Speaker 1: So the big question is this, how do investors like
Speaker 1: us get access to the ideas, information, and most importantly,
Speaker 1: the right people that give us the tools and information
Speaker 1: we need to make informed and educated decisions to have success.
Speaker 1: That is the question, and this podcast will give us
Speaker 1: the answers. This is Mark Moss, your host. Let's get
Speaker 1: this started, blow and welcome to another episode of the
Speaker 1: Market Disruptors podcast. Today I am joined by Mona Elisa
Speaker 1: and she is the CEO and founder of Melanport, which
Speaker 1: is working in the decentralized finance space. She has a
Speaker 1: really unique background working in traditional finance and raising money
Speaker 1: through hedge funds and dealing with the bureaucracy and the
Speaker 1: high expensive costs it takes to do that. She saw
Speaker 1: those massive problems and figured out there's got to be
Speaker 1: a better way, and she has since worked on decentralized technology,
Speaker 1: using the blockchain to build new applications to cut down
Speaker 1: on that red tape, cut down on time, and save money.
Speaker 1: You got a really unique perspective. It was a great conversation.
Speaker 1: Let's goad just jump right into it. Hey, everyone, welcome
Speaker 1: to another episode of the Market Disruptors Podcast. Today. I'm
Speaker 1: sitting down with Mona Elisa. She has the CEO and
Speaker 1: founder of Melanport. Um there in the decentralized finance space
Speaker 1: a really exciting area. I'm excited to sit down and
Speaker 1: and talk with her this morning. Somna, welcome, thank you. UM,
Speaker 1: great to be here, all right. So, UM, yeah, I
Speaker 1: know you're in the decentralized finance space. You kind of
Speaker 1: have an interesting background. UM, that's led you here. Why
Speaker 1: don't you just fill everybody in and kind of what
Speaker 1: you've been doing, um, and that brought you to the
Speaker 1: space and what you're doing currently. Yeah, sure, so UM,
Speaker 1: I mean I I started my career in London working
Speaker 1: for Goldman Sachs and equity trading, which was kind of
Speaker 1: a hybrid role between market making and prop trading at
Speaker 1: the time. And eight years later A decided to go
Speaker 1: and work for one of our clients based in Geneva,
Speaker 1: who was a large hedge fund and I ran a
Speaker 1: long short equity book for him. So I basically sat
Speaker 1: on the other side of the trading desk, which was
Speaker 1: kind of the investing role, investing other people's money and
Speaker 1: m and four years later I got um made an offer.
Speaker 1: This is this is a part of my life I
Speaker 1: don't talk about very much. But four years later I
Speaker 1: got made an offer by a small family office who
Speaker 1: wanted to see me twenty million dollars to launch my
Speaker 1: own long short equity fund, and I, you know, as
Speaker 1: most young aspirational traders, I jumped on the opportunity, and
Speaker 1: I thought, this is a this is an opportunity to
Speaker 1: make a name for myself and my own track record
Speaker 1: and do what I love doing. So I took the
Speaker 1: offer and moved to Zurich and I tried to launch
Speaker 1: my own long short equity fund, and my my dream
Speaker 1: quickly became my nightmare because it was a horrible year.
Speaker 1: UM Launching a fund with anything less than two hundred
Speaker 1: million dollars is very, very difficult in this day and age.
Speaker 1: UM there's an incredible amount of administration, operation compliance that
Speaker 1: needs to be done, and I was very naive thinking
Speaker 1: that I could do that with twenty million. I actually
Speaker 1: raised thirty million in total UM. But basically within a
Speaker 1: year I realized that most of my time was being
Speaker 1: spent in an operational and administrative role when I should
Speaker 1: have been focused on investing and preserving capital of my investors.
Speaker 1: And ultimately I decided to wind it down. UM, I
Speaker 1: was going to take a year off. But essentially during
Speaker 1: that year I discovered blockchain and discovered etherium, starting with
Speaker 1: bitcoin obviously, UM. And then and then I thought, why
Speaker 1: don't we do this all again? UM? I mean when
Speaker 1: I say do this all again, I mean, why don't
Speaker 1: we just reinvent the financial infrastructure so that we can
Speaker 1: lower these barriers to entry and automate all of these
Speaker 1: processes and and make it make finance much more easily
Speaker 1: available to people who want to um, who who are
Speaker 1: talented and and aspiring, and who want to be able
Speaker 1: to do things without the large headwinds. Yeah, that's that's awesome. UM.
Speaker 1: It's amazing to think that thirty million is not enough
Speaker 1: to start a fund, especially when you're saying that you're
Speaker 1: really being gobbled up or swallowed up by the fees
Speaker 1: and admin costs. Yeah, it's insane. I mean it's Anyone
Speaker 1: who's raised that kind of money before for the first
Speaker 1: time without a track record knows how difficult it is. Yeah.
Speaker 1: What what year was that? That was in two thousand
Speaker 1: and fourteen? Okay, okay, so even when you had a
Speaker 1: good market behind you, Yeah, so it wasn't about the market.
Speaker 1: It was really about the not about the performance of
Speaker 1: the market. It was about the market overall, or the
Speaker 1: regulations and admin costs that are involved with ut Yeah,
Speaker 1: it was just you know, I mean, if you want
Speaker 1: a little, you know, peek into what my my kind
Speaker 1: of average day look like. It was dealing with UM. Okay,
Speaker 1: So starting with the end of a trading day, you know,
Speaker 1: I'd have to fill in four different types of spreadsheets.
Speaker 1: Each of them had forty different columns reporting um, forty
Speaker 1: different bits of information on each trade that I had done.
Speaker 1: One spreadsheet for equities, one spreadsheet for FX or currency trades,
Speaker 1: one spreadsheet for bonds, once one spreadsheet UM for cash management,
Speaker 1: and report that into the fund administrator, who's then receiving
Speaker 1: the counterparties, you know, reporting on the other side, who
Speaker 1: checks them. Sends a bunch of emails the next day
Speaker 1: saying this trade doesn't match, that trade doesn't match this
Speaker 1: Your fourth decimal place doesn't match his fourth decimal place.
Speaker 1: Some one of you is wrong. We've got to settle
Speaker 1: this before we can settle the trade. That's one part
Speaker 1: of it. Then there was like you know p n
Speaker 1: L spreadsheets where you know, at the end of the day,
Speaker 1: I have my piano calculation of fund administrator has their
Speaker 1: calculation almost never matched. They were always slightly off. Have
Speaker 1: software for that? Oh yeah, you have software, but I
Speaker 1: mean you have software that costs a hundred thousand dollars
Speaker 1: a year to run. Again, that's back down to the
Speaker 1: you know, to the barriers. How much do you want
Speaker 1: to pay to run and operate your fund? You know,
Speaker 1: when you when you're thirty million dollar fund and you're
Speaker 1: charging what one per cent and feest you've got a manager.
Speaker 1: You know, you've got a manager. Operating costs become you know,
Speaker 1: quite crucial where you spend them, right right? Yeah, So
Speaker 1: even those p and and monitoring tools are not perfect.
Speaker 1: You know, they require they still require a lot of
Speaker 1: manual input. Right. Um, So those are the costly layers there,
Speaker 1: um that you saw. Now, so so you saw a
Speaker 1: theorym and then you figured there's some way that that
Speaker 1: that compliance piece, that those layers could be compressed down
Speaker 1: using the blockchain. Yeah, well, I mean what what what
Speaker 1: ethereum really gave us was well what let's let's take
Speaker 1: a step back. What Bitcoin gave us was a way
Speaker 1: too was an accounting system. Right, an accounting system which
Speaker 1: was UM a way to transfer money from A to
Speaker 1: B with no counterparty, no sorry, no into between two counterparties,
Speaker 1: with no intermediary in the middle, in a completely transferse way.
Speaker 1: Then you had Etherium, which took that same accounting methodology
Speaker 1: and secure secure accounting methodology and embedded an entire coding
Speaker 1: language on top of that, giving you something that looks
Speaker 1: like you know, they used to call it a computer.
Speaker 1: I think you know when you can code, when you
Speaker 1: can code UM rules and conditions onto how transactions can
Speaker 1: be spent, and when you know what you can and
Speaker 1: can't do. This becomes a very powerful tool in finance
Speaker 1: because it basically solves all This is essentially what the
Speaker 1: operational layers are there for, right, to make sure that
Speaker 1: fund managers don't UM run off with your money in
Speaker 1: basil your money, steal your money and run away to
Speaker 1: spend is in a way that wasn't that they weren't
Speaker 1: permission to UM as per the kind of advertisement or
Speaker 1: or fun perspective perspective of that product. UM. And we
Speaker 1: see that. You know, it's happened time and time and
Speaker 1: again in history, whether it's rogue traders at ubs or
Speaker 1: whether it's a model for whether it's whatever. You know,
Speaker 1: the system constantly fails people. People people managed to get
Speaker 1: away with things, spending investors money or savers money in
Speaker 1: a way that they were not permission to do. Yet
Speaker 1: we keep adding these layers of compliance and layers of
Speaker 1: operations to check and double check and triple check. But
Speaker 1: the problem with the traditional financial system is that it's
Speaker 1: so untrained, it's so it lacks transparency. There are so
Speaker 1: many layers of technology. There are so many there's such
Speaker 1: a lack of technology actually, and you know, tracing a
Speaker 1: trade is just like it's a very difficult process. So
Speaker 1: so it's easier to get away with things because there
Speaker 1: wasn't you know, there wasn't a good trace trace ability,
Speaker 1: and there's so many part is in the middle, you
Speaker 1: never know where something is. Um So blockchain etherium gives
Speaker 1: you this transparency, accountability and a way to kind of
Speaker 1: embed rules sets within smart contracts and enforce them. The
Speaker 1: blockchain can enforce them, so all of a sudden you
Speaker 1: can do away with these operations, compliance teams, um you know,
Speaker 1: accounting teams, etcetera, etcetera, because you have an immediate almost
Speaker 1: immediate settlement time. You have a completely transparent settlement system.
Speaker 1: You know when a trade fails and why it fails.
Speaker 1: You can see where everything is at any time. You
Speaker 1: can see in you know, we will get to Mala
Speaker 1: in a second, I'm guessing, but you can see, you
Speaker 1: can you can predefine rules by which people can do
Speaker 1: things or can't do things um. And there's absolutely no
Speaker 1: way those rules can be broken because they're embedded in
Speaker 1: a smart contract. So when you talk about the settlement
Speaker 1: times in the traditional stocks, I mean there's so many
Speaker 1: different people in the middle, right, So from the from
Speaker 1: the company issuing it all way down to the individual
Speaker 1: maybe retail investor or trader who owns that stock or
Speaker 1: thinks they own that stock. There could be what five
Speaker 1: six different people in between, and then when someone trades
Speaker 1: that stock or buys your shells at stock, then it
Speaker 1: has to get settled all the way through the line.
Speaker 1: Is that what you're talking about? Yeah? Absolutely, you know
Speaker 1: you need exactly you need to transfer ownership um And
Speaker 1: believe it or not, you know, ownership in the traditional
Speaker 1: world of finances is literally a bit of paper, a
Speaker 1: legal document that tells you yes, so and so owns this,
Speaker 1: we need to transfer, you know, the ownership of this
Speaker 1: asset to the new person. And this is it's it's
Speaker 1: a lengthy process, so it takes time, it takes verification,
Speaker 1: it takes people, it takes it takes a lot of
Speaker 1: manpower as it stands today, and manpower costs money. So
Speaker 1: it adds costs layers of costs. So some of that
Speaker 1: also has to do with like the custody, right, So
Speaker 1: then um, just like with what what the blockchain has
Speaker 1: enabled us to do is to take custody of the
Speaker 1: asset um not i and all these intermediaries to keep
Speaker 1: keep their ledgers up to date or sort of speak
Speaker 1: absolutely yeah. Yeah, But actually this is very interesting point
Speaker 1: that you bring up because so um, over the years,
Speaker 1: it's become a regulatory requirement that every hedge funder asset
Speaker 1: manager has a fund administrator and a legal custodian. And
Speaker 1: the reason that that those rules have been enforced by
Speaker 1: law are that it's it's a way of ensuring that
Speaker 1: the fund manager can't just run away with the assets
Speaker 1: and spend them on porsches and private jets and whatever,
Speaker 1: but they actually have to spend the funds they you know,
Speaker 1: investors are trusting them with in the within the within
Speaker 1: the kind of rule sets that have been defined to
Speaker 1: the investor. UM. When you talk about the world of blockchain,
Speaker 1: this rule actually just becomes a nuisance, right because investors
Speaker 1: always are the the the owner of their own funds,
Speaker 1: because they're always holding custody or at least the world
Speaker 1: defy decentralized finance is such that investors should always have
Speaker 1: custody of their own assets if they want it. Um.
Speaker 1: And so this rule about having a custodian and a
Speaker 1: fund administrator suddenly becomes quite interesting to to reassess because, um,
Speaker 1: everything is so transparent and everything is pre defined in code.
Speaker 1: So why would you need, you know, why would you
Speaker 1: need to replicate this role when it's arguably more efficient
Speaker 1: and potentially in future more secure than having uh kind
Speaker 1: of manual intermediary in the middle. Right. So to set
Speaker 1: the stage, then, so the big problem that you ran
Speaker 1: into and that everybody is facing is massive administrative cost
Speaker 1: because of the way that custody is happening and settlement
Speaker 1: has to happen through multiple people, and so the compliance
Speaker 1: to keep up with that UM is just just too
Speaker 1: burdensome and just to to cost too costly. Absolutely, and
Speaker 1: and you know, compliance requirements are only going in one
Speaker 1: direction because every years, there's every two or three years
Speaker 1: as another scandal, there's another you know, financial meltdown, and
Speaker 1: then regulators deal with it by slapping on more and
Speaker 1: more rules and more and more restrictions. And in order
Speaker 1: to you know, to to meet those reporting requirements and
Speaker 1: to meet those regulations and rules, you know, funds essentially
Speaker 1: just get slapped with more and more costs. So it's
Speaker 1: it's a yeah, it's a difficult environment for funds. And
Speaker 1: what you end up seeing is instead of the biggest,
Speaker 1: instead of the best fund managers doing best, doing well,
Speaker 1: what you end up seeing is it's the big ones
Speaker 1: getting bigger and the small ones getting smaller because the cost,
Speaker 1: because of the cost to do the administration. Exactly, you
Speaker 1: need the scale to be able to suck up the administration.
Speaker 1: It was a great I wish I could remember the source,
Speaker 1: but there was a great article um a couple of
Speaker 1: years ago. I think it's said something like of the
Speaker 1: world's assets invested in hedge funds are invested in five
Speaker 1: largest hedge funds. Yeah, one about that. We see that
Speaker 1: all throughout different areas in the world. For example, in
Speaker 1: e commerce, right, so you have am on that's continued
Speaker 1: to grow bigger and bigger and bigger, and then regulations
Speaker 1: have been constantly put into place for small businesses to
Speaker 1: keep up with, like local tax jurisdictions for example. UM,
Speaker 1: and so it's it's too burdensome for those small entrepreneurs,
Speaker 1: those small sites to keep up with those regulations. And
Speaker 1: so Amazon of course has the scale and they can
Speaker 1: do that. So UM and we can see that just
Speaker 1: play out over and over and over, and it's it's
Speaker 1: kind of kind of what you're saying, is it's kind
Speaker 1: of like, on one hand, Um, the regulations continue to
Speaker 1: build up and continue to make it harder and harder
Speaker 1: and harder. But at the same time, we're on a
Speaker 1: system that's been around for eighty years or I don't know,
Speaker 1: sixty seventy years and it hasn't really changed. Is that
Speaker 1: kind of what what you see? Absolutely? And and the
Speaker 1: thing is, you know, eighty years ago we didn't have
Speaker 1: very exciting technology. Today we do, and UM and probably
Speaker 1: you know we've had exciting technology for the last couple
Speaker 1: of decades as well. But the financial system, so UM,
Speaker 1: you know, it's it's so fragile right now because we've
Speaker 1: just slapped layers and layers and layers of um of
Speaker 1: old technology on top of our new technology on top
Speaker 1: of old technology for so many years that the technology
Speaker 1: stack that they're dealing with such a mess in banks
Speaker 1: and financial institutions. So to to try and you know,
Speaker 1: make any proper use cases or to use blockchain or
Speaker 1: new technology to its food potential, it's almost impossible if
Speaker 1: you're a large incumbent. And I think the people that
Speaker 1: are doing the really exciting stuff now are the people
Speaker 1: that can really start from fresh, take all the technology
Speaker 1: that's available to us today, and reinvent things from scratch.
Speaker 1: You I want to ask you, um how hard that's
Speaker 1: going to be because of the incumbents that are there
Speaker 1: on the regulations. But before we get to that, UM,
Speaker 1: let's jump back to UM. Let's just jump back now
Speaker 1: to melon. So you've seen these problems, You've you've had
Speaker 1: to deal with this in real life, the burdensome costs
Speaker 1: and compliance and labor and so forth, and so UM
Speaker 1: using this new technology of bitcoin, etherory and blockchain, UM,
Speaker 1: you think you found a better way? Absolutely? I mean,
Speaker 1: we are. It's still very early days in terms of
Speaker 1: where the whole space is UM, but I think you know.
Speaker 1: In February nineteen this year, we went we went to
Speaker 1: main net with version of one of Melon, and Melon
Speaker 1: enables you to As of today, you can set up
Speaker 1: a crypto fund within a few minutes. You can define UM.
Speaker 1: You can pre define things like who is allowed to
Speaker 1: invest UM, where to your asset universe, which trade, which
Speaker 1: exchanges are you allowed to trade with? Which, what's your
Speaker 1: maximum number of positions, what's your maximum position size? All
Speaker 1: the kind of things that you can define in a
Speaker 1: fund perspective which is enforced by financial intermediaries. We can
Speaker 1: start to define those by smart contract code in a
Speaker 1: customizable way. I can customize my fund with its rules
Speaker 1: and its parameters. I can select my fees, my my
Speaker 1: management and my performance fees, and I can deploy this
Speaker 1: fund to the blockchain. It takes the form off its
Speaker 1: token and people can invest. The smart contract takes care
Speaker 1: of the accounting, the share creation, the fund administration, the risk,
Speaker 1: the risk management, everything operational about the fund except the
Speaker 1: except the investing, which is done by the manager is
Speaker 1: taken care of, which just frees up the manager to
Speaker 1: focus purely on investing. Now, UM, that's huge when you
Speaker 1: think that. You know, my fund took six months to launch. UM,
Speaker 1: they can take up to twelve months to launch. And
Speaker 1: the costs involved before you even launch are north of
Speaker 1: a thousand dollars in most cases, and the running costs
Speaker 1: of a fund are at least that per year. So
Speaker 1: you know, we've reduced that to process to a few
Speaker 1: minutes and um less than a hundred bucks. And you can, yeah,
Speaker 1: and you can, and you can start to see. You know,
Speaker 1: the user experience is not as easy as UM. You
Speaker 1: know we'd like it to be, but that's largely because
Speaker 1: of other developments that need to happen. There is the
Speaker 1: user experience on setting up a traditional fund. It's true,
Speaker 1: that's true. But you know, blockchain is not perfect. And
Speaker 1: I'm not trying to sit here and say as of
Speaker 1: today it's perfect. But UM, if we keep if we
Speaker 1: keep improving, or if we keep developing things in the
Speaker 1: way at the speed that have they have developed in
Speaker 1: the last three years in the blockchain world, I think
Speaker 1: that three years from now we'll be looking at a
Speaker 1: system which is massively, massively better experience than the traditional
Speaker 1: experience of fun management. Now when you say a fund um, uh,
Speaker 1: there's there's a couple different things. I mean. Originally I
Speaker 1: was thinking MELON was like helping someone set up like
Speaker 1: an index fund, which means I would say, you know,
Speaker 1: for simplicity sake, I have ten different assets in there
Speaker 1: at at different ratios, and um, someone could buy into
Speaker 1: that index fund. UM. But I think now you're talking
Speaker 1: about setting up a fund where I could raise however
Speaker 1: much money and then go invest that kind of whatever.
Speaker 1: My thesis is, Yeah, I mean, and I use the
Speaker 1: word I default to the word fun because it seems
Speaker 1: to be a word that most people can relate to.
Speaker 1: But actually you can use melon to set up any
Speaker 1: kind of investment vehicle. It can be an e t F,
Speaker 1: It can be a hedge fund, it can be a
Speaker 1: VC fund, it can be whatever you want. It can
Speaker 1: be a dow UM. There's actually no limitations on because
Speaker 1: each each investment vehicle is customizable. But you know, what
Speaker 1: we give is and what we hope is that one day,
Speaker 1: you know, five years from now, maybe any kind of
Speaker 1: investment vehicle is doable on melon um all the rule sets,
Speaker 1: all the risk management rule sets. You can imagine are
Speaker 1: available because obviously there's a limit finite amount right now
Speaker 1: based on the fact that we're a small team UM
Speaker 1: and we're only two three years into the project. So
Speaker 1: um but you know, it's all open source, it's all
Speaker 1: code that's there for anyone to see, anyone can participate,
Speaker 1: anyone can um submit proposals or code, and it's you know,
Speaker 1: it's easily integratable. So there's absolutely no reason why it
Speaker 1: couldn't be used as the future financial infrastructure for all
Speaker 1: asset management. And so how how would someone use that now?
Speaker 1: I know, for example, we talked about um ash that's
Speaker 1: building on top of that, and they're doing some sort
Speaker 1: of like gamified UM fund fund investing type platform. So
Speaker 1: if I was a builder, I would want to build
Speaker 1: on Melon and I could come build my fund. I mean,
Speaker 1: I guess you're saying like the options are endless, or
Speaker 1: like I would set up like my own marks index
Speaker 1: fund or um or I could say, hey, this is
Speaker 1: just give me just raise a million dollars and I'm
Speaker 1: just gonna go invest it. However, I see fit, I
Speaker 1: mean any option that I want. So Melan just kind
Speaker 1: of takes care of the compliance piece of that. So
Speaker 1: You can think of Melon as the infrastructure, right, the
Speaker 1: infrastructure which gives you the tool kit to build whatever
Speaker 1: you want to build. In the asset management space, you
Speaker 1: can you can set up a vehicle. This vehicle can
Speaker 1: be invested in. You can limit the number of investors,
Speaker 1: you can keep it unlimited, you can you can select.
Speaker 1: It gives you all the tools that you need to
Speaker 1: to customize whatever you want to do. Now, we haven't
Speaker 1: got all the bits there, but we have a full
Speaker 1: feature set and we've delivered everything, all the features we promise,
Speaker 1: and we're now looking towards the future to what else.
Speaker 1: You know, what are the next features that people want
Speaker 1: to see? Ashes building a use kick that we never
Speaker 1: actually imagined on Alan and I just came along UM
Speaker 1: I think it was a year and a half ago,
Speaker 1: and they said, oh, we love what you guys are doing.
Speaker 1: We uh, we're really good with UX and you I
Speaker 1: and UM. We want to build a fun use case
Speaker 1: on Melon and we want to kind of do something
Speaker 1: like a Battle of the fund managers on Melon where
Speaker 1: people can just challenge one another to short or long
Speaker 1: term you know manager competitions and UM and you know
Speaker 1: there's a there's sort of sort of prize pool which
Speaker 1: gets allocated to the winner, and it's all very competitive
Speaker 1: and there's a very playful there's a very playful element
Speaker 1: to it. UM. I have actually envisioned the use case
Speaker 1: of Melon initially to be much more serious because I
Speaker 1: come from the traditional world of finance. But I'm very
Speaker 1: open to anything that anyone wants to build on Melon
Speaker 1: because ultimately, it's all the same infrastructure and it's all
Speaker 1: the same you know, it's all the same tools. And
Speaker 1: the more people that are building on Melon, the better,
Speaker 1: because that's when we're going to get the best features,
Speaker 1: the best functionality, the best minds on it, the best
Speaker 1: the you know, the more the more developers that work
Speaker 1: on it, the more secure it is. UM. So, so
Speaker 1: we're very open to working with any teams that want
Speaker 1: to build on Melon to build anything asset management related. Now.
Speaker 1: UM basically, what you're trying to do is make it
Speaker 1: much easier to build a fund in the financial space,
Speaker 1: and we talk about like compressing those layers, the costly layers,
Speaker 1: taking out some of that admin. A lot of that
Speaker 1: is there because of laws regulation. UM there's a lot
Speaker 1: of people that make money from that as well, So
Speaker 1: it seems like quite a lot of people are going
Speaker 1: to be disrupted through this process. So, UM, are are
Speaker 1: the regulators going to allow this to happen or what's that?
Speaker 1: What's that battle going to look like? Yeah? You know
Speaker 1: this is this is I mean, this is the this
Speaker 1: is a great question. UM. Who knows? Um? You know
Speaker 1: you you see there was a report. I'm just trying
Speaker 1: to put it up now so i can give you
Speaker 1: the title. It's just shocking. But you know, the center
Speaker 1: of fund administration in the world is Luxembourg, as you
Speaker 1: probably know, and there was a report UM published by
Speaker 1: Deloitte this week or maybe it was last week. The
Speaker 1: title is quite striking. It's called um blockchain technology has
Speaker 1: the potential to wipe Luxembourg off the map something along
Speaker 1: those lines. And you know that's because Luxembourg, basically, I
Speaker 1: think most of it's g d p IS is made
Speaker 1: from servicing the fund market, the funds asset managers. So UM,
Speaker 1: so you know people are signed it. We've we've been
Speaker 1: saying this for three years. I was amazed at this
Speaker 1: report came out now, but you know this is this
Speaker 1: has been our belief all along. Our regulator is going
Speaker 1: to accept it. You know, it depends, um that some
Speaker 1: are more open to others. Um. If you're Luxembourg, probably not, frankly,
Speaker 1: but if you're you know, if you're a jurisdiction that
Speaker 1: that embraces new technology doesn't have a lot going for
Speaker 1: you in the asset management space to start with, or
Speaker 1: in the finance industry, Hey, you may want to make
Speaker 1: a name for yourself by being open minded and embracing
Speaker 1: this kind of technology. Um. But in general we're seeing
Speaker 1: mixed you know, mixed um, mixed reactions on that. And
Speaker 1: in general, the law is the law at the moment
Speaker 1: for most of the kind of financial centers where you
Speaker 1: do need these financial intermediaries and so well, you know,
Speaker 1: we'll either see creative technological solutions that come come up
Speaker 1: that sort of build the technology in a way where um,
Speaker 1: you know, where where the law you know, there's no
Speaker 1: kind of strict definition on how the law can be interpreted,
Speaker 1: or you'll see the technology being built in a way
Speaker 1: that you know, can fit into the existing law. I
Speaker 1: hope it's the innovative way we see because there's absolutely
Speaker 1: no point in in in there's no upside in this
Speaker 1: technology if you have to fit it into the regulatory box. Frankly, UM,
Speaker 1: you think regulators should be open to people experimenting and
Speaker 1: to seeing what can happen. And I think ultimately it's
Speaker 1: better for UM, it's better for you know, sandbox environments
Speaker 1: are very good, but it's better to it's better to
Speaker 1: the potential. The potential of what this technology can do
Speaker 1: for the fund administer, just for for the fund industry
Speaker 1: is huge, yea. And I think it's largely you know,
Speaker 1: the focus seems to be people seem to be getting
Speaker 1: stuck on K y C A m L A lot.
Speaker 1: And I think, yes, maybe you could argue that, uh,
Speaker 1: you know, depending on which angle you're looking at, it
Speaker 1: could be a disadvantage from a regular from a regulator's perspective.
Speaker 1: But the flip side, I mean the advantages that get ignored,
Speaker 1: you know, risk management, control, transparency, reporting possibilities, UM, you know,
Speaker 1: the fact that the investors can keep custody of their assets,
Speaker 1: that the fact that UM, you're somehow protected from a
Speaker 1: market downturn in the way that you weren't during Lehman
Speaker 1: for example. So UM, I think that there's a large
Speaker 1: educational role that needs to be played there. I think
Speaker 1: that sandboxes are good, you know, you know, in increasing
Speaker 1: usage in a sort of controlled environment to prove your
Speaker 1: use case and then going you know, kind of mega
Speaker 1: big with it. It's always a good way to do things. UM.
Speaker 1: But you know who knows? Yeah? Now, currently are you
Speaker 1: only doing it on digital assets like the digital assets are?
Speaker 1: Are you? Is it being done on actual securities right now? Oh? No, no,
Speaker 1: we're We're not. We're definitely not able to interact with
Speaker 1: securities UM in the traditional sense. Um. There's because none
Speaker 1: of them have been none of them have been tokenized. No, No,
Speaker 1: definitely something that might become possible in future. Um. We're
Speaker 1: only able to include e r C twenty tokens UM
Speaker 1: in the Melon protocol UM. And yes, if there are
Speaker 1: e r C twenty tokens that are securities, users can
Speaker 1: make them part of their asset universe. UM. But that's
Speaker 1: that's really a user. It's kind of part of the
Speaker 1: customization process, right. The users select which assets they want
Speaker 1: to trade. If they're UH, if they're able to trade
Speaker 1: securities within their fund, then then they can. If they're
Speaker 1: not able, and they should stick to other types of tokens. Right.
Speaker 1: We are starting to see some people um, like, uh,
Speaker 1: they called wrapping them or you know, creating an arc
Speaker 1: token that represents an actual security. So maybe something like that.
Speaker 1: We actually have wrapped BTC already available in the Monon protocol,
Speaker 1: which is cool. Okay, I'm curious. Um, I'm curious. Coming
Speaker 1: from Switzerland, which is known for having one of the hardest,
Speaker 1: most sound moneys, Um, what you think about bitcoin overall?
Speaker 1: And then and then how like ethery um compares to that?
Speaker 1: I mean, are you are you a hard sound money
Speaker 1: person or do more like the expandable fiat kind of money.
Speaker 1: I'm not originally from Switzerland, but I definitely love this country,
Speaker 1: and I, um, you know, I if I had to
Speaker 1: put my money in any fiat I would I would
Speaker 1: probably pick the swizz frank frankly. Yeah. But as far
Speaker 1: as um crypto goes, I think, um, you know, I do,
Speaker 1: I do see I do see Bitcoin and etherorum in
Speaker 1: a slightly different way. Bitcoin is for me a you know,
Speaker 1: a digital um, a digital money. You can you can
Speaker 1: buy things for you know, you can exchange it, you
Speaker 1: can you can you can use it as a store
Speaker 1: of value. And it's for me, it's um, it's it's
Speaker 1: I see it as a compass with Frank, but maybe
Speaker 1: even more secure and in fact, definitely more secure UM
Speaker 1: and an etherory m. I see it in a slightly
Speaker 1: different way, you know, I see a theorym as um
Speaker 1: more of a platform that will grow with with its
Speaker 1: use cases. I don't really see it so much as
Speaker 1: a as a currency, although it can be used as
Speaker 1: a currency, right, So not direct competition. They're serving different
Speaker 1: purposes and different needs in the market. Yeah, you know,
Speaker 1: the pure noess of bitcoin, the fact that it can
Speaker 1: only be used to hold or exchange, you know, exchange
Speaker 1: for good to deser versus um makes it characteristically more
Speaker 1: like a currency for me, a digital currency, right. And
Speaker 1: then as far as building on Ethereum versus other protocol platforms,
Speaker 1: um have you guys, did you guys do due diligence
Speaker 1: on other platforms? Is it something where like at some
Speaker 1: point you could move it to another platform or are
Speaker 1: you sold on Ethereum's position in the marketplace? And and
Speaker 1: you think Ethereum is kind of the front running winner
Speaker 1: at this point, Yeah, well funny you say that. But
Speaker 1: back when we started in two thousand and of two
Speaker 1: thousand fifteen, I mean, there weren't that many other platforms today, Yes, UM,
Speaker 1: and we started my ethereum UM. We continue to keep
Speaker 1: an eye on other blockchains that are emerging in the space.
Speaker 1: I still don't think there's anything that offers to you
Speaker 1: what ethereum can offer. UM. Having said that, UM, there's
Speaker 1: there seems to be a lot of blockchain new block
Speaker 1: newer block chains that are going to main net soon
Speaker 1: ish and UM, and you know, we plan to research
Speaker 1: them and and we've definitely researched. We've definitely you know,
Speaker 1: started looking at things like the Polka Dot network and
Speaker 1: into as we think about scalability and interoperability. UM. But
Speaker 1: you know, ethereum two points around the corner two and
Speaker 1: we're excited about that. And it's just a matter of
Speaker 1: keeping in touch with what's happening in this space and
Speaker 1: making sure that UM, you know, we're we're up to
Speaker 1: date and we're ready to to make a necessary amendments. However,
Speaker 1: as of today, most of the decentralized finance, in fact,
Speaker 1: all of the decentralized finance applications are on ethereum, and
Speaker 1: so moving away from ethereum would be silly at this stage. Yeah, UM,
Speaker 1: for the decentralized finance space. It's an area that that
Speaker 1: that I think is just fascinating. I mean, I love
Speaker 1: the decentralizing everything. Um. Do you see that as kind
Speaker 1: of being like the main use case right now or
Speaker 1: the primary use case, um of what of what we're
Speaker 1: doing with this technology? Yeah? I do, I really. I
Speaker 1: mean I'm biased obviously because of my background, but I
Speaker 1: think that I think that, um, you know, the industry,
Speaker 1: the only industry that hadn't been disrupted by technology, in
Speaker 1: my opinion, was was financial services um um. And finally
Speaker 1: it's happening. You know. I think etherium gives us the
Speaker 1: possibility to to to finally get rid of a lot
Speaker 1: of the fat in the financial industry and do it
Speaker 1: in a different and better way. UM. So I'm really
Speaker 1: excited about that. Yeah. Now let's just jump into the
Speaker 1: next thing. Now. What I what I find is really
Speaker 1: interesting is how talking about how I just mentioned how
Speaker 1: I love everything becoming decentralized, Um, you would actually built
Speaker 1: melon and now have launched it in a more decentralized
Speaker 1: manner where you've kind of I think, created like a
Speaker 1: doubt decentralized organization and kind of giving it back to
Speaker 1: the community. Can you talk about that a little bit. Yeah,
Speaker 1: so we yeah, so we always promised that at the
Speaker 1: end of the two years, when we completed our roadmap,
Speaker 1: we would um, you know, we would sort of let
Speaker 1: Melon out into the wild, so to say. So, we
Speaker 1: to the main net UM and we I wanted to
Speaker 1: make a point of giving up any control over the
Speaker 1: protocol UM, so we we handed it over to decentralized
Speaker 1: kind of UM government system, which we call the Melon Council,
Speaker 1: which is composed of a group of technical users and
Speaker 1: UM user representatives and it's running currently on arragon os
Speaker 1: UM software. So so we did that UM and yeah,
Speaker 1: it's completely you know, we we have a seat on
Speaker 1: the council. UM. We're definitely consulted when the decisions have
Speaker 1: to be made, but we have no more than one
Speaker 1: vote on the council. So and and over time I
Speaker 1: would expect that to you know, of as the council grows,
Speaker 1: i'd expect you know, our our influence and influence just
Speaker 1: continues to diminished. But what does that look like? So,
Speaker 1: I mean, you've given it up to the to the community. Uh,
Speaker 1: you're still taking a seat on there. So now it's
Speaker 1: like up to the community to vote on the direction
Speaker 1: that it goes and new features and stuff, but who
Speaker 1: actually will manage it and run it or or or
Speaker 1: develop on it. So UM, so there's a few, there's
Speaker 1: a couple of different parts, so the council. So let
Speaker 1: me take a step back, UM in order to use
Speaker 1: the Malon protocol, so we have we have a token.
Speaker 1: Uh we there is a MELON token that exists which
Speaker 1: basically is a usage token and is basically consumed as
Speaker 1: a kind of asset management gas whenever anyone is interacting
Speaker 1: with certain functions in the system. When the ecosystem UM,
Speaker 1: the tokens are are basically burnt once they've been spent.
Speaker 1: On the flip side of that, there's an annual amount
Speaker 1: of tokens which are created by the network and these
Speaker 1: go towards future maintainers and developers of the network, and
Speaker 1: they are allocated, uh allocated or burned by the TAO
Speaker 1: as per the needs of the network. So essentially UM,
Speaker 1: the token holders and the users are somehow aligned by
Speaker 1: the token o mix. So users are incentivized to help
Speaker 1: grow the network because as usage goes up on the network.
Speaker 1: In theory UM, this should be linked to the token
Speaker 1: value and the future maintainers and developers are also incentivized
Speaker 1: because as they develop cool new features and maintain the
Speaker 1: software effectively. Also, users go up on the network and
Speaker 1: they're earning in this kind of token UM. And and
Speaker 1: then the one kind of stakeholder in the ecosystem that
Speaker 1: is not represented anywhere is the user right because the
Speaker 1: user UM just wants to use a secure protocol. They
Speaker 1: don't really care are about the token. And so when
Speaker 1: we designed our governance, we said, like, you know, how
Speaker 1: can we design a governance system that represents the stakeholder
Speaker 1: that is underrepresented in our ecosystem? And so we said, okay,
Speaker 1: if we were users, we would want to know that
Speaker 1: people looking after this UM software are technically competent or
Speaker 1: user representative. And so that's exactly how we designed the
Speaker 1: Melon Council in the dow around it UM. So basically,
Speaker 1: anyone who joins the Melon Council has to prove that
Speaker 1: they're somehow technically competent in order to make decisions around
Speaker 1: upgrades or UM any kind of protocol related decisions. And
Speaker 1: on the flip side of that, UM, if you're a
Speaker 1: user of the network and you can prove that you're
Speaker 1: a user of the network and you're you're you're sort
Speaker 1: of elected by the other users. You can join the
Speaker 1: Melon Council to represent the users, so you can say
Speaker 1: to the you can say to the technical council, you're
Speaker 1: spending too much time on security. Actually, we really wanted
Speaker 1: this cool new feature. You know, go ahead, guys, build
Speaker 1: this for us UM and this is this is I'm
Speaker 1: representing the users and this is what we want. So
Speaker 1: it's kind of um, it's kind of a good balance
Speaker 1: between the token economics and the governance. We've basically represented
Speaker 1: and looked after we hope all users and stakeholders in
Speaker 1: the ecosystem interesting. And so you have the new tokens
Speaker 1: being created that can fund it um, you have the
Speaker 1: token holders the users, which are are voting in the
Speaker 1: governance of that, and then you have the funding that
Speaker 1: that can pay for the ongoing development. Just to be clear,
Speaker 1: the token holders do not vote with the token. The
Speaker 1: token holders basically just benefit as used it of the
Speaker 1: network goes out the users. UM, the users consume Melon
Speaker 1: as they use the network, and the yeah, and the
Speaker 1: and the the us the exactly. Yeah. So the reason
Speaker 1: we didn't go for the token holder voting, which is
Speaker 1: on chain government, and it's because it's too easy. In
Speaker 1: our opinion, for our use case, it was too easily gamable.
Speaker 1: So if you had token holders vote voting on sensitive
Speaker 1: things like protocol upgrades, it's very easy to influence or
Speaker 1: manipulate the vote. UM when you when you're not necessarily
Speaker 1: technically qualified to make a vote on an upgrade, right,
Speaker 1: or even worse, we've seen and a lot of protocols
Speaker 1: which have token hole token voting rights, we've seen apathy
Speaker 1: in voters. So uh, you know, something like less than
Speaker 1: fifteen percent of people will typically turn up to vote
Speaker 1: with their tokens. And this um, this is also a
Speaker 1: negative for the protocol because you know, then the swing
Speaker 1: vote or the ability to influence a vote in a
Speaker 1: malicious ways is too easy. So we've we decided to Actually,
Speaker 1: if we had on chain governance, this would have made
Speaker 1: the users very vulnerable. You know, you could have had
Speaker 1: a competing network come along and try to maliciously upgrade
Speaker 1: code to something that was insecure, or you could have
Speaker 1: had um, you know, you could have you could have
Speaker 1: had a number of malicious attacks. UM. So what we
Speaker 1: tried to do here is give the give the users
Speaker 1: of the network. Um, We're sorry. Give the token holder
Speaker 1: is something to Tom to look after them, and that
Speaker 1: is the more users on the network, the more the
Speaker 1: token holder benefits because the the buying burn model links
Speaker 1: the value of the token to the usage of the network. UM.
Speaker 1: And what we gave the users is this governance which
Speaker 1: is designed in a technically competent way so that people
Speaker 1: making the decisions around the future of the protocol have
Speaker 1: to be technically competent to do so, or at least
Speaker 1: user rep provably user representative. Yeah. Yeah, we're really interesting.
Speaker 1: It's such a it's it's so fascinated to see these
Speaker 1: different types of governance that are that are coming out
Speaker 1: of this use of blockchain techn apology, you know, theoryum
Speaker 1: and whatnot. So um. You know, it's all very new
Speaker 1: and experimental. The whole idea of decentralized governance. I mean
Speaker 1: maybe Switzerland is the closest example to it, you know,
Speaker 1: given they have a very decentralized government government system here. Um.
Speaker 1: But it's in terms of doing it tech on technology
Speaker 1: with tokens and on chain versus off chain. It's still
Speaker 1: very early days and I think time will tell, you know.
Speaker 1: I think a lot of the stuff being done now
Speaker 1: is still very experimental. Yeah, yeah, great, Well, UM, I
Speaker 1: wanted to get into more stuff, but we are running
Speaker 1: long on time, so I think we'll have to go
Speaker 1: ahead and wrap it up here. But I'm definitely gonna
Speaker 1: be keeping an eye on Melon for others that are interested, UM,
Speaker 1: what are some things that they should be looking for
Speaker 1: where they should be watching. UM. We're very active on
Speaker 1: our Twitter channel, so Melon Protocol we are. We try
Speaker 1: to write UM regular blogs on Melon Protocol medium page. UM.
Speaker 1: And if you want to chat to us directly, you
Speaker 1: can join our get your channel. There's one for users
Speaker 1: and one for developers UM, and we're always happy to
Speaker 1: take questions on either of those subjects anytime. All right, Mona,
Speaker 1: it's been been fascinating. I love to hear how this
Speaker 1: old old style of finances being disrupted and I'm excited
Speaker 1: to see it happened. And I appreciate you taking the
Speaker 1: time to explain to everybody. Pleasure to be here. Thanks
Speaker 1: about Mark, Take care. Hey. If you like this episode
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