Asset management may not sound like a particularly exciting thing. But the truth is, the asset management industry is worth trillions of dollars and usually overshadows the entire cryptocurrency market in terms of it’s size. The industry may be huge, but it’s not without problems. Most asset management companies are overloaded with high fees and are often unavailable to average retail investors. This is why the creators of Melon, Melonport AG, made their blockchain-focused asset management project. It’s designed to allow anyone to not only participate in an digital asset managed fund, but to create one yourself and have others invest in it. In this article, we’re going to go over what Melon is, and how you can take part in this exciting potential financial revolution.
What is Asset Management?
For those that don’t know, asset management is a financial term that refers to different ways in which financial companies offer to help investors on various financial markets like the stock market. For example, mutual funds are a good example of asset management. Investors pay fees in order to be a part of a managed fund that is controlled by (supposedly) skilled people. These people then turn around and invest that money using their own skills and experience and try to turn a profit.
The problem with mutual funds is that, as mentioned above, they often have steep fees. Some mutual funds charge a fee to buy shares, and to sell shares out of the fund. While some mutual funds do not have these fees, they all have some form of management fee. To make things worse, many mutual funds have a minimum required amount to even get your foot in the door. For instance, $10,000 or more is often seen in a number of different managed funds. Even low-cost index funds have management fees, but they tend to be much lower since index funds are not actively managed.
Another major issue with asset management is that if someone wants to start their own fund, it requires many millions of dollars, an army of lawyers, and years of time spent going back-and-forth with filing fees. Basically speaking, this means that only the vested top players are able to participate in asset management and earn profits from doing so.
Democratizing Asset Management
This is where Melon comes in. The idea behind Melon is to create an infrastructure that allows anyone to create their own asset fund that is bound by a number of rules and regulations that can be configured upon the creation of the fund.
Photo: Hansen Wang of Melonport gives a presentation at the April 2018 Shanghai Ethereum Meetup
Everything is managed by smart contracts, and Melon never has any access to funds contained within various investment plans. Melonport itself describes their offering as a “public good” that is “like the Internet itself”.
The entry requirements for both investing in a fund and creating your own are extremely low. It appears that all that is required is that you own Melon tokens. Melon tokens are used to create a fund, collect earnings from a successful fund, as well as to invest in one.
Investing in a Melon Fund
Melon just went live on the Ethereum main net in February of this year. And so today, there is already quite a few community created funds that one could choose to participate in.
Currently, the way to access the list of available funds is through a link on the Melonport official website. This leads to a page on ipfs.io that lists all available choices. Clicking on one of these choices will reveal how the fund is structured, as well as its past performance. It details the rules that the fund must abide by in accordance with its smart contract, and what assets the fund currently owns.
One interesting component of Melon is that the rules under which the fund is created are essentially set in stone once it is set up. So, for example, a nefarious actor cannot create a fraudulent fund, and then empty the account and run away once investors buy into it. This is because the smart contract will prevent this action from occurring. That’s why Melon says that investors and fund creators do not need to trust each other. They only need to understand the rules of a particular fund. If everyone accepts the rules, then they will be forced to abide by them as any actions outside of these rules will be simply impossible to execute.
Melon Tokens (MLN)
Melonport had a stunning offering with its token sale selling out completely in a shockingly short time. Following this, the group released its Melon tokens, MLN, of which there will only ever be a maximum of 1.25 million.
Currently MLN tokens are trading for around $70 each, with an all time high of $240 each back in December of 2017. The current circulating supply is 599,400 MLN.
The primary use case for Melon tokens is for those that wish to participate in a digital asset fund through the Melon network. Either that, or they are used to set up a new fund for those that wish to do so.
MLN is available to purchase on the following exchanges:
Is Melon Worth Looking into?
Melonport has been around for a while now and so far they have acquired a strong community as well as having a number of happy investors. With their main net product now live, interest in the project should be steadily growing as more investors get involved in this type of investment.
What Melonport is offering is an entirely new way of investing in a broad collection of digital assets. Today, if you want to invest in cryptocurrency, the simplest way to do so is simply to buy it and hold it. Melonport, however, offers a whole new investment paradigm that is more familiar to those that are investors in a stock market. That being, investing in a well-designed Melon fund could allow you to have access to a wide spectrum of various digital assets without needing to buy and hold all of the different tokens and altcoins. Not only that, but Melonport claims that it offers strong security features so that investors do not need to worry about holding onto hundreds of private keys for all the different digital assets that the fund represents. Compare this to investing on your own in 100 different digital assets. One would either need to risk keeping funds on an exchange, or they would need to set up at least half a dozen or more multi-asset wallets and individual asset wallets in order to store everything.
Melon is not perfect, however. It’s user interface is still extremely rough and not very user-friendly. The team will need to work hard to develop an interface that is visually attractive and easy to understand at a quick glance. This is likely part of the goals of the team, but it’s difficult to say when such a aspiration may become a reality. For now, only the most patient and technically adept are likely to participate until this is resolved.
If you are willing to dig through the highly technical user interface, then you may find the experience to be quite rewarding and beneficial to your portfolio and your bottom line.
Photos via Robert DeVoe, melonport.com