Enzyme

About Enzyme

Enzyme, an open-source decentralized trading protocol, operates on the Ethereum blockchain, enabling users to create, manage, and share their own investment funds without relying on traditional intermediaries such as banks or fund managers. Formerly known as Melon, the platform leverages smart contracts to facilitate transparent, secure, and cost-effective investments, with a primary focus on asset management and cryptocurrency portfolio management. The native cryptocurrency of the Enzyme ecosystem is called MLN, which plays a crucial role in the network’s operations and governance.

History of Enzyme

Enzyme, originally launched as Melon with the ticker symbol MLN, underwent a rebranding process that changed the ecosystem’s name to Enzyme while retaining the original ticker. The project was conceived and developed in 2016 by a private company founded by mathematician Rito Trinkler and former Goldman Sachs vice president Mona El Isa.

Based in Switzerland, the company conducted an initial coin offering (ICO) in 2017, raising nearly $3 million between 2017 and 2018. During this period, 1,250,000 MLN coins were minted and distributed. Following the successful launch of the first version of the Enzyme Finance protocol in 2019, the private company, known as Melonport, was dissolved, and control over the network and its protocol was handed over to the Melon Council, a decentralized autonomous organization (DAO) created specifically for the Enzyme protocol.

The Melon Council operates through smart contracts, allowing users to invite new members to the network and actively participate in its governance. This includes proposing and implementing changes to the protocol and its parameters, ensuring a democratic and transparent decision-making process within the Enzyme ecosystem.

How Does Enzyme Work?

Enzyme is a decentralized platform built on the Ethereum blockchain, utilizing a set of smart contracts to facilitate asset management. While Enzyme relies on its proprietary software and protocol for asset management features and utilities, it harnesses Ethereum’s computational power to run the network. As a result, fees and transactions within the Enzyme protocol are paid using Ethereum’s native cryptocurrency, ETH.

One of Enzyme’s notable features is its support for web browser searches, made possible by the integration of a Javascript library. The network architecture is divided into two distinct layers: the Fund layer and the Infrastructure layer.

The Fund layer is where users and network participants create and share their investment funds, allowing other users to invest in them. This layer also enables users to manage and control their assets, granting them full ownership over their funds.

On the other hand, the Infrastructure layer is governed by Enzyme’s decentralized autonomous organization, known as the Enzyme Council (formerly the Melon Council). The protocol’s utility token, MLN, plays a crucial role in managing digital investments within the ecosystem.

MLN serves multiple purposes, including its use in the voting mechanism and network governance. For instance, MLN holders can vote on proposals related to the inflation rate of the token. Additionally, MLN is utilized for fund management execution, streamlining the process of managing digital assets within the Enzyme platform.

Key Features and Benefits of Enzyme

Enzyme Finance is revolutionizing the world of asset management by breaking down the barriers that have traditionally prevented the average investor from actively participating in investment fund management. In traditional financial markets, asset management is often reserved for high-net-worth individuals, with prohibitively high minimum entry levels that exclude the majority of potential investors.

By leveraging the power of blockchain technology, the Enzyme protocol democratizes access to asset management funds, allowing anyone, regardless of their financial background, to invest in funds, manage their assets, and create personalized portfolios. This unique approach opens up a world of opportunities for a much broader demographic of investors who were previously unable to engage in such activities.

What sets Enzyme apart from other platforms in the decentralized finance (DeFi) space is its combination of advanced features, technical capabilities, and practical utility. Users maintain complete control over their assets, benefiting from the transparency and security provided by the blockchain. This level of control and transparency is unparalleled in traditional financial systems.

Another groundbreaking aspect of Enzyme is that users can invest in management funds without necessarily knowing or trusting the fund manager. This is made possible by the use of smart contracts, which govern the actions of fund managers and ensure that they adhere to predefined rules and guidelines. As a result, investors can have peace of mind knowing that their assets are secure and being managed according to the protocol’s standards, even if they are not personally acquainted with the fund manager.

MLN token

The MLN token serves as the backbone of the Enzyme platform, designed to support its growth and increase the token’s value. It has three primary functions within the ecosystem: governance, staking, and fees. Additionally, MLN has an annual inflation rate of 2%, which helps to encourage user participation and contributions while simultaneously supporting the platform’s security and development, ultimately driving up the value of the MLN token.

As of now, there are 1,453,964 MLN in circulation, out of a total supply of 2,669,183.53197661 MLN. Initially, the token economics of MLN included an ongoing inflation rate, with 300,600 new tokens being issued annually. Any unallocated tokens were to be burned. However, the Enzyme Council is currently considering a proposed change to the economic model, which would result in a 20% decrease in token emission each year, starting from 2021. Under this new model, tokens that remain unspent for two years would be burned.

Since Enzyme members use ETH to pay for fees within the platform, the network has implemented a mechanism that utilizes the Melon Engine feature to convert all ETH used for fees into MLN. The Engine sells ETH for MLN at a premium price and then burns the purchased MLN tokens. This process helps to regulate the token supply and remove these tokens from the total supply, ensuring a healthy and balanced token economy within the Enzyme ecosystem.

Enzyme competition

In the competitive landscape of digital asset management, Enzyme Finance stands out, primarily juxtaposed against the Unido Enterprise Platform (EP). While Enzyme caters to both individual and institutional investors, Unido specifically targets corporate clients.

When evaluating the technological foundation of both platforms, it’s clear they both accomplish their core mission of facilitating digital asset management for their users. Enzyme is rooted in the Ethereum ecosystem, whereas Unido leverages Polkadot, giving it an edge in supporting transactions across different blockchains.

Enzyme, however, casts a wider net by also focusing on individual investors, a group that, although not currently the main revenue stream, could significantly contribute to Enzyme’s expansion due to a potential surge in retail investment in the future.

Historically, Enzyme Finance has built a more substantial trust with its user base, attracted a larger community, and managed a greater volume of assets under management (AUM) compared to Unido EP, indicating a stronger growth trajectory.

Partnerships and Investors

Regarding partnerships and backing, Enzyme Finance has garnered support from notable venture capital entities such as Placeholder, DeFiance Capital, and Collab+Currency. The platform’s decentralized structure means that purchasing MLN tokens is an open door for anyone to invest.

Asset managers have the opportunity to forge strategic alliances with Enzyme by setting up their own vaults on the platform. A notable collaboration occurred in February 2021 when Techemy Capital launched an ETH-BTC portfolio utilizing its proprietary trading strategies on Enzyme.

Enzyme’s ecosystem is further enhanced by integrations with leading DeFi services, including Aave, Compound, Convex Finance, Curve, Maple Finance, Idle Finance, Uniswap, Paraswap, Unlashed Finance, Yearn, and 0x, showcasing a robust network of strategic partners.

The Future Outlook for Enzyme

Enzyme brings flexibility and modularity to on-chain lending. As DeFi expands, Enzyme is well-positioned to become a core component of its infrastructure.

If Enzyme sees continued adoption, MLN could capture increasing value as the native token powering this lending stack. Community governance also enables Enzyme to evolve its capabilities over time based on user needs.

However, competition is growing across DeFi lending protocols. Continued product innovation and integrations will be key to Enzyme’s long-term outlook. Overall though, Enzyme’s future looks bright if it can deliver on its vision of optimized, customizable structured products for all.