Enzyme

The Enzyme (Launched in 2019) is an Ethereum-based protocol for decentralized on-chain asset management. It is a protocol for people or entities to manage their wealth & the wealth of others within a customizable and safe environment. Enzyme empowers anyone to set up, manage and invest in customized on-chain investment vehicles.^[1]^[2]

It is a Defi asset management protocol, deployed on both Ethereum and Polygon. The protocol itself consists of two layers, a fund layer, and an infrastructure layer, and it comes with its Javascript library that enables web browser support.^[6]^[7]

Overview

The Enzyme Protocol was originally developed by a Swiss company called Melonport AG. Upon the February 2019 main net launch of the protocol, Melonport AG wound down operations and the protocol's governance was passed to the Enzyme Council. The Council is composed of the Enzyme Technical Council (ETC) and representatives from Enzyme User Representatives (EUR), both of which are described in subsequent sections.^[4]^[15]

Enzyme aims to create an alternative system. Using the project’s web portal, users can invest in funds and portfolios launched by other users, and other users can invest in their creations. The Enzyme Finance protocol uses the MLN cryptocurrency to execute various operations on the platform.

Enzyme Finance was formerly known as Melon Protocol. It was founded in 2015 and named Melon from the Greek word for future, due to its ambitions at the time.

The token has a new icon and name, but the MLN ticker and contract address stays the same.^[3]^[2]

Enzyme Finance is a collection of smart contracts whose computation is performed by the Ethereum blockchain.
Because of this design, fees for transactions are paid in ether. These fees cover the cost of using Ethereum’s computing power and Enzyme's software.^[12]^[13]

Fiduciary Duties and Conflicts of Interest

The Enzyme Council is bound by fiduciary duties, guiding principles, and Enzyme Council Statutes. This means the Enzyme Council members will be obligated to act in the best interest of the Enzyme protocol. Any member violating their fiduciary duties will expose themselves to the revocation of their seat.

If an Enzyme Council member has a conflict of interest on a specific question, they should inform the rest of the members immediately and abstain from voting on the matter in question.

The Enzyme Council has a Chair and Vice Chair which rotate bi-annually. Their responsibilities include coordinating the meetings and agenda. The Enzyme Council also contains several sub-groups which take leadership roles on specific topics, such as audits, features, ecosystem projects, network parameters, token economics, community calls, etc.

Enzyme Administrators

Two primary parties administrate privileged functions in Enzyme Protocol: Avantgarde Core (deployer) and the Enzyme Council (admin). Which are;

As the lead developer of the protocol, Avantgarde Core deploys all contracts and configures all of them before taking a release live. Once the release is taken live, full access control of protected functions is handed over to the Enzyme Council.

The Enzyme Council DAO is made up of two sub-committees; the Enzyme Technical Council (ETC) and the Enzyme Exposed Businesses (EEB). The ETC is a confederation of technically skilled appointed parties who together have sole access (via Aragon) to voting on all protected, protocol-wide functions once a release is taken live.

The Enzyme Council is a fully trusted entity, which is core to the security assumptions of the protocol. ^[4]

The Enzyme Technical Council (ETC)

The Enzyme Technical Council was formed to provide technical expertise and efficiency in the protocol's decision-making processes. This design tries to find an optimum number of decision-makers that can ensure quick decision-making. Binding members by their identity and fiduciary responsibilities reduces the risk of any malevolent behaviors. The ETC is primarily designed to represent their most important stakeholders (their users) by providing technical expertise and speed in decision-making.

The ETC is made up of a diverse set of people and entities. The initial members were appointed by the Melonport AG team before the launch of the Melon Protocol in early 2019 (later renamed Enzyme). ^[5]

The Enzyme User Representatives (EUR's)

The Enzyme User Representatives are designed to collect, prioritize and deliver user feedback to the Enzyme Council on behalf of users.

The aim is for the ETC and EURs to maintain a close relationship and preserve a healthy feedback loop. The ETC is required to address concerns raised by the EURs, and both sub-committees should work together at defining and prioritizing the pressing needs of the users of the Enzyme network.

Users can elect delegates to represent their interests on the Enzyme Council. Qualifying EURs managing a product with a minimum threshold of assets equivalent to 1% of AUM in USDC terms.

Composition

The ratio of ETC: EURs is currently 5: 2.

The EURs help balance power by checking the decisions made by the ETC and can inform users about any suspicious activity. EURs can vote on the exclusion of a Melon Council member violating the MC statutes (through a two-thirds majority vote).

The EURs are currently coordinated using an invite-only Telegram group tied to the creation of a Melon fund. This is currently the forum they use to nominate and vote on EUR's.

Responsibilities

The EUR's are expected to meet bi-monthly too; once with the ETC and once independently of the ETC. Their responsibilities include the following:

Community calls: Organizing and curating community calls.
User feedback: Collating and gathering feedback from users in the ecosystem to integrate into the Council strategy & roadmap.
Growth: Helping grow the user base and protect their best interest.
Monitoring: Oversee and check that the user's best interests are being correctly represented and prioritized by the ETC.^[14]

MLN Token

MLN is an Ethereum token that powers Enzyme (formerly known as Melon Protocol), a protocol that aims to facilitate on-chain asset management for the DeFi ecosystem. MLN allows users to build, share, and explore DeFi investment strategies (called “vaults”) while filtering by historical performance and risk profiles.^[8]

The MLN cryptocurrency is used to execute fund operations and for voting on the protocol’s software policies, such as its inflation rate. Fund operations might include transaction costs or performance and management fees.

MLN has a total supply of 2,070,263 tokens and can be traded on: Binance, OKX, BingX, MEXC, and Bitrue.^[9]^[10]

The token has two uses:

Users pay for usage in MLN tokens.
Developers or outside contributors can earn MLN tokens by submitting for a grant.

Governance

The Enzyme governance model is user-centric. It ensures users have permissionless access to a secure asset management protocol and are protected from malevolent actors in the network. At the same time, users have the option to benefit from continuous innovation and improvements on top of the protocol, safeguarded by the thorough checks and analysis of the Enzyme Council, bound by fiduciary duties.^[2]

The Enzyme Council is responsible for taking decisions and preserving the interest of the network's users. The user always remains in full control and is the sole decision maker concerning the software they are running.

Neither the Enzyme Council nor the token holders can impact the smart contract code used by a fund manager. The fund manager must take voluntary action to upgrade to new versions of the code, and the fund’s investors are free to instantly redeem their shares if they are not happy with the version of the code being used. The fund manager is never forced to use a new version of the code they may or may not feel comfortable with. Users take full responsibility to upgrade from code that may contain security vulnerabilities.

As a result, the convergence of users towards a specific version of the Enzyme protocol shall give a strong indication to the Enzyme Council of their alignment with the users’ sentiments and needs.

Although the Enzyme Technical Council (ETC) owns and controls the ENS subdomains pointing to the latest contracts, the users are the ones truly deciding which version to base their business upon, which constitutes a strong signal to the community. This is further enabled by the unstoppable character of smart contracts (once deployed, the Enzyme contracts can not be taken back by the deployer).^[11]

Those that sit on the Enzyme Council

Janos Berghorn: Investor @ KR1 (ETC)
Giel Detienne: User representative (EUR)
Mona El Isa: Founder & CEO @ Avantgarde Finance (ETC)
Felix Hartmann: Founder @ Hartmann Capital & User (EUR)
Fabian Gompf: VP @ Parity Technologies (ETC)
Will Harborne: Founder & CEO @ Deversifi (ETC)
Lev Livnev: Formal verification researcher @ dapp.org and a founding partner @ Symbolic Capital Partners (ETC)
Martin Landfall: Formal Verification Researcher @ Ethereum Foundation & DappHub (ETC)
Nick Munoz-McDonald: Smart Contract Auditor & Researcher @ G0 Group (ETC)
Paul Salisbury: Founder @ Blockchain Labs (ETC)
Zahreddine Touag: Founder @ Woorton (ETC)