ZKPodcast: Unleashing Melon into the wild with Jenna Zenk

Transcript

[Music] welcome to zero knowledge a podcast where we explore the latest in blockchain technology and the decentralized web the show is hosted by me Anna and me Fredrik in this week's episode I sit down with Jenna zank from melon port she's a CTO there and we're gonna discuss the path this company took and what it means to release a protocol into the wild [Music] so before we start we'd like to say

thank you to this week's sponsor no fund no I fund is building an e rc 20 compatible open-source platform enabling tokenization of real world assets no i fund implements protocols that bind off chain assets with on shane representation in this episode we do touch on e tos or security tokens so this is kind of relevant to that so if you're interested to see how the NOI fund has linked legal documents with smart contracts check out their github profile at github calm slash boyfriend or join them on their telegram channel links as always are in the show notes and now here's our interview with Jenna [Music] hi Jenna hi Anna how you doing good Anu

very good I'm here with Jenna's Inc who's the CTO of Mellon port and we're here in sook just a few days after we wrapped m1 the asset management 3.0 conference that Jenna and the Mellon port team put together and that I got a chance to host which was super fun Jenna I think as we always do I think the best start is a quick introduction so why don't you tell us a little bit about yourself sure first of all thanks for having me I'm really excited for this podcast because I listened to the podcast all of the episodes so it's definitely one of my favorites so yeah I'm Jenna I've been working on the

project for two years now but before that I was actually working in finance and traditional finance I was working in the hedge fund industry in New York and then I decided to stop and to learn programming and to actually become a developer I have been in the crypto space before learning programming out of personal curiosity and interest and then I started actually working in the space two years ago so you made this pretty dramatic shift in your career what inspired you to do that so I've always wanted to learn programming like this is this always attracted me I started in a business school studied finance a lot of

mathematics and coding was definitely something that I wanted to do at some point but then I started working in the hedge fund industry right after graduating so being in the crypto space and reading a lot and attending a lot of conferences and meetups kind of like gave me this extra push to be like okay now I actually want to get a more technical background so that I can understand things in a deeper manner do you think that's actually important for people entering in the space that they put in the work to understand the tech I think it depends what are your goals by entering the space I think you can definitely understand a lot of things without being an engineer there are a lot of resources out there available for anyone to do a lot of reading and quite

frankly like I've spent maybe three years reading about crypto without you know having a technical background and that was totally fine but I would say if you feel the need to understand deeper then yes let's talk more about how you actually got into blockchain because that happened before you actually got into programming what first what was your first contact with the space so I think it was like in 2012 or 2013 and I was just generally interested in different technologies just reading about new things that that were coming out but I was particularly interested in technologies that were that could empower people or you know give more control over data or privacy

or economic power and so I came across Bitcoin at the time which I found very interesting so I got involved a little bit like nothing crazy I got involved I was following the space by a fire you know for maybe two years and then I think it was in 2014 when we started speaking about the theorem that's when really I could see what I could do you know because when it was Bitcoin I couldn't see what I could myself do but a theorem was like this promise of a platform where we can actually build smart contracts so the contracts that can do things that opens up a whole lot of new opportunities so from that point on I was completely hooked and that's when I started like

kind of reading all night long about what was going on so you've sort of fell into the wormhole what do we call it read or text the rabbit definitely I was working I was working hedge fund so you know I had a full time job but all of my weekends and nights like I would like to read everything attend all of the meetups in the US and friends that were happening and yeah and then when I was actually able to program I was like I actually wanted to work in this space and then I met Mona in the first at Con in Paris 2017 and it was kind of like obvious that what she was trying to do was very relevant for what I've been

doing being asset management but also being very involved in crypto and becoming a developer let's talk a little bit about Mellon the protocol the project and Mellon port the company let's go back to that first meeting with Mona did Mellon port already exist when you joined or was it just an idea yes when we met at ed Kahn actually Mona and George we're there and they had just completed the token say it like a few days before like maybe four or five days before and so they were actually starting to look out for building a team and and that's how we connected so you so you actually joined post I see oh

yeah cool yeah I didn't what was the project at that time like what did you join so I joined the project that had a very ambitious goal which was building an infrastructure for asset management on the theorem blockchain which at the time quite frankly there was not many complex protocols being built there it's a lot of things were being built but it was very early so even in terms of tooling it was a big challenge I would say but just the idea of using a theorem to disrupt the industry that I was working in because I've seen those inefficiencies myself so that's that's the idea that I joined

so you met Mona in Paris mhm at IDI con yeah and then but you weren't living in Paris where were you living I was living in New York but I'm originally from Paris okay and I flew from New York to Paris for the at Conte conference because it was one of the first Bakey theorem conference except I mean separate from Def Con so I definitely grew from that for that you know I just came for a few days and the day that we met I was playing back to New York the next day so what happened right after that like were you did you just pick up from New York yeah we just you know we just got in a few calls the following days from New York between New York and

Zurich I had personal plans to move to LA before that but my plans got changed and I actually moved to Zurich Switzerland that's pretty amazing yeah that's like that's like a big life-changing decision right there back kids but but I would say it was it does sound like very like big shifts but at the same time you know when when tonight's yeah just kicks for you and you know okay that that's what I want to do you just know it because for me I have been spending maybe eight months not I was not working it was not studying and his core anything I was just like reading about he theorem and attending conferences and I was waiting

for this moment where okay I would find the project that okay that really passionate smiie either find a team he's working on that or have an idea by myself ray but the minute I spoke with George and Mona it was like okay this is it it was very obvious for me and I think for them my background was very obvious because they were looking for developers but it also had the innovate asset management background and financial having having studied finance do you think that that the fact that you switched like I think some people feel that when they're studying they should be studying exactly what they're going to do and if they decide to switch at some point that it could be like a setback but it sounds like in your case

it was like additive oh definitely yeah I've been you know have been saying that for a long time to people around me friends relatives I think I think what you study doesn't really matter if you end up realizing that there's something else is what you only want to do it's I think it's always possible especially in our times now where you have a lot of online resources to learn about anything but you also see new education models where you can go in a school or boot camp for like you know four to six months very intense but you know study something completely new I come out of this and being able to work in in this

new industry so that's what I've done like I went to a programming boot camp for like four months very intense but after that I was able to you know build an application by myself and and then and also learn any other programming language by myself so I think I would encourage actually anyone to switch if they feel the need to switch and in my case it was very helpful so let's dig deeper into Mellon and this protocol so you mentioned it's sort of at least for from your background it's a great mix of like the tech and the asset management the financial services side what is it exactly so the men and protocol is an open source protocol built on top of

aetherium it is a set of smart contracts that implements the behavior of an investment funds so what this means is that it lets you to unchain asset-management so the way you can think about it today when you have a hedge fund you're you're you know on Wall Street managing your hedge fund dealing with all of the intermediaries around you and what we're building is something to let you exactly do the same thing you know from your apartment and powered by the theorem that chain so it is an open source protocol for Unchained asset management and it lets people create investment funds on the theorem that chain and

manage those funds completely on Jane is this only for crypto trading like are the assets managed always crypto so in v1 that we're running out in a couple of days or weeks from now you have access to a RC 20 tokens so tokens that exist assets that exist on the theorem dark chain but the plan is definitely in future versions to open up the asset universe and that comes with interoperability when we have those capabilities we can then have men and funds that manage more than just as that's existing on your theorem and so that would be other block trains but do you think it will ever go into the real world like maybe even look like seven

twenty ones like is it a representative of like real-world assets could that live in yeah so I would say that one of our very important assumption here when building men and we're not building this just for the crypto space we're building this for the asset management industry as a whole and our assumption is that all the assets that we know of today will be tokenized in a forum or another on a blockchain or another it doesn't matter where and when but it we think that in the next five years most of the assets will be tokenized and we're already seeing this you have a lot of people planning to do it cos or SCO security token offerings so these are

actually assets like shares of a real company in the real world that that are represented on the blockchain you also have people latex who are at organizing gold you have real real estate being tokenized so it is definitely happening it takes some time but I think in a couple of years from now you can probably manage any assets that exist in the traditional financial industry in Amazon's what is the protocol actually like look like what are the pieces of this protocol the protocol is composed of two layers so the first layer is the fun layer so those are all of the smart

contracts related to the funds operation so the way we have built it is in a very modular way so when you actually create a fun what you're really doing you're just deploying a bunch of contracts maybe seven or eight contracts and each contract is doing one thing and it's trying to do it the best in the best possible way so you have a contract that is managing the accounting of the fund you have another contract that is managing the share distribution and redemption for the investors you have another contract that is responsible for interfacing with the different exchanges etc so on this layer one you have all of the contracts that power your fund and then you have the

layer two which is more infrastructure type of contracts so those funds can't really live by themselves they need some infrastructure contract so that could be a price source so we need prices to power the funds it could be adapters translating demand and terminology to the specific exchanges that we're using we have also kind of like a registry that tracks all of the existing assets all of the existing exchanges that you can interact with so those two layers are the Mellen protocol is there also I mean there's the Mellen protocol and that is there also like the mellon product yeah sure so when we talked about the protocol we tend to focus on

under smart contracts but quite frankly smart contracts they themselves are not very useful if your end user is not a developer or a technical person you definitely need to have actually a product or an interface so what we have is we have what we call them the melon manager interface it is a desktop application that you can download from our github and it just it just runs on your local machine you can connect your local if your node or hosted note whatever and it's like your interface to manage your fund and or as an investor to invest in any fund it's really like

the the toolset for asset managers and investors and that is powered by typescript library that we've been working on but also a quite complex data layer using graph QL and all that stuff so I think you've made just a really good point I feel like a lot of projects especially if they're trying to interface with the quote unquote like real world or like existing realities they are going to actually have to understand that there needs to be a bridge built and I guess that's what you mean by this like front-end dashboard that's that's like a web product yeah it's I would say that our protocol is in a way very hard to interact with if

you're not technical like I can't see a manager actually interacting directly with the smart contract I mean he would freak out immediately and never touch this product again right so what we've done is that and even for developers who are not necessarily familiar with our protocol firsthand it's not trivial to get started so what we've done is that we've built the Menin TS library which is a type script library that really is I think very powerful because it allows you to interact with the contracts without knowing anything about so G so you don't have to know about writing smart contracts it's obviously useful but you could

create a phone using just this type script library if you're a JavaScript or a tech type script developer and when building this library we realize like there are a lot of things that sound super trivial but are not so for instance we deal with a lot of token like here see 20 tokens but they all have some differences number of decimals for instance sounds super super simple but when you actually have to multi play I took an A and token B or a divide took an A and token B or you know know what took an a B and C amount for in the nav calculation of your funds we realized it can get a little bit messy so when

building the library we also built like sides libraries such as token math my colleague Simon has been working on that a lot and it's a very tiny library but it allows you to do any interaction and calculation on tokens regardless of if they have the same number of decimal nuts it takes into account their prices and I think we have the types of libraries very developer friendly but still if you're an asset manager you don't have to do that so on top of that we have the melon manager interface which is a desktop application and it is you know the Gateway for users to interact with the melon protocol without having any

technical knowledge it almost sounds then like you've built you've built multiple products like you you've not only had to build or ship like a protocol you've also had to build like a web app and like all of the UX and I can just picture like going through that process multiple times yeah definitely I mean the promise was to deliver a protocol in an interface that goes with it but I would say that the tech stack that we have is very complete from back-end to front-end back-end being the smart contracts front-end the interface but in between you have this typescript library that can of like bridges and quite complex data layer that is using

graph QL but also we found that we had to aggregate order books from exchanges so we have a library that this just this yeah the text app is quite complete and what we've been building for its years definitely was not only just a set of smart contracts and the team that we have you would see to smart contract only developers and three JavaScript and front-end developers and a designer so you know it's the white gamut but yeah yeah so I imagine like in the development of the front facing at the user facing platform there's so many libraries there's best

practices you know web 2.0 is quite well traveled and it's you know there's a lot you can just you can draw on from previous work but with the protocol level stuff there's a lot of unknowns so tell me a little bit about what you came into contact with and maybe like what were the challenges for your specific use case sure and I would say the first challenge that we've encountered in the first few months of development was the lack of tooling that was a big one and we ended up building a lot of the tooling ourselves of what we needed but that was just in the first few months because then etherium developer base like kind of grew massively and and I

think today we have a lot of toolings around what we're trying to do so for our current or remaining challenges the first one are the Oracle question or in our specific case how to get prices on chain so if you're doing Asset Management's you need a way to be able to evaluate your funds to calculate the nav which is the net asset value of the fund because that metric is used for everything else the share price the management the performance fees that are paid out etc and it's funny but you know the blockchain doesn't know about what the price of this as it is and we have

to find a source a price source unchain to be able to do what we're doing and we found that like until now I don't think that there is the ideal decentralized trust less price feed solution on chain with you know we've tried of different approaches and I think we came to a point today that we're happy with what we have but definitely there can be better things done and ultimately I think in the future price source on chain will come from decentralized exchanges the reason why we can't really do that today is because of the lack of volume traded and the lack of liquidity and the centralized exchanges so you

don't get the price accuracy that you would need for valuing investment funds well and that would be problematic that would be definitely pragmatic can we I don't think we've ever actually defined this on the podcast but how do you define an Oracle okay so an Oracle is a way to put unchain real-world information so the blockchain if you don't tell the blockchain it doesn't know about what's the weather outside what is the result of this election what is the price of this asset what is the level of the S&P 500 and all this type of information that we have access so easily you know just by going on your web browser all it knows is like a block

number yeah and it just knows about its current state and its self state and that's it it doesn't know about anything external unless you bring it so an Oracle is something that brings data unchain this data usually is as useful for all of the applications that live on on the blockchain now you can have it's actually quite easy to have an Oracle that brings prices so I can just you know have it smart contract and push prices every morning at 8:00 a.m. I can do that but it is kind of centralized and I'm like a single point of fader so the real challenge here is to have a decentralized or rather trust less price

source because if one person or a set of persons can actually manipulate the prices that they put on chain then the results of that can be quite dramatic especially for financial applications what would be the equivalent of an Oracle in sort of traditional financial worlds well we would use like you know official price sources you can get prices from Bloomberg from Reuters you know it's it's it's so trivial to get this information in the real world it's so not in the blockchain world so I would say that was like one of the big challenge so there's no Bloomberg or Reuters in crypto and I guess all you have are kind of like you have some

centralized exchanges but they might be reporting like very different values so what did you do so yeah centralized exchanges definitely have you know they actually have like quite accurate prices but they're not unchain they're obtained so what we've done actually we've tried a couple of approaches so the one that I mentioned earlier just having a price feed contracts to which you push prices every so often that's super easy but also super meeting trust in the person updating prices so then we we moved to another approach which was a little bit more decentralized so we had this kind of like canonical price feet which was

aggregating prices from different operators on our network so you could have like I don't know 100 operators who are who were staked in Mallen tokens and they would provide prices unchain and then this canonical price would kind of like take the five most staked operators and take the median of their prices so that was an OK solution I mean it definitely worked like we used it on the main net over the summer it was working but it was just like very complex solution for something that shouldn't be that complex and still vulnerable to price manipulation so then what we what we're doing now actually came out of

discussion over the summer with no from caber we're about to integrate caber as one of the decentralize exchanges that the Menin funds can trade on and just by discussing with with lie on there approaches under approach we realized okay but actually those guys have an Unchained price like that is quite that could be used in our case so you know they were alive for like three months at this point and so I was like in the past three months like do you know what what is the price deviation what is the deviation between your prices that you've had on chain and prices that we can find on a central exchange and he

said it's very small it's like around 1% and I was like I can't believe this like I really could not believe it so what we've done is actually we've done our analysis we've been we ran a script that that started at the the inception of the caper Network and we checked for you know different points in time every day for like six months I mean the three months but now we we run it recently for like the six months so we take a price at a certain point in time that is on cable right unchain and we compare it with an average price that we get from different central exchanges and I have

to apologize for him I mean I've already done presently but yes it's true price deviation is around one percent one point five percent which for a decentralized exchange is very impressive now the reason for that is caber is not really a typical descent rate exchange it is rather a network of what they call reserve managers and those reserve managers bring liquidity to the network so they have assets that are unchain that are kind of like an inventory and what they do is that they set the spread so they set a price at which they would sell men and the price at which they would buy melon right and they kind of like readjust this price

every so often I think every two minutes or so so because of that the prices are quite you know they could be more accurate but for for blockchain I think these are the best Unchained prices that you get in a trust less manner because no one can really manipulate those prices except for the reserved managers themselves but if they do that they put their inventory at risk so game theory from a game theory perspective is quite interesting what caper has been building and we decided okay this is our price source we're just you know we're getting prices from caber we're definitely now relying on another on another network on another project

which is quite interesting because we took this decision we're like okay if we do that we are relying on caper it's something that we're willing to accept so it's one of the assumptions of our model is caper is working in caper is quite resistant to two attacks so finding the price and figuring out what something's worth is one of the big challenges what else would you say is a challenge so the other thing that was quite challenging is you know putting a lot of things on chain because our whole protocol is running on chain right so we put a lot of data on chain and also some of the features that we have require

quite heavy computation so I would give it as an example risk management and risk engineering so basically when you have a man and fauns you're an asset manager you can manage your portfolio but if that's all you knew you could you know theoretically embezzle funds so what we have is a risk management or rather we call it a risk engineering component that actually protects the investors from the asset manager potential malevolent behavior and these are just rules that the manager chooses at at the phone creation time so you can say look I will never trade this obscure

asset right I will never have this as I did my fund or I will never trade at prices that are over 5% away from the actual price given by the price source or I will never have a concentration in this asset of more than 10 this type of things so these are rules and what we do is that when a manager tries to trade like to sell an asset or to buy an asset we evaluate those rules that you know evaluate to true or false if it evaluates to true the trade is accepted so it can happen but if it evaluates to fold it will just not happen but in risk engineering you have things that are a little bit more

complex than you know asset whitelist or asset like list or price tolerance you have things like volatility and actually in in the real world this is a core thing in risk management is valid city of your portfolio but if you want to measure the volatility of your portfolio after you buy this asset you actually need a long historical record of data that really we shouldn't be putting on chain so that's definitely one of the challenge so you need that data and then you need to perform a can of like heavy computation I mean not so heavy but like for blockchain it's early heavy computation at this point unchain so what we've done is that we've

implemented all of the rules that are not so heavy in computation but in the future we'll have to find solutions for the risk engineering rules that are more emerged amending and so here what you're saying is like you're gonna need some sort of off chain computation or some or the on chain needs to be faster or more yeah so cuz right now it sounds like you've put like a minimal rule set or minimal kind of like the bare bones of what can make the protocol run but what you'd want to do would be bigger yeah I mean we've identified like about 12 rules that would be like really an ideal to set for a manager and we've

implemented five of them some of them can be implemented now some of them require either enough chain solution or better capabilities on chain now the thing is there are a few things that we've looked into we're going to be considering substrate in the future from Gavin's talk during m1 it seemed like being on substrate could help solving this issue where we could actually upload some of the heavy computation and also upload some data storage so that could be something that could work the other things that we have considered and discussed with mat

diferente our security reviewer is maybe using using using different operators that can actually do do those risk engineering checks of chain and submit as your knowledge proof unchain to you know prove that this trade was accepted because it was compliant with the risk engineering rules that the phone had no cool you're coming into our neck of the woods yeah okay and so given that it's a smart contract based protocol you'll always have the question of smart contract security and I'm wondering like

where are you at with that I mean I don't think it's new I don't think it's unique to any project in the space that this is an issue but like what given that you're managing that you have a protocol that's managing money and not like I don't know like fun game in game stuff like I could just imagine security in this case being like a very high priority yeah I would say you know you were talking about the challenges that we've had smart contract security is definitely the biggest one I would say because all of these other problems are solvable when when you have enough time to put in there but smart contract security is interesting and has been one of our priority in the past and will be

will stay one of our priorities in the future so you know the way we'll deal about this is very similar to other projects I would say we can apply double down on security audits we've been having security audits since the very beginning I mean like the first version of the smart contracts that has like nothing to do with the contracts that we have today was edited probably by two independent auditors so we've been like doing regular security audits with different and independent parties so more recently for the upcoming v1 we've been audited by three independent auditors but what we found may be a lesson learned from other projects is

that it's good to have security audits at a point in time but you have to remember that it's not at at a point in time of your code base and the the whole process of onboarding a security auditor that do their analysis report their results and all of that is of course extremely valuable but what I found even more valuable is that we've had the chance to work with Matt diferente actually on a weekly basis so he's been our security expert and reviewers since the month of July and having someone who looks at your codebase in your smart contracts from a security angle every

week is extremely extremely helpful now it's actually very hard to find because their security auditors are you know not very available but for us this has been I would say a game-changing methodology for a smart contract security having to explain what we what we've done every week and what we plan to do and getting his feedback that was great and also and we come like closer to v1 he's gonna be producing his final reports but for him it's like he doesn't have to learn about the whole codebase in a week or two he actually knows it he knows all of it already he was gonna produce the final report so I think having that maybe a security expert in-house or having

someone that works a few hours a week with you that was extremely helpful now despite all the audits that we've had and all of the measures that we've taken bug bounties live bug bounties all of that the risk zero does not exists obviously and in the future we definitely want to explore things a little bit more like from a verification or at least in the coming months I think will be formal formally specifying the protocol and my feeling is that just the fact that we're gonna be really specifying the whole protocol in detail in another language that could that could potentially help finding

things that we haven't you know found so far do you think that that is sort of the future of protocol development where it's not going to be like build something get audited release into the wild but rather like an ongoing process of like there needs to be a security auditor on hand I would say that if you're building venture related protocols or them something that manages money definitely yeah and I would just add on that that also it seems like a lot of auditors are actually moving toward that that kind of like new model of smart contract security so when they

were before offering services for okay here is the quote for one audits right now on your code base right more of them are actually moving toward Amala where they could be you know consulting with you for X amount of time so it looks like it's going there yeah I guess also in the past a lot of the security audits were unlike IC o---- contracts they weren't on like real yeah complicated it's smart contracts yes so I feel like I definitely have a good understanding of like the tech but now I want to hear a little bit more about what is happening now Mellon is a protocol that's about to be kind of released into

the wild so that's what I want to talk about maybe to start though let's go back to this the beginning of the project what was the plan for the Mellon protocol early on yeah so back in February 2017 the kind of like official beginning of the project where the tokens say it happened Mellon port AG swiss-based company was mandated for the development for the two years development of the melon protocol v1 so that is the company that I work for and that our whole team works for and it was all always planned that this was a two

years workshop where we would build the v1 of the protocol and the interface that goes with it now the project the whole two years workshop was kind of like split into two three phases and phase three which was we started back in July was about governance so if this company is not going to exist after February 2019 how you know how our future decisions gonna be made how is what its gonna happen to the protocol who is gonna be maintaining it what who is gonna be you know pushing upgrades and all that so all of those things that have to ultimately have to do with governance so as you mentioned we're now

in February 2019 and the protocol is about to be conflate released into the wild during DEFCON four we presented the governance model so how it's going to look like with the men on council I know all of that stuff and a couple of days ago during m1 we unveiled at the initial men and technical council members so what is the technical council right so maybe before explaining the technical council a I'm just gonna give a quick lowdown on the men in Council so the men in council is a body it's gonna be responsible for making future decisions on the Mellen protocol decisions such as protocol upgrades but also resource

allocation so we have an inflation pool every year how are we going to be spending that on which developers which teams which projects and so on and so forth and a few others protocol related decisions now this men on council is what is unique about it is that it's composed of two sub groups the first subgroup is the men and technical council which is composed of as you might expect technical people could be developers but could be just really anyone who has technical expertise on the melon protocol or related protocol that the men and protocol interacts with or really expertise relevant to the decisions that are going to need to to

be made so the initial members of that technical council have been appointed by the outgoing melon pro team we unveiled the eight members last week and in the future this council can grow so anyone who has expertise relevant expertise can apply to to get on that council and then the whole council will vote on including a new member or nodes now the second subgroup is probably what is the most unique about it I would say is what we call the MIB men and expose businesses and that is the subgroup that represents the interests of the users of the melon protocol on that council and

make sure that the needs of the users are going to be addressed so what we have here is what we call a skill based and user centric governance model where you have users on that council who can say here is what we need here is here are the things that should be prioritized but those users are not necessarily technical and here they're actually supported by a set of extremely talented and knowledgeable people just to go a step back this is actually a question that I that I have is what is the reason for setting it wild like what's what's the purpose of not continuing to maintain it as melon port I guess men

and the men in protocol was always meant to be a decentralized permissionless protocol and we believe that if you have one company behind a protocol that is responsible for everything and that everyone relies on then that's not what you have because if this company disappears then your protocol is kind of like left abandoned somehow so this is not to say that we're gonna make stuff maintaining obviously we'll be involved but we want to make it so that the men and protocol you know it's almost like it could not it could live without us being involved so it's just really a will to to make

things you know as they should be decentralized do you think that in a way what you're saying is like the mellon protocol could become part of some bigger like shift in financial services like is that part of why you would do this to to say like because somebody might take the mellon protocol and actually go in a very different direction with it yeah so I would say it's definitely you can if like in the open-source mindset which we all have very close to our hearts here at Mellon port but as you said very you know spot-on the idea here or the division is that Mellon will become the kind of like infrastructure for asset management as a

whole so not on the in crypto but in the traditional finance world so kind of like the backbone for asset management and this is obviously very ambitious and II if you're right and we believe that it can only reach that goal if we open up the development to other groups because you know we've had we have our vision we have our expertise but there are a lot of people out there who could add so much value to what we're building so that's the idea behind it so you've created this council and the council's job is sort of to continue to look out for its well-being I guess but how are the users and the asset managers kind of

needs reflected in that like how do you link that then the meb subgroup the metal exposed businesses the way it works is if you're a user on Menen you can prove that your user on menin based on the assets under management that you have on the network so what we say is provided that you have X percent of assets management set in their management on the melon network you are defect to a melon exposed business whether you want it or not you might you know do something about it or not that's up to you but you are entitled to that right and what this the rights that this gives you is to elect the MLB representatives who are going to

sit on the council because obviously we can't really have all of the users in the same room with the men and technical council so they have to elect representatives to sit on the council together with the men and technical council to make those decisions in the future so one thing that we haven't really mentioned is the melon token so I mean you mentioned that there had been a token sale before you joined and you Mona had done that when when was it done actually it was in February 2017 okay it's like two years ago mm-hmm a lot of people or I mean there would have been I imagine a ton of investors who bought the melon token are these investors also the asset managers so it's hard to say

who are the people owning melon tokens but you know there are a lot of crypto funds out there and I would expect that some crypto funds do have melon token or are exposed to the melon token so to that extent there they're you know men in token holder and potentially future users because as I said menon aims at being the infrastructure for asset management but the very first natural users with be crypto funds first I want understand how does the melon token actually factor into all of the smart contracts in the protocol so I'd like to start by saying that the melon token has nothing to do with governance and this

is really important it's completely decoupled from the governance model that we have and what we've tried to do with the can flake token muddle the economic token model is to provide proper economic incentives to the network so as we say you know the men and protocol relies much more on future developers who are going to build new cool things on top of melon and the way those people are compensated is by being paid in melon tokens where the melon council actually allocates men and tokens to people building on top of melon so if you're gonna be paid in

melons this man in token better have value right so what we've tried to do is make sure that the value of the melon token or the purchasing power of the melon token is linked to the usage of the network so that this aligns the interest of the developers and maintainer is working on that protocol with the success of the network so if you build something that is going to be used this will factor in the value of the melon token quite simply it is obey and burn metal so when you use let's say you're a fund manager you create a fund and you're going to be managing your phone for the next three years when you perform certain actions on your

fund so when you call some functions you're gonna be paying asset management gas so the same way you pay a theorem gas when your smart contracts on melon you're gonna be also paying asset management gas that gas is paid in ether so we don't want to impose on the users to actually have melon tokens that they could interact with the protocol because that's not cool and that's not that's like a little bit a UX barrier I would say so you're just gonna be like paying it it's like very very tiny fee almost negligible in either the ether that you paid in asset management gas is going to be sent to what we call the melon engine and this is a smart contract that receives all the ether collected as fee

from the network and there's religious two things it bears up melon tokens with the ether that it collected from the open market so you can come in and you have and you want to sell them you can sell them to this contract and this contract will buy your melon token at a premium which is defined according to a premium schedule based on the number of ether present in the contract so the Menin engine based up melon and then as soon as it gets menon it burns it so it acts as what you could call I guess a token sync so it's a way to get men and tokens out of circulation as the network usage

grows so if there is one thing to take away I guess from this is really the men and token is its value is linked directly with the usage of the network so I guess that would be like a very high level view of the melon ah mcc's mmm-hmm yeah definitely I'm sure there's a ton of blog post so you guys have written that go that goes deeper into that but I think on this note though I wanna I want to bring it back to the users these asset managers because there was a panel at m1 that I thought was very powerful and there was a panel that was moderated by Mona which I I guess at some point you guys are gonna release

these videos I will try to find a link to that but I thought what was really cool about this was Mona basically asked this audience consisting of a lot of asset managers who possibly owned tokens and and work in crypto whether or not they would be willing to bring some of their act their activities on chain as well through the asset management platform and there was a few but it was a little bit of like a strange moment where this there was this realization that like as much as a lot of these funds like to see themselves as like taking on incumbents and being very forward-thinking they still actually follow very traditional fund formats in terms of the way that they manage their actual assets

yeah so like they're still using I and maybe you can explain quickly what what are they using sure so the crypto phones that we all know managing a very new very new type of facet cat's rights the crypto asset class which is an asset test but the current infrastructure that we have is really not adapted to the management of those crypto assets and so those crypto funds have you know are kind of like taking your bets on the script I said so all of those crypto blockchain protocols that that we know about but what was interesting on this panel is they are making a bet and investing on those protocols but at

the same time they are still very reluctant to using them to using those protocols themselves and in our case it was it's very interesting because our protocol is targeting those very users those very crypto funds like we've built that for them and the reason is as you would expect that they are not ready or they don't feel ready to trust assets to smart contracts so the question of smart contract security is definitely you know big one had has been a priority for us but the what came out of this panel is that those asset managers are not comfortable with trusting assets to

smart contract at this point but not only at this point because if I remember correctly Mona was asking unlike ten years time frame and they were not comfortable with that so that's definitely something that we have to work on and try to to make them feel more comfortable also also in these panels we've got a few asset managers who actually committed to running a portion of their funds on Menon in 2019 so that was quite cool and I think that's what we want we don't we definitely don't want crypto funds to go like fool Mellon and like put all of their assets on Mellon next month but you know testing out the protocol with

like small amounts progressively that's definitely the approach that we're encouraging and that was kind of like it's the word dogfooding is that what people say I kinda don't like it it is sorting your own champagne it's in other ways to put it that was an amazing reveal though this idea that like there's these people who are investing in crypto and they'll spend a lot of time evangelizing the projects that they invest in and this mentality and the model of decentralization and this spreading of you know new asset classes and all of this stuff and yet to see that room to

see that like the peat the very people selling it are very very scared to touch it was there it was amazing but econo and worrying that these are investors these are the people who actually like to move from being an investor like in crypto to using a platform like Mellon port it seems like not a huge leap whereas if you're like investing in some deep protocol stuff like off chain computation mechanisms I understand why maybe a an investor won't ever get hands-on with those types of investments but with with Mellon it it was like it's awful close yeah yeah I think it will definitely take time which is not a bad

thing in itself but there was something else that was very interesting on this panel that I found is on the one hand they are scared of trusting their assets to it smart contracts because there is you know there is a chance that there will be a bug in the code and that they could lose their assets whatever happened with the wallet hacks the Dow hack and all of that stuff but at the same time on the other hand someone in the audience I think it was Edward four from web 3 asked you know if there was a way with some sort of engine governance system and to revert an action if if there was a bug in the code would that

make them feel more comfortable and the answer was unanimous I on the panel and they were saying that immutability is really important so on the one hand they are scared of a bug in the code that would lead to fund loss but on the other hand they are very reluctant to know the idea of maybe reverting it so very attached to the immutability feature of that change I mean I think it was I hope it left some of the people in the audience with a self reflection on like is it just play money and that's the point it's just like betting on things that are kind of completely unpredictable or is this

actually investment into an ecosystem and investment into these ideas mm-hmm hope it's the latter well I think that definitely brings us to a nice place to end the interview but I'm wondering is there anything else that you want to share with the zero-knowledge audience yeah sure I'm very excited and looking forward for our v1 lounge later this month and and also very excited about kind of like handing over officially the projects from our team to the Mellon Council that was presented to m1 so I think that's going to be cool well looking forward to hearing more and it's always a pleasure to hang out Jenna thanks Anna thanks for

having me thanks for being on okay and to our listeners thanks for listening you [Music]