"You Can Wake Up With an Idea for a Fund and Deploy it in Minutes:" Melon's Mona El Isa
Mona El Isa discusses how Ethereum is slashing the time and cost of asset management and reveals what's coming up on Melon's v2.
Hello Defiers! This weeks podcast episode is with Mona El Isa, the co-founder of Melon, a decentralized asset management protocol. Mona tells the story of how she started her career at Goldman Sachs trading equities, derivatives, and all kinds of financial instruments, for a decade. She then went to work with one of Goldman’s hedge fund clients, where she managed a long-short portfolio. With all that experience and $20 million dollars from a seed investor, she ventured on her own to launch a hedge fund —but failed. The time, costs and administrative hassle were too much to handle even with an investment of millions, which in that world, is actually pretty tiny.
She took a break and then at a beach in Brazil she stumbled across an article on Bitcoin and that changed everything. Finally, there was something in finance that made sense. She dove into blockain technology and crypto. She started going to bitcoin meetups, where she didn’t exactly encounter the most welcoming environment but persisted. She came to the conclusion that the next step for her would be to build a blockchain-based protocol so that nobody would have to experience what she did when trying to set up an investment fund. A platform that made the process so much cheaper, faster and easier, that anybody could become a hedge fund manager. That’s how Melon Protocol came about.
In the interview, Mona reveals plans for Melon’s version two, talks about a vision where all assets become tokenized and traded on distributed networks, and even announces the project’s new name.
🎙Listen to the interview in this week’s podcast episode here:
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Mona El Isa: My background is in traditional finance. I spent most of my career there. I started straight out of university on the Goldman Sachs trading floor in London. I was trading cash equities initially, and market making, and pretty soon afterward, they also gave me a proprietary book to trade for them. I was basically using the firm's capital to invest across equities initially, and then derivatives, futures, commodities, CDS, and all that stuff. It was a fun, very high adrenaline job. I spent nearly a decade there and then move to work with one of our hedge fund clients, where I was a long short portfolio manager for four years.
My last career move before forming Melon was to try and launch my own hedge fund, and this was a complete disaster. I was completely going into this opportunity with starry eyes and dollar signs and thinking finally, I can launch my own business. I had a seed investor who's willing to give me $20 million to get started, which was really small compared to what I had been managing previously in my two previous jobs. But I was thinking, this is my baby, and I can grow it and I can really make something out of it. It turned out to be a complete disaster.
“My last career move before forming Melon was to try and launch my own hedge fund, and this was a complete disaster (…) I was completely unprepared for the high barriers to entry and asset management for a starting emerging manager.”
I was completely unprepared for the high barriers to entry and asset management for a starting emerging manager. I was completely unprepared for the high cost, not just money, but also the time required to set up a fund, research, all the different service providers, etc. I was also very spoiled: when we were in the larger institutions, we just had people doing stuff for us all the time, which you just take for granted. I closed the fund after a year, and was pretty depressed and upset about how bad it had gone. The next thing was basically Melon, how to make it better.
Camila Russo: Why specifically, crypto? After shutting down this hedge fund in traditional finance, what made you look into crypto for your next project?
Bitcoin in Brazil
ME: That's a great question. I think one of the questions I had a voice in my head during that very tough year, and it just kept saying to me, why is everything so complicated in the 21st century when we have so much technology available to us? How is it that we're still booking trades on paper, we're still reporting using Excel sheets? We don't have a standard for each different asset class. How is it? I just couldn't understand.
“How is it that we're still booking trades on paper, we're still reporting using Excel sheets?”
We were talking about driverless cars in some industries. We're talking about all these insane technologies in terms of artificial intelligence and, and we can't get finance right? There's so much money in finance, how have they not figured this out? I never really explored that question because I never really had much time to do that. But after sort of closing the fund, I decided to take some time off and I was lying on a beach in Brazil, and I was reading some articles and I stumbled across an article on Bitcoin. All of a sudden, I was like, oh, finally, something in finance that makes sense; this technology is advanced, it’s immediate, it’s efficient.
Then I got obsessed and that led me to Ethereum. Then I started hearing about ICOs and tokens and I started to imagine how all assets could eventually be tokenized. It wasn't like I was looking for crypto, for me it was, I stumbled across it by accident, I suddenly understood what this could mean. I was like, oh, so if all assets in the world could eventually be tokenized, which clearly they will, because you need some efficiency in finance, then we can basically automate all the stuff that I struggled with in the last year using smart contracts. I guess that realization, once I made it, I was like, time off over, I need to make this happen. What do I do to make this happen?
CR: You mentioned ICOs, was it around 2017 era?
ME: This was at the very beginning of 2016. I think the only project that ICO-ed around that time was been a handful of ICOs or token sales. More and more, obviously, started to accelerate, more and more it started to happen. But for me, it was really just the realization that this could happen and it already had happened with Bitcoin and Ether. Why wouldn't it just happen with everything else?
CR: Still pretty early in the token boom phase, that's really interesting that you decided to make the plunge and bet on tokenized assets. What were the next steps going forward that led you into founding Melon?
Bitcoin Meetup in Zurich
ME: Once I realized I was really hooked on this space, and what it meant for finance, I couldn't take any more time off because my mind was just like always thinking about crypto and blockchain technology. I thought, how can I basically immerse myself into this world being a non-technology person and all of this stuff being so technologically advanced?
I basically decided to get on a plane back to Zurich, which is where I had my apartment. I had read that the Ethereum Foundation was in Zug, which was 20 minutes from my apartment. I thought, I'm just going to immerse myself into the crypto scene and I didn't know where to start. On meetup.com, I found a Bitcoin meetup, and I showed up, and they were, I think, maybe 12 guys there. All of them were software developers, and they just looked at me and they said to me, “Sorry, I think you're in the wrong place. This is the Bitcoin meetup.” I was like, no, this is where I want to be. They all rolled their eyes and were like, who is this girl and what does she want? I was just persistent. I was like, I'm sitting here, I'm going to listen to everything you guys are saying, I'm going to take notes, and I'm going to go home and I'm going to research this stuff afterward, and try to make sense out of it.
“Sorry, I think you're in the wrong place. This is the Bitcoin meetup.”
I think it was my third Bitcoin meetup when one of the guys finally decided that he was going to speak to me. He turned around and was like, okay, so who are you? What are you doing here? Everyone wants to know, and we’re surprised you keep turning up. I said, well, this is my story, I don't know anything about tech, but I'm super interested in what this could mean. I am just going to sit here and listen, I don't want to bother anyone, and I'm just trying to learn. But I understand that I'm too dumb for you guys, so just indulge me and let's try and make this work. He's like, wow, you're from finance! We didn't know that. He was like, we've never had anyone from finance interested in crypto. This is like the first time we managed to attract someone from the financial industry. So then they were like, oh, wow, this is big for Bitcoin, you know, people in the finance industry are starting to care.
All of a sudden, they were like, let us help you make some introductions. You can mentor some people in Zurich, who are working on some cool startups, and they'll teach you about the tech and maybe you can teach them a little bit about business and companies and finance because a lot of them are trying to set up their companies but don't know anything about that topic.
From there, I started mentoring a bunch of people and one of them ended up becoming my co-founder Reto Trinkler, we cofounded Melonport together at the end of summer 2016, and that was basically the start. We did our token sale in February 2017. It was a small token sale, it was before the bubble. But I think the bubble basically started right after that. When we did our token sale, Ethereum was at $11 when we did it.
CR: Can you tell me more about Melon itself? I understand it is an asset management protocol, but what’s the idea behind it? How does it work and why does it need a token?
[ … ]
Paid subscribers have access to the full transcript, including sections on:
New Melon name
“So we've decided to rebrand and the new name is Enzyme protocol. We were playing on the idea of accelerating a financial revolution, accelerating the asset management industry.”
Removing complexity
“The idea is to remove the complexity (…) automating that whole middle layer, and making it so that fund managers can just set up a fund and just start trading.”
“This is how a lot of errors are uncovered. Some of these errors can be very costly to the fund and its investors. We automate all of that process by using decentralized finance and Melon contracts.”
The Melon token
“Whilst the idea of doing it in ETH, it sounds simpler, it doesn't really give protocols the tools to adapt their economics the way they should have that freedom to do what's best for the protocol.”
Reducing time and cost
“In traditional finance, you would probably struggle to launch a fund with less than $100,000, and your ongoing costs would probably be at least $50,000 to $75,000 per year, regardless of your size (…) With Melon, it's costing you right now around 100 bucks.”
Melon/Enzyme v2
“I would say v2 is almost an almost an entirely new protocol.”
“The three big takeaways, I think, are lower gas and speed, upgradability being incorporated, and much, much higher asset universe.”
Adoption
“I don't think that we've done a great job attracting users in the first couple of years, or the first year and a half of Enzyme. I think a lot of that has been down to the UX and UI problems, and I think that, hopefully, we have got that into a much, much better place for V2.”
Big picture
“I do see it [Enzyme] as the infrastructure that should underpin the whole asset management industry one day and that doesn't just mean native Web 3.0 DeFi, but I do believe that traditional finance will move on-chain eventually.”
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About the founder and editor: Camila Russo is the author of The Infinite Machine, the first book on the history of Ethereum, and was previously a Bloomberg News markets reporter based in New York, Madrid and Buenos Aires. She has extensively covered crypto and finance, and now is diving into DeFi, the intersection of the two.
