Melon Protocol Reference

The Melon Protocol intends to present a decentralized, public, permissionless, robust infrastructure for the secure management of crypographic token assets on the Ethereum blockchain. It aims to be a viable, low-cost alternative to the current fund management ecosystem, which has evolved similarly across most legal jurisdictions.

This Melon Protocol is a collection of smart contracts written in the Solidity programming language and deployed to the Ethereum blockchain. Supporting functionality allowing web browsers to freely interact with the protocol is provided by the javascript library, Melon.js.

Motivation

Today, starting and running an investment fund is an arduous and capital intensive endeavor. To a large degree, the applicable laws and requirements - formidable hurdles that have evolved over time - have originated in the singular ideal: to protect investor capital.

The dizzying array of laws, regulations and requirements present obstacles to the practice of investment management. An individual or organization wishing to engage in investment management activities must be able to bear the costs to achieve compliance with their governing authorities. Initially, there are direct costs, such as legal and regulatory fees, set-up costs and service provider costs. Operating a fund incurs other indirect costs, such as maintaining regulatory reporting with back-office support staff, IT systems and integrations intended to satisfy requirements. The implication is that managing a fund is financially viable only after a certain scale of Assets Under Management. This scale is, in practice, quite significant. This necessarily reduces the number of managers by creating barriers to entry, resulting in an exclusive set of established players already operating at scale.

We believe that choice is good and that investment management talent has no compelling reason to be subject to hurdles when certain trust-, legal- and regulatory touchpoints are provably and reliably provided by the Melon Protocol.

Ultimately, the cost of what was initially intended as investor protection, is indeed borne by the investor, in that a portion of investment performance is consumed by these costs. We believe the Melon Protocol can achieve something the legacy investment management industry simply cannot: increasing investor protection, dramatically reducing the costs of fund operations, leveling the playing field for new and innovative managers, and making fund investment viable at any scale.