Now… let’s look at how Melon benefits you as (i) an investment manager and (ii) an investor.

(i) Melon for investment managers

The operational overhead of simply maintaining a fund and abiding by regulatory requirements is a full time job in itself — even with the assistance of a fund administrator and a back office/middle office support team. Melon automates the vast majority of such tasks by replacing them with smart contracts, thus freeing up your time and energy to focus on portfolio management.

Essentially, Melon can help you operate a fund of digital assets for your clients. The blockchain itself is the custodian of your assets, while Melon takes on the role of the fund administrator and parts of the back/middle office to help you with the administrative tasks and operations. When setting up a fund, you simply define your fund configuration by choosing the different policies/parameters (exchanges, risk management profile, management and performance fees, KYC/AML solutions etc.) and deploy your fund contract to the blockchain. The whole process should cost you less than USD 50 (Ethereum gas costs) and be finished within a few minutes. At this point, you are all set to focus on your primary mission: managing a portfolio of assets and making investment/trading decisions. You can do so by trading on the specified decentralized exchanges to which your fund is connected.

In addition, Melon will enable you to generate interactive reports, factsheets and other documents for investor or regulatory reporting … all in one click.

Snapshot of reporting/marketing interface

(ii) Melon for investors

Most of us don’t work in finance or have the skills, time or inclination to become knowledgeable in this area. But instead of being excluded from the benefits of economic growth, you can simply outsource investment decisions to professionals for a fee. This is how asset management works — funds allow a manager to concentrate investment management effort towards the collective funds of many investors. Now what are some of the obstacles for a teacher, doctor or engineer to find the right asset manager to manage their money?

Traditional asset management has high barriers to entry; many hedge funds for example do not accept small investments. If you are a student with USD 300, you are going to have a hard time finding a fund that will accept your investment. If they do accept smaller investments (retail clients), fees are usually much higher. And it makes sense. Onboarding a new client is a lengthy, time consuming process. On Melon, there is no minimum investment. Whether it’s 1/10 ETH or 10 000 ETH, the fund contract will accept your investment. This is due to the fact that the subscription process for new investors (i.e., issuing new shares) is fully automated and, thus, can be scaled without a significant increase in costs.

In addition, traditional investors lack a standardized approach for evaluating funds. Most funds provide updates on performance and strategy through regular factsheets, but use different metrics, making comparison difficult. On top of that, there are very few, if any, standardized platforms where you can obtain such data on funds for free (services like EurekaHedge and Morningstar, which do offer comparative data on funds, are usually quite expensive and few individuals would get subscriptions).

Melon will provide investors with a ranking of Melon funds based on historical track records that no one can tamper with. In addition, each fund can maintain its own frontpage with standardized, transparent metrics (historical performance, volatility, VaR, fee structure, etc.). This will enable investors to make educated decisions about the funds in which they want to invest.

The Vision

In its current form, Melon is only compatible with digital assets. It is an asset management tool that allows you to create an investment fund of digital assets — that is, assets that are tokenized. Currently, that is the entire USD 300 billion cryptocurrency market. However, we believe that in the near future, most or all traditional assets will be digitalized and stored on a blockchain or, in other words, tokenized.

Why? Simply speaking, blockchains are designed to securely store ownership information and reliably transfer value. And there are already ample companies working on that: Digix tokenized gold, Bitfinex tokenized the USD, Neufund is helping new companies to issue their equity shares in token form to name a few. When the day comes that most traditional assets in the world are tokenized, you can seamlessly include them all in your portfolio. That means you will be able to manage (tokenized) stocks, bonds, commodities etc. in your Melon fund. Isn’t that exciting?

The MLN token

The main purpose of the MLN token is utilization of asset management gas units (amgu’s) on the Melon network. Melon is intended as an autonomous fund management protocol, built by the Melonport team. Once it is finished, Melonport AG, the company behind the Melon protocol, will take a step back and hand over the governance of the protocol to the maintainers of the protocol. For an in-depth description of the MLN token utility, go here.

What’s next?

When we started the Melon Project, we estimated that it would take us about two years to finish the protocol. At the time of writing, there are about seven months left. During these remaining eight months, we will focus on:

Making the protocol feature complete Integrating more decentralized exchanges Building the governance system on Melon Securing the code base and performing some refactoring work. Driving user adoption through regular competitions such as our recent olympiad

When we finish the protocol in February 2019, Melonport AG, will have fulfilled its objective of getting a decentralized investment management protocol on its feet and the current plans are for the company to be wound-down. But until then … there is still a lot of work to do.

If you’ve got any more questions, feel free to join our group on Telegram or drop us an email at team@melonport.com. We would be happy to see you there.

Until next time!

The Melon Team

This blog post is subject to change as the research & development phase is ongoing. Melonport will aim to update blog-posts regularly to represent our latest thinking on a best-efforts basis but there may occasionally be time-lags between latest thinking and updated documentation. With this in mind, the author of this blog assumes no responsibility or liability for any errors or omissions in the content of this blog