asked how many asset managers at M-1 would be keen to pilot test the Melon protocol and other TROFs, a wave of enthusiastic hands shot up. So it looks like the next 18 months is going to be busy! Once the Melon protocol is launched on the Ethereum mainnet, we’ll be looking for users to help us test, iterate and refine the protocol. Similarly, MAMA will be continuing its work with regulators to try and help pilot “Technology Regulated and Operated Funds” (TROFs) in a number of jurisdictions, most notably Liechtenstein and Malta. Please get in touch to find out how you can get involved. Melon Council unveiled. The members of the inaugural Melon Council were announced at M-1. This new decentralised organisation will be responsible for maintaining and overseeing the future development of the Melon protocol. Like the protocol itself, the Melon Council is a groundbreaking development in the on-chain asset management industry, championing the principles of openness, decentralization and transparency. The Chair is Matthew di Ferrante (founder of ZK Labs) and the vice-chair is Nick Munoz-McDonald (Former Head of Security Audits at Solidified). The Melon Council will be powered by aragonOS, a solidity framework that allows anyone to create, manage and participate in complex decentralised organisations. This is the first time Aragon will be used to power a decentralized asset management protocol. To see the full list of Melon Council members see here.

The members of the inaugural Melon Council were announced at M-1. This new decentralised organisation will be responsible for maintaining and overseeing the future development of the Melon protocol. Like the protocol itself, the Melon Council is a groundbreaking development in the on-chain asset management industry, championing the principles of openness, decentralization and transparency. The Chair is Matthew di Ferrante (founder of ZK Labs) and the vice-chair is Nick Munoz-McDonald (Former Head of Security Audits at Solidified). The Melon Council will be powered by aragonOS, a solidity framework that allows anyone to create, manage and participate in complex decentralised organisations. This is the first time Aragon will be used to power a decentralized asset management protocol. To see the full list of Melon Council members see here. Security of smart contracts was still a paramount concern among asset managers. Matthew di Ferrante talked about the importance of security audits on smart contracts and talked through some of the key tools — static code analysis, security analysis (to identify vulnerabilities), evaluating the design of the code-base and game theory (looking at perverse incentive structures which might result in a ‘tragedy of the commons’). Martin Lundfall highlighted the need for formal verification — essentially the process of specifying and verifying the behaviour of a programme.

It’s the user experience, stupid! Amongst the community, there are serious concerns about the security of centralised exchanges, not to mention their growing power. Even though decentralised exchanges (DEXs) — such as Kyber Network, Oasis DEX and 0x — are by design far safer to use than centralised exchanges, they still suffer from low levels of user adoption and therefore low levels of liquidity. Will Harborne from Ethfinex shared findings from a recent research project which explored some of the challenges around adoption of their DEX Ethfinex Trustless. It turns out that users didn’t really care whether or not the platform was centralised. The key issue for them was the user experience and ease of use. For example, interviews uncovered the fact that most users didn’t have Ethereum wallets which were required for signing-on. As a result, Trustless have introduced a new wallet on-boarding system. So rather than focusing on the merits of DEXs — namely that they’re safer, more transparent, and give users greater control of their assets — we should be making sure that they’re as easy to use as possible.

Amongst the community, there are serious concerns about the security of centralised exchanges, not to mention their growing power. Even though decentralised exchanges (DEXs) — such as Kyber Network, Oasis DEX and 0x — are by design far safer to use than centralised exchanges, they still suffer from low levels of user adoption and therefore low levels of liquidity. Will Harborne from Ethfinex shared findings from a recent research project which explored some of the challenges around adoption of their DEX Ethfinex Trustless. It turns out that users didn’t really care whether or not the platform was centralised. The key issue for them was the user experience and ease of use. For example, interviews uncovered the fact that most users didn’t have Ethereum wallets which were required for signing-on. As a result, Trustless have introduced a new wallet on-boarding system. So rather than focusing on the merits of DEXs — namely that they’re safer, more transparent, and give users greater control of their assets — we should be making sure that they’re as easy to use as possible. Tackling a lack of liquidity on DEXs. One of the key challenges within this space is a lack of liquidity on DEXs. This is being tackled in a number of different ways. Gnosis, for example, have created a ‘Dutch Auction’ which batches users together and enables them to bid for a price. Even though this approach is relatively slow, there are a number of benefits — such as no frontrunning, less volatility, a fairer price finding mechanism, low gas costs and market makers aren’t always necessary. Kyber Network, on the other hand, enables users to swap tokens instantaneously. Kyber, one of the first fully on-chain market makers, doesn’t provide an order book and users are simply given a price which they can accept at the click of a button. Behind this very simple interface, liquidity is provided through an open reserve architecture that allows anyone to contribute their idle token assets to Kyber’s decentralised central liquidity pool and earn from the spread in every transaction. In this way, Kyber are able to achieve the same levels of liquidity as some of the centralised exchanges, but with far less inventory. Woorton is providing another approach to the liquidity challenge. They provide market making as a service to a range of professional clients. They were given inventory from a token issuer and managed liquidity on exchanges on their behalf. They started on centralised exchanges but now operate on decentralised exchanges and are currently acting as a reserve manager on Kyber Network. Similarly, Hummingbot is an innovative approach to bringing more liquidity to exchanges through its decentralised approach to market making. Hummingbot enables users to run their own automated arbitrage strategy through the use of cross exchange market making bots.

To find out more you can watch all the talks here. We’d love to hear your thoughts on the topics discussed. If you have any feedback you’d like to share then please don’t hesitate to get in touch.