All you need to get started is your laptop, an internet connection, some ether (for gas), approximately 20 minutes of your time and… a cup of coffee.

This blog is for investment managers, or aspiring investment managers, who want to set up on-chain, permission-less, decentralised investment funds, building a provable on-chain track record. This enables anyone to build a verifiable reputation within investor circles regardless of their background, age or circumstances. Before Melon, this wasn’t possible in the traditional, or the crypto, asset management space due to the high barriers to entry and a lack of transparency.

All you need to get started is your laptop, an internet connection, some ether (for gas), approximately 20 minutes of your time and… a cup of coffee.

This document will get you started with the Melon Manager Interface (MMI), it covers: setting up a fund, configuring your portfolio rules, and investing in your own fund. You’ll be able to select your fund’s asset universe, the management and performance fees you’d like to charge investors, which DEX’s you’d like your fund to connect to, and the risk management parameters you want to adhere to.

A “Part II” and “Part III” to this blog will follow and will cover trading in your fund, investing in other funds and redeeming funds as well as shutting a fund down.

We’re assuming that you are familiar with basic crypto terminology, that you have a hardware wallet, are familiar with its use, have access to some ETH and that you know how to send funds to an address. Before we get started you will need to:

Download and install the MMI

Download and install Frame, if you don’t have it already, which will allow you to sign transactions with your hardware wallet

Configuring a fund is a two step process:

you first need to set up your wallet and then configure and deploy your fund.

Setting up your wallet

There are two ways to configure your wallet with very different security implications:

A quick and dirty way using a keystore file or mnemonic. This method is not secure and we don’t recommend this route unless it is explicitly for testing purposes with “play money”. If you decide to go down this path, you can find a video that illustrates the creation process here.

The proper and secure way, described below, using a hardware wallet.

Before you setup your wallet though there’s a couple of quick changes we should make: one (optional) change to your Frame set-up and one thing to check on your Ledger hardware wallet.

One-time configuration for the Frame interface

Rather than using the default Infura Ethereum node you will get faster performance following these instructions to point your Frame interface and Ledger hardware wallet to the Avantgarde Ethereum node.

Open the Frame application on your computer.

On the Frame app on your computer click on the Ledger logo for your account.

Click on the chevron prompt in the top right hand corner.

Turn on the secondary connection.

Enter the following in to the Custom connection field.

wss://mainnet.melonport.com/ws

Quit Frame.

Allowing contract data on your Ledger

In order for your Ledger to work with the MMI you’ll need to check that you have the following setting configured correctly.

In your Ledger device go to the Ethereum application and select Settings.

In Contract Data make sure that it says: “Allow contract data in transactions Allowed” and not “Allow contract data in transactions NOT Allowed”.

If you need to change it you do so by pressing both buttons on the Ledger at the same time.

Now, let’s get started!

Using a hardware wallet is a lot more secure and the path we recommend for any user looking to use Melon beyond play-money testing purposes! The below steps describe using a Ledger Nano X but the process should be roughly the same for other Ledgers. Instructions on setting up a new Ledger can be found here.

Logging in to Frame and connecting the Melon Manager Interface

Plug your hardware wallet into the USB port of your computer.

Log in to the device.

Select the Ethereum app on your hardware wallet.

Open the Frame application on your computer click on the Ledger logo and then select the account you’d like to use.

Open the Melon Manager Interface application on your computer.

After a few seconds a warning message will pop up explaining the legal issues you should consider before proceeding. When you have read this and are happy to proceed click OK.

Click on the “SETUP YOUR FUND” button.

You should see a request in your Frame application from the Manager Interface.

Click approve.

On the Melon Manager Interface you should now see an option saying: “Use … from Frame“, click this.

Creating your fund

Now that you’ve connected wallet you’ll need to fund your wallet with a small amount of ETH to cover the Ethereum gas and the Melon gas. We recommend sending 0.5 ETH to your wallet address (you can always find your wallet address by clicking on Your Wallet in the top right of the MMI).

to cover the Ethereum gas and the Melon gas. We recommend sending 0.5 ETH to your wallet address (you can always find your wallet address by clicking on Your Wallet in the top right of the MMI). Click on “SETUP YOUR FUND” and let’s get started!

First of all choose a name for your fund. Once you create an investment fund name, you will be the only one who can use this fund name on the current protocol version as well as on all future versions.

Now you’ll need to select which exchanges you want to be able to trade on and which assets you want the fund to be able to invest in. Setting these rules here embeds them into the fund when the Melon Fund Factory creates the fund. This gives your investors certainty that your investment decisions stick to the letter of the fund’s mandate. When you’ve done that click Next.

Here you specify the management fees that your fund charges:

>Management Fee — specified as an annual percentage, the management fee goes to you the fund manager, calculated on the net-asset-value of the assets under management this accrues on a block basis.

>Performance Fee — specified as a percentage, the performance fee goes to you the fund manager, and calculated as the increase in the value of the assets over the Performance Fee Period. The specifics of how this is calculated can be found in the documentation.

>Performance Fee Period — the number of days over which your performance fee is calculated.

— specified as an annual percentage, the management fee goes to you the fund manager, calculated on the net-asset-value of the assets under management this accrues on a block basis. — specified as a percentage, the performance fee goes to you the fund manager, and calculated as the increase in the value of the assets over the Performance Fee Period. The specifics of how this is calculated can be found in the documentation. — the number of days over which your performance fee is calculated. And finally you get a chance to review your fund rules before proceeding. When you’re happy with the fund configuration click “CREATE FUND”.

You will now sign and send the 9 transactions needed to deploy all the components of your fund and link them all together. For every function you’ll call, you’ll pay the gas fee.

Note: The gas price defaults to 5 GWEI. If the Ethereum network is busy this will not be enough to get your transactions mined in a timely manner. It’s always worth clicking on the Eth Gas Station link before you proceed.

EthGasStation.info gives recommended GWEI values based on current network usage. We recommend that you set your GWEI to at least the Fast value (11 in the screenshot below) or the set-up process becomes quite time consuming.

When you’re happy with the gas price value click Confirm to begin the set up of your fund. You will have to repeat that for the 9 setup transactions.

The ‘beginSetup` transaction is the first step out of 9 to deploy your fund. The next transactions will deploy the Accounting component, Fee Manager component, Participation component, Policy Manager component, Shares component, Trade component, Vault component and then finally the last transaction completing setup.

At the end of them, your uniquely customised fund will be deployed to the blockchain and viewable on the Melon Monitoring Tool!

Configuring your fund’s risk profile

The Risk Profile is where you configure the risk parameters for your fund which ensures the fund manager adheres to transparent, pre-defined rules. These rules can help investors get comfortable upfront with the risk-profile of the fund and guarantees certain fund manager promises. These rules are customizable and not compulsory. You should design the risk management profile in line with your investment strategy and the risk appetite you think your investors will have. You don’t have to set these rules right now (or ever), and you can come back and amend these settings anytime.

Click on the Add Policies button.

The first screen is the Risk profile screen. You can add policies for:

Price Tolerance (% ) — specifies the maximum % price tolerance which you the manager are allowed to trade from the best bid/offer to the disadvantage of the investor(s). To some degree this prevents trading at the wrong price.

) — specifies the maximum % price tolerance which you the manager are allowed to trade from the best bid/offer to the disadvantage of the investor(s). To some degree this prevents trading at the wrong price. Max number of positions — specifies the maximum number of positions that the fund can hold.

— specifies the maximum number of positions that the fund can hold. Max position concentration (%) — specifies the maximum amount of the fund (as a percentage) that can be held in one asset.

— specifies the maximum amount of the fund (as a percentage) that can be held in one asset. User Whitelist — allows you to specify who can invest in your fund. If enabled, anyone not on the list will be unable to invest.

— allows you to specify who can invest in your fund. If enabled, anyone not on the list will be unable to invest. Asset Whitelist — allows you to specify the assets the fund CAN invest in.

— allows you to specify the assets the fund CAN invest in. Asset Blacklist — allows you to specify the assets the fund can NOT invest in.

— allows you to specify the assets the fund can NOT invest in. When you’re finished configuring the risk profile you’ll need to click on Submit Request and confirm the Gas fee.

Investing in your Fund

The next step after creating your fund, is to make the first investment in it.

Initiating and executing the first investment request

After deploying your risk profile, you will be redirected directly to an investment screen. If you’re coming back to your already existing fund, in the MMI click in top-right “Your Wallet”.

Click on “Go To Your Fund”.

Click on the Invest button (top-left-hand corner).

Select the token you want to use to invest in the fund from the drop-down menu (you will need to have that asset in your wallet in order to invest).

Specify the Quantity of shares you want to buy (this can be a fraction, it doesn’t need to be whole shares).

Note: You can specify your investment as a Quantity of shares or as a Total amount of your chosen investment asset.

Click Submit Request. This will be a three step transaction process.The first transaction will be to approve your tokens to be transfered. If you’re using a Ledger, make sure you confirm Selector Field, 1 Field 2 and Field 3. The second transaction will be the actual submission of your request. The third will be the execution of your request.

For the following three transactions, you’ll have to set the gas price (remember to check the current prices on EthGasStation), sign and send the transaction as you had to do before during the fund set up process. Your ledger will prompt you to sign those transaction by confirming the following; field 1, and sometimes field 2 and 3.

If you’ve managed to finish this three step tutorial, congratulations on becoming a Melon Manager and investor!

If you experienced any problems during this process, don’t hesitate to write to us on Gitter or Twitter. Our Telegram channel is also open once a week for 24hours. We’re always happy to help! We’d love to hear feedback on how to improve this manual easier to understand. For those of you who’d like to see the video flow from our release blog in February, we’ve attached the youtube link below!