 Hello everyone, my name is Jenna and I work with Melanport and I'm here today to Tell you that Melanport will not exist by DevCon 5 So I would like to start with a quick question to the audience Who knew already before that Melanport would not stick around for a couple more years One two three. This is the Melanport team. Okay, so not so many That's normal because Melanport is actually one of the first depth Protocol which is going to wind down the company that built it after two years of development And completely let go of the control of the protocol. So really Melanport is a Swiss-based company that was mandated in February 2017 for the development of the Melanport And Melanport took the commitment to wind down the company once the protocol would be ready to deploy it on the mainnet So in February 2019, which is two years later in a couple of months from now We are going to deploy to the mainnet wind down the company and decentralize the The the governance and future maintenance of the protocol So really what this presentation is about is how can we get rid of Melanport? Or in other words How do we make it so that the Melan protocol? Can be self-sustainable and succeed without the existence of the company that initially built it? So this is threefold the first part we're going to talk about how can we create a healthy ground for network effects? Then we're going to see how do we provide the proper economic incentives? for the participants in the network and the third part is The governance and maintenance framework that we put in place to support the future of the Melan protocol So first what is Melan? I'm going to give a quick Melan 101 for the people not familiar with the Melan protocol So Melan is an open-source protocol for on-chain asset management It allows anyone to set up and manage a fund on the Ethereum blockchain So technically what it is it is a set of rules implementing the behavior of an investment fund As a set of smart contract so another way to Understand what Melan is is to see how you would actually create a fund on our platform So it's very simple. It takes a few seconds You go on the platform give your fund a name Select the exchanges that you want your fund to be allowed to trade with Then you're going to be able to Define your fee structure. So that is the management and performance fee are your of your funds So just as in the traditional world except that here the this is encoded in the smart contracts Then you will also have the possibility to Configure your risk management profile. So those are Pre-trade clearance rules that are going to be encoded in the smart contract and enforced By the blockchain so it can be you know maximum number of position. It could be price tolerance Maximum concentration you could have you could whitelist assets You could blacklist assets if you want to give the guarantee to your investors that you're not going to trade anything dodgy and then Really you're gonna have the overview of your the rule set that you defined and as soon as you hit create funds You're actually going to be deploying a fund to the Ethereum blockchain So really on the blockchain. How does it look like? You get what we call a technology regulated and operated funds So it is a set of smart contracts And each contract is a component of the fund So you have a component that takes care of the internal accounting and nav calculation You have a component that takes care of The fee calculation and distribution you have a component that they care of the trading etc. Etc. So you as a fund manager on top you control your funds and can make various Interactions such as trading on behalf of your investors So you can have external investors on the left that can come in and directly invest in your fund by calling a function in the participation component and Your fund the valuation of your fund is going to be calculated on chain using on chain prices that we get From the Kiber network And then the other external interaction that you have are the decentralized exchanges that you can trade with So right now we have integrated oasis decks It's your ex and Kiber and we have the f3 next integration coming up soon So that's how a fund looks like on the blockchain and what I think is really nice is that in the past two years we have seen an explosion of open source finance protocols and melon comes nicely on top of that and nicely integrates and Connects those different protocols. So melon allows you to manage crypto assets trade on decentralized exchanges in the future we envision integration with Credit lending on chain marging derivatives all those type of new protocols that we've seen and We have also people working on blockchain based identity systems, which is Really important if you want to be able to identify the investors in your fund So that's for the melon 101. So now we can actually get into the subject of today So when we design a system that needs to be self-sustainable and decentralized What you really want to do is identify the different stakeholders that you have in your network and make sure that your model You know caters to the needs of each of your stakeholders. So for an hour case We have a couple of stakeholders and they are the token holders The project and developers who build on top of melon We have the users and we have The maintainers the people who are going to make decisions in the future for the protocol So throughout this presentation, we're going to see how we make sure that we That we cater to the needs of all of those stakeholders So first of all we want to be able to maximize the network effects in the past couple of months. We have seen More and more projects reaching out to us Projects and team wanting to build new things on top of melon and that is really cool It doesn't really come as a surprise to us because asset management has a lot of use cases We are focusing on the hedge fund use case, but you can have VC funds pension funds insurance funds We also have people working on the gamification of asset management And it's it's really nice, but the problem is that each of these projects Needs to get funding and what they plan to do rightfully so is to Run another ICO to get funding and what you get with that is that you get different projects sharing the same underlying infrastructure, but each of that project has a token a token economic a different governance system a different maintenance system, so you have one infrastructure, but isolated Isolated sub ecosystems and that we believe is Not great because we think isolation brings inefficiencies. So if we have if we find a way to To actually have synergies between those projects and to make it so that they can share more than just the Infrastructure we believe that all of our ecosystem could benefit from economies of scale so Earlier this year we decided to open up the melon token to other teams and other projects in order to To to benefit from synergies So basically the melon token has a yearly inflation pool, which is a fixed amount of token that gets minted each year and This inflation pool is going to be used to to fund different things. So the first thing is Compensating developers who complete MAPs, which are melon improvement proposal inspired by the Ethereum EIPs So if you're a developer and you see that there is this feature really like yeah, I think this is cool I want to solve that problem or I want to make this integration You can do it and get compensated in melon for that the second thing is for a project who want to build on melon and Who need to get funding instead of doing an ICO what they could do is Make a funding request to the melon governance system And if the government system agrees that could they could get their funding through the melon inflation pool And the third thing is a little bit more exotic. I would say and maybe a little bit more Forward thinking those are token swaps and token mergers Inspired by what what happened very often in the traditional investment banking world so in the case of a token swap it would be the case where you have a project that already has a token and We identify Potential synergies between melon and that other project if that other project has a smaller smaller market cap than melon What we could do provided that both governance systems pre-agree to it This project could burn all of their token and in exchange they could get melon token and we kind of like join forces between the two project and create a stronger and Bigger ecosystem and the last thing is the token the token merger request So that is the case that you have another project that has another token But it's like a project of a similar size similar market cap And in that case this would not require anything from the inflation actually it would just require both projects to actually Burn their tokens in order to create a new token that encompasses both economies and both communities so Opening up the melon token allows us to benefit from synergies But also to to align the interests of the participants across the networks. So this part caters to the needs of the project and developers that build on Top of melon. So now that we have seen how to maximize network effects We actually compensate people with melon tokens. We need to make sure that we built in the right the right economic mechanism in the tokens that the token is actually Something that is desirable back from those developers. So that is providing proper economic incentives So this relates to the token economic design So when we were working on that we really had three goals in mind that we wanted to Fulfill the first one was ensuring that the melon token would be desirable and would have integrity in order to be able to provide proper economic incentives to the user and developer needs of the network and Last but not least. We also wanted to avoid the pitfalls of the high-velocity token model, which is a problem that has been Written a lot about by different people such as Vitalik or Chris Berners-Key or others We published a very long and detailed blog on that if you are Interested on that part So with these goals in mind our solution to the token economics is called the melon engine. So Let's take just a step back When you use when you interact with a smart contract on Ethereum you pay You pay gas to the Ethereum network and that gas is calculated as the number of gas units that are consumed by the function that you're calling and That is multiplied by the Ethereum gas price, right? So we came up with the idea that when you interact with melon smart contracts in addition to paying gas to the Ethereum network You're also going to pay what we call the asset management gas and you're going to pay that to the melon network So the way it's calculated is very similar to how it's done on Ethereum So we take the same number of gas units that are consumed by the function on the EVM and Instead of multiplying that by the Ethereum gas price we multiply it by the melon gas price or the asset management gas price So how does it look in more details? So you're a user and you're about to use Some melon smart contracts on Ethereum So we impose that asset management gas on certain functions not all of them because we want to stay cheap affordable and Competitive compared to other alternatives So on a few functions, you're going to pay your gas to the Ethereum network as usual And in addition to that you're also going to pay your asset management gas to the melon network And instead of paying that gas and this is really important here Instead of being that gas in melon. You're going to pay that gas the asset management gas in ether That ether is sent to the melon engine smart contracts and that contract is very simple It only does two things the first thing is that when it receives ether from the user Interaction it's going to sell this ether and buy melon at a premium on the market So it's basically a contract that is a unidirectional liquidity contract It's a contract that is a market itself So it's going to sell the ETH by melon at a premium and once once it has melon in the contract It's just going to burn those melons. So sending them to a probably unaccessible address You know how that works. So what we have here is that when the network is used absent inflation The melon total supply is going to be decreasing So this mechanism gives us two very nice things. The first thing is we managed to reduce friction in Confidence and cost on the user because instead of having to own melon and Ether when you when you use melon on Ethereum You only need as a user to have ether just as if you were using any smart contract on Ethereum And the second thing and arguably much more important is that we managed to align the token value With the usage of the network and we do that Without having a high-velocity token model. So that's really Really important. We think that we're the first Dapp protocol to have managed to do something like that So we are very proud of our work there and I encourage anyone who is interested to read The melanomics to piece that we wrote about that So that part as you might have understood by now takes care of the token holders So it seems like the token holders are interested by the restart return on investment on the token And if the network is successful This mechanism should cater and cater to the needs of the token holders and please them so now that we've seen how to maximize network effects and To provide proper economic incentives The last part that we need to go through is the governance and maintenance system of melons So when melon port is going to disappear in February 2019 we need to have a way to make decisions for the future of the protocol So that's what we're going to see now so first of all when When designing the system we really ask ourselves, okay, why are we doing that? Like what are the goals that we want this governance model to To to complete basically so those are three full as well So the first one is that we want to preserve the integrity and security of the network It's extremely important when you're speaking about asset management The second thing is that we want to maximize user adoption and protect protect the user as much as possible And the third thing is that we want to faster innovation in order to make the network more attractive So how do we do that? So when I talked about our different stakeholders in in the space We're gonna talk about this again now So when you're building a governance model, I think that really what you want to do is identify what is the most vulnerable stakeholder group in your ecosystem and So that's how we worked Our most vulnerable group are the users here so the users are the people who manage melon funds so asset managers and Also the investors who are invested in those melon funds so From this assumption that the users are the most vulnerable we worked out a model that is User-centric so really focused on protecting the user, but also Making sure that their voices are heard Sorry and will be heard in the future And we also wanted to make sure that the users would be supported by Technically skilled people so So we come up with a user-centric and skill-based governance model. So how does that look? So I introduced you to the melon council now So the melon council is a body that is going to be responsible for the future development and Maintenance of the melon protocol. It is composed of two subgroups. The first one is the melon technical council So this is a group of technically skilled people or people who have Expertise on the melon protocol or other Finance-related protocols on Ethereum Or people who have contributed To the melon code base in the past so This subgroup is going to be responsible for the technical parts of the decisions that we're going to have to make in the future The second subgroup is what we call the MEP Representatives so those are the melon exposed businesses. So this is a self-organized entity that Where you will have all of the users who can you know prove that there are users of the network either by Proving that they have assets under management subsequent assets under management on melon or Proving that they have used this amount of asset management gas over the past year So this group is going to be able to elect among themselves their representatives for To sit on the melon council together with the melon technical council members. So with this With this melon council what we hope to achieve is that? by combining The user representation and people who are technically skilled and informed we hope that we are able to make The best decisions possible for for the protocol and for the users of melon So, how does that work? How does how do we form the council? So I told you how the melon exposed businesses is formed For the melon technical council. It's a little bit different. So In February 2019 melon port is going to be saying five to set five to seven seats For the melon technical council to external people to people that we believe have the The skills or expertise to do that and also the ethical standards That that go with it. So we're going to sign the initial seats and then from there on The county is going to be able to self-expand so to grow by itself Based on the consensus of its members Following a five to two ratio. So for five Melon technical council members will be able to have two MEB representatives It's worth noting here that the melon technical council are going to be compensated With melon token from the inflation pool that are going to be vested Over a couple of years And that those people are are known so we know who they are Their identities are Revealed so now what is what are the responsibilities of that council? You might be wondering So those are three also the first one are protocol upgrades The melon code base Will need to evolve from February onwards. So the melon council is going to be responsible for Deploying new contracts and most importantly managing the ENS sub domain names at that point to the official melon contracts Important to note here all upgrades are obtained only which means that the user will never be forced into an upgrade And it will require explicit and voluntary action from the user to To upgrade to new contracts So the second thing are resource allocation So as I mentioned in the beginning of the presentation we have the inflation pool which can be used for various things and the melon council is going to be a Responsible for making decisions as to what to fund or not which project to To to accept in as a funding request or token swap or merger Etc. So that's going to be a melon council responsibility and the last one are network parameters so I when when I presented the melon engine I mentioned the asset management gas price and What I didn't say is that this is actually a variable that we can change and that we can adjust So based on our financial modeling It is not expected that this asset management gas price would need to change very often actually it I think it would be quite rare because it is expected that market dynamics will Adjust will make you know natural adjustments, but we can't predict There are some scenarios that we can't really predict so you want to have the option to adjust the gas price Basically to reduce it in two cases The first one is if there is a network usage spike overnight You might want to reduce the gas price and the second one is market volatility So here we're exposed to the melon ETH price, but also the ETH USD price So the melon USD price and if there is extreme market conditions or volatility you might want to Reduce the asset management gas price in order to stay affordable for the user and competitive compared to other alternatives so that part on the governance caters to the maintainers of the network and To the users as you might have understood by now So to wrap up our model both token economic and governance addresses the needs of all of the stakeholders we maximized network effect by opening up the melon token so that we can align interest participant interest across the network and We managed to have a token model that is Aligning the token value with the usage of the network and finally we Recognized that the users are the most important The really the key player in our ecosystem without users at the end of the day we fail So we designed a system that make sure that the users are valued properly and supported by technical skills so With that I would like to Announce that the melon technical council applications start today So so really the technical council is is supposed to be inclusive and open So if there are excellent developers who have the skills or feel Like competent for for that role we would be really happy to receive Applications so you can reach out to MTC at melon port dot com But all of the melon port the melon port team is here Everyone is wearing leather jackets So if you want to reach out in person use Defcon for that we would be very happy as well. So This was the last melon port presentation It's it was another for me to do that Melon port will not exist by Defcon 5 But that doesn't mean that it's the end of melon. It's actually just the beginning I believe so thank you and I think we can upload the melon team for the incredible work to make this a reality Thank you