Melon Token Sale: hedge fund management on the blockchain - Smith + Crown

Melon Token Sale: hedge fund management on the blockchain

The Melon token sale raised almost $3 million in minutes. The open-source Melon protocol will enable distributed digital asset management on the Ethereum blockchain.

Update: Melonport raised almost $3 million in its first token sale. It hit its cap of 227,000 ETH within 10 minutes, attesting to the popularity of the protocol and the momentum its team has built. Tokens will be available for trading in four weeks.

The open-source Melon protocol will enable distributed digital asset management on the Ethereum blockchain. Anyone can set up, manage, and invest in digital assets. Performance is easily demonstrated and audited. A user can invest in other portfolios or have others invest in hers. The core software will support trading multiple tokens through a single interface, while add-on ‘modules’ will open features like price feeds, risk calculation, and KYC compliance.

In traditional finance, hedge funds manage assets smartly on behalf of others. However, the fledgling crypto-finance industry lacks the technological infrastructure to keep performances auditable, secure, and as frictionless as possible. To solve this, they have created the Melon protocol.

Migrating hedge funds to a blockchain also brings many benefits to the hedge fund industry itself. These include the following and broadly amount to lowering the barrier of entry for hedge fund management:

  • More transparency of fund performance, which would help in identifying poor performers
  • Reducing overhead costs (for auditing, booking, reconciliation, settlement)
  • Smaller up-front capital costs supports smaller funds, which themselves predict higher returns
  • A leaner and more diverse hedge fund industry could allow smaller investors to participate

This could help a fund-management industry emerge for existing crypto-assets and support existing traders who are migrating traditional assets to blockchain tokens. The protocol will be useful for managing one’s own funds too.

A live working version on Ethereum is expected in late 2017 or early 2018. The Melon protocol will consist of a core software, which provides the basic tools for portfolio managers, and a set of modules, which provide advanced features such as price feed, volatility calculations, etc. Token inflation will compensate developers for creating these modules, which fall into five categories of difficulty. Each category will be eligible for a different share of inflation, although the exact inflation rate hasn’t been determined.

What is the token being sold?

Melon tokens (MLN) will be used to pay the usage fee for the platform. Any trading will require a small amount of Melon tokens, similar to per-trade tax. High-frequency trading would consume a high amount of tokens, while low-frequency trading would consume a smaller amount.

This tax will go into one or a set of smart contracts. Stakeholders, who will be identified in future governance planning, will be able to vote on how to spend them.

The tokens will initially exist on the Ethereum blockchain, and when Melon launches, will support trading all tokens on Ethereum. When a multi-chain platform, such as Cosmos and Polkadot, has been finalized, this may change. One of Melon’s ambitions is to support both public and permissioned blockchains; this may require migrating platforms.

What are the sale terms?

A maximum of 1.25 million MLN will be created to support this crowdsale and a future one to support additional phases of work. 500,000 are available during this crowdsale. 150,000 slated founders, advisors, and corporate partners will be locked and non-tradable for two years or until Melon is fully deployed. 100,000 tradable tokens will be created for the Melonport company to use. 500,000 will be kept in reserve for a future crowdsale.

Note: The Melon Protocol will create additional tokens after launch through inflation. These percentages only reflect MLN distribution at launch and will change as more tokens are created, 100% of which will go to module developers. The inflation schedule hasn’t been defined.

The price was set at 2.2 MLN/ETH, setting a cap on the raise of 227000 ETH, roughly $2.9 million with ETH price at $12.8.

The sale is not open to US citizens. Crowdsale participants must digitally sign a statement that they are not a US citizen. MLN will be tradeable four weeks after the sale. Interested US participants could buy them on the secondary market.

What is the project status?

At time of writing, Melonport has developed the core software, an initial set of modules, and a simple user-friendly portal to the protocol. It is live on the Ethereum testnet. Melon has confirmed various partnerships for beta testing: CoinFund, Token Market, Cryptodex, and more.

This year (2017) will involve refining the core software, building more modules, finalizing partnerships, and several audits. They intend to launch later this year or early next.

In February 2018, after the launch of the live version, the team will focus on the governance model and multi-chain connectivity. The current plan is for the growing fund of MLN transaction taxes to fund solutions to these two challenges.

Who is the team behind the project?

Melonport is the company developing Melon. It currently consists of two co-founders and several advisors.

  • Reto Trinkler is the developer behind Melon and the CTO of Melonport. He studied mathematics from ETH Zurich–a prestigious technical university in Switzerland–and began developing Ethereum smart contracts in 2015. He helped develop software for blockchain consultancy Brainbot Technologies and developed a trading algorithm for sport betting.
  • Mona El Isa is the CEO of Melonport. She is a former trader at Goldman Sachs, worked at Geneva-based macro fund Jabre Capital in 2011, and launched a hedge fund in Geneva before moving to the blockchain industry.
  • Advisors include well known blockchain developer Dr Gavin Wood, Swiss entrepreneur Dr. Andreas Glarner, and Hong Kong-based venture capital partner Jehan Chu.

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