My Summary: This project has had significant development over this bear market. Key Changes to growth dynamics are imminent but are not at all priced in.
Key Question: Will we see AUM Growth?
There are only a few projects that are category creators. Ethereum created the category of Layer 1s with a Virtual Machine running to execute Smart Contracts.
- ETHLend or now called Aave was one of the first projects creating the category of lending protocols / crypto money markets
- Dfinity created the category of Decentralized Computing Network Protocols
Melon similarly created the category of Asset Management Protocols in 2o17. In that sense, it has been a true pioneer of “Decentralized Finance” long before “DeFi” was established as a term. It has gone through different announcement cycles that influenced the price.
However, funds that started using Melon have not seen significant traction. I will give you a review of current developments, token use case and catalysts.
Product/Vision
Melon allows you to outsource all the back office work of a fund for public tokens to its blockchain protocol. Managers can define the asset allocations of Ethereum tokens and the protocol handles new investor deposits, withdrawals, payment of fees, and exchange orders for portfolio positions.
Token
You can invest in the Melon ecosystem by buying the MLN token. There is annual inflation to incentivize developers to improve the protocol. Revenue that is generated from the funds is used to buy back MLN and burn them. This is reducing the MLN supply and a way for token holders to profit from increased usage.
Traction
Currently, there are about 300 funds as well as about 5 Mio USD in total assets within all melon funds. So although the protocol has existed for a few years now, it has not received significant traction with investors. I would argue most of the current volume is people testing the protocol.
Why is that?
- Currently, fund managers can only pick out of 10-15 assets for their funds, this is extremely limiting
- Funds need to be closed and restarted with protocol updates
- Revenue for MLN token holders is not yet on a recurring basis
So, it’s no wonder that MLN barely had any movement yet.
Catalysts
Over the last few months, I’ve followed the changing dynamics within Melon. A lot of the problems above are being addressed. I would advise you to check-out Melon Improvement Proposal #7 along with a financial model for these changes.
https://github.com/enzymefinance/ENZIP/issues/7
Melon Tokenomics Model by Delphi Digital
Links for your own research
https://melonprotocol.com/
https://melon.avantgarde.finance/
https://monitoring.melon.network/
Legal Challenges:
Disclaimer: I personally hold positions in MLN Token.
