BNY Mellon, the world’s largest custodian bank and asset servicing company with $1.9 trillion in assets under management and $33.3 trillion in assets under custody, has sent a cease and desist letter to a decentralized assets management project running on ethereum’s smart contracts. Melonport’s lawyers say:
“We have received a cease and desist letter from WalderWyss in the name of The Bank of New York Mellon Corporation today. You can find the respective letter attached to this e-mail.
They are declaring their concerns regarding the recent trademark applications by Melonport Ltd in Switzerland. Furthermore, they have announced that they will file opposition against the following trademark registrations today:
Mona El Isa, Melonport’s co-founder, said she was “returning the trademarks” as they were not “planning to keep them anyway. A decentralized protocol should have no owner.”
She says they “could have fought them – but since was going to return them anyway didn’t see the point.”
The matter should now end there, with the world perhaps spared a legal battle between the biggest assets servicing company and an ethereum based project that plans to automate much of it.
Melon is “exactly what fund admins (like BNY Mellon) do manually basically,” according to Isa who speaking to Trustnodes was kind enough to describe it in more detail:
“Its’ a decentralized protocol which allows people to set up and manage funds. You can build in the rule-sets of the fund using melon smart-contracts, eg., you can pre-determine:
– management/performance fees
– asset universe
– exchanges fund is allowed to trade with (currently integrated 0x, oasis dex, Kyber network and working on the next one)
– which addresses are allowed to invest in your fund
– risk managenent rules (max number of positions, max position size, max volatility etc)
Melon smart contract determine the NAV (funds performance) on-chain and calculates fees + distributes to manager.
Investors hold their private keys at all times and have security of knowing manager can’t trade outside of the rule-sets.”
These are on-chain funds, with the process described from the end-user’s perspective as “you send ETH, USDC, DAI (depending what the fund is denominated in) to the fund address you want to invest in and the smart-contracts send you back shares in the fund. The shares are redeemable for the underlying assets at any time.”
Basically, you pick a fund you like, say one that invests only in tokens with a market cap of less than $10 million, send however much eth you want to invest in those tokens, and then the actual investing part is managed for you based on the smart contract rules.
“The manager is not automatic (unless its an algo). Doesn’t have to be automatic, but the fund operations (invest /redeem/ fee calculation/ NAV etc/ etc) and regulatory aspects (eg risk management, ensuring that manager doesn’t take stupid risks or ‘run off’ with investors fund etc due to the rules) is all automated,” Isa says.
“All the underlying assets of the fund are held by fund smart contract,” the project says. With this seemingly being fully decentralized, running on eth and IPFS. If we want to copy it all and launch Melon Cash, for example, we can, we’re told.
This launched on mainnet for a brief period of just two weeks, but the full live launch is expected in February.
“We will be winding down the company after the project is complete. It has been on the cards for a while,” Isa says.
They will present at Devcon under the title “Melonport will not exist by Devcon 5.” That tile is “meant to be a bit provocative – ie. melon can live without melonport,” according to Isa.
They will be introducing the new governance model that oversees the project once it goes live, with it presumably incentivized by MLN, the protocol’s token that Isa describes as “asset management gas.”
“Same way that ETH is used on ethereum, computational units x gas price, but only called on a couple of functions in order to keep user price low and competitive.
User pays in ETH – it’s sent to Melon engine smart contract which sells ETH/buys MLN and burns.”
That means as the usage of Melon increases, the supply of MLN decreases, making it a sort of automatic “dividend” for MLN holders.
Some of it is offset by a fixed amount of inflation “which pays the maintainers and developers of the protocol.”
The rate of inflation has not yet been determined, nor whether it will run indefinitely or for a fixed period. Parameters which presumably will be decided through the new governance model.
That’s to be presented at Devcon, with the intriguing title now making a lot more sense. The company will be dissolved because the protocol will be launched. Afterwards, the project takes a life of its own.
With it sounding interesting conceptually. Rather than keeping your eth doing nothing, you can turn some of it into DAI and give it to the assets management smart contract in the hope it can increase it.
There’s risk of course as with any investment, but few have time to look at all these tokens and keep up with their developments if they want to part with some of their savings. They can instead just give it to the smart contract.
That’s what many do in the traditional world, with BNY and others investing on other’s behalf and managing trillions worth of funds.
Soon now ethereans can get the same service too, with smart contracts and professionals managing their assets in what sounds like a trustless way.