What is Enzyme Finance? All You Need to Know about MLN

Introduction

In traditional finance, asset management relies on intermediaries to oversee and regulate financial decisions, ensuring market stability and the safety of customer funds. These regulatory processes increase operational costs and overall capital requirements for asset management firms. Conversely, DeFi employs smart contracts on blockchains to handle regulation and intermediation. DeFi asset management simplifies requirements to funds, human oversight, and code (smart contracts).

Enzyme Finance serves as a digital asset manager that aggregates DeFi protocols into a single interface giving users the autonomy to design and implement their asset management strategies.

In this piece, we will explore Enzyme Finance, its value propositions, how to navigate the interface, and the latest developments.

What is Enzyme Finance?

Enzyme finance is best described as a decentralized asset management platform that proposes to simplify DeFi, natively integrating the best of DeFi protocols into a single interface. Its users are provided with 24/7 Net Asset Value reporting, automated fees, and programmable risk management. Asset managers can grant smart-contract-enforced permissions and establish trading roles within their organization i.e. trustless trading delegation.

Users can choose to access the protocol via the Ethereum or Polygon chain. It should be noted that each chain comes with its disadvantages, the Ethereum chain provides a larger pool of assets although it might be more expensive to create a vault. On the Polygon chain, creating a vault is cheaper although there’s a reduced pool of assets.

Brief History of Enzyme Finance

Enzyme Finance previously known as Melon Protocol was founded in 2016 by Mona El Isa and Reto Trinkler as a product of Melonport AG. Mona El Isa is the founder of Avantgarde Finance and a former Vice President at Goldman Sachs while Rito Trinkler is a mathematician. Melon rebranded into Enzyme Finance in 2019, after Melonport dissolved its organization and passed its management to the Enzyme Council, a decentralized autonomous organization (DAO).

Use Cases

Enzyme Finance is targeted at the asset-management sector as a product that can be used to manage funds, indexes, and treasuries for DAOs. Asset managers can participate in lending, borrowing, staking, swapping, etc, using a single interface while depositors can delegate the research and adoption of the best investment strategies to professionals while maintaining full custody of their funds.

Unique Features

Whitelabel App

Whitelabeling is the legal process of buying a company’s product to rebrand it as your own. Enzyme Finance’s whitelabel feature allows asset managers to customize their vault based on Enzyme’s code, host it on an independent website, and operate it as it suits their brand direction.

Fiat On-Ramp

The Enzyme Onramper feature allows Enzyme users to buy crypto natively in-app, with support for more than 180 countries and over 95 fiat currencies. Onramper is a fiat-to-crypto aggregator that allows users to buy crypto directly with fiat currencies by recommending the best route for a successful transaction. It supports providers such as Coinify, Itez, Indacoin, MoonPay, Wyre, Xanpool, etc.

Governance Model

The governance model gives users full control of their choice of product version, although users have the option to benefit from improvements made to the protocol as verified by the Enzyme Council. The Enzyme Council as a decentralized organization ensures that decisions are made in the best interest of the users, following thorough checks and analysis.

The Council is composed of the Enzyme Technical Council (ETC) and representatives from Enzyme User Representatives (EUR) in a ratio of 5:2 respectively.

The Enzyme Technical Council provides technical recommendations for the community, and efficiency in decision-making processes regarding protocol upgrades, network parameters, and resource allocation. The Enzyme User Representatives are obliged to collect, prioritize, and deliver user feedback to the Enzyme Council on behalf of users.

How Does Enzyme Finance Work? Navigating the Enzyme Interface

Source: Enzyme Finance — Vaults can be viewed and rated by their AUM, performance over the last month, week, or day

Enzyme Finance operates customizable asset pools known as vaults. A vault can pool up to 20 tokens with investment strategies determined by the manager. For a seamless experience, Enzyme Finance aggregates a variety of DeFi protocols and assets, including Compound, Kyber Network, Yearn Finance, Uniswap, Balancer, Curve, and many others.

Successfully created vaults mint vault shares for depositors to invest in. The next section gives a step-by-step process of creating a vault.

How to Create a Vault on Enzyme Finance (For Managers)

Source: Enzyme Finance — Setting up a Vault

Step 1: Visit the web app (app.enzyme.finance). First-time managers on Enzyme should connect their wallet to the Ethereum or Polygon Chain. There’s also an option to sign in by email.

Step 2: Asset managers can proceed to create a vault, set up the required parameters (name, symbol, denomination asset, fees, deposit limit, etc.), select a pool of assets they would like to invest in, and generate an address for deposits.

Step 3: Once you’ve configured your Vault settings, you’ll be presented with a summary of your choices. After thorough verification, accept the ‘’Terms and Conditions” and click the Create button to start the transaction signing process. After the transaction has been mined, you should see a buy shares button on the top right of the screen. From here, you can invest in your vault with the denomination asset or seed it with a pre-existing portfolio.

Step 4: You may authorize additional addresses to trade on the vault’s behalf. Note that authorized addresses will have permission to manage your positions. You can add these permissions and revoke them at a later date.

How to Join/Deposit into a Vault on Enzyme Finance (For Depositors)

Step 1: First-time depositors on Enzyme should connect their wallet to either the Ethereum or Polygon Chain, there’s also an option to sign in by email.

Step 2: From the ‘Discover’ page, you can explore various vaults that are active across the Enzyme ecosystem, assess them based on performance, and view their portfolios, before buying shares into any vault of your choice.

Step 3: To deposit into an Enzyme Vault (purchase a share), make sure you’ve got some of your chosen network’s native asset (ETH or MATIC) to pay for gas, then click the ‘Invest’ button in the top right corner of the Vault’s page.

Source: Enzyme Finance — You can invest in a vault using ETH or MATIC (depending on which network the vault is on) or the Vault’s denomination asset (the benchmark asset the vault is measured in), WMATIC in the image above

Step 4: Choose an amount to invest and approve it; this transaction grants the vault permission to spend the assets in your wallet, and this amount is deposited in return for vault shares.

Step 5: Ownership in Enzyme Vault is represented by an ERC-20 token that enables you to redeem your shares.

WARNING: Do not send assets directly to the vault’s contract address; they are not redeemable into vault shares.

Monitoring and Redeeming Your Investment

Source: Enzyme Finance — After setting up your account, On the Dashboard, you can view your deposits and the performance of the vaults you’re invested in

To monitor your deposits, use the Deposits tab on the dashboard, you can see the total value of all your investments and a table summarizing your positions. You can also find your Deposit History, which shows when you’ve bought and sold shares.

To redeem your shares, follow these steps:

Step 1: Access your vault and go to the Vault’s info page.

Step 2: Click on the ‘Redeem’ button in the top right corner of the page.

Step 3: A dialog box will appear showing your current balance and an input field to choose the amount of shares you want to redeem.

Step 4: Select the desired amount and click ‘Continue’.

Step 5: Review the information on the transaction page that appears next and click ‘Submit’.

Step 6: Your connected wallet will prompt you to confirm the transaction.

Step 7: Once confirmed, the transaction will be processed, and the appropriate token balances will be sent to your wallet.

Types of Vault on Enzyme v4

Source: Enzyme Finance; Types of smart vaults available on Enzyme V4 (Sulu) and their features.

In the latest software version v4, also known as Sulu, Enzyme Finance introduces three vault types, each vault is differentiated by pre-configured levels of trust between depositors and managers. These vaults are classified into Public, Private, and Hybrid

Public Vault

In this vault, trust does not necessarily need to exist between Depositors and the Vault manager, as most of its features prioritize depositors’ protection, and access is not restricted i.e., any depositor can join the vault.

Private Vault

This is a vault with full trust, where Depositors trust the Vault Manager and vice versa. Depositors join through an allowlist, a KYC procedure, and legal documentation are also included for both parties. Its features prioritize access to DeFi activities. A recommended use case for DAO treasuries.

Hybrid Vault

This vault also has limited access, and the vault manager can choose to approve depositors. It prioritizes protection from malicious depositors. Usually, the vault manager will be a trusted entity and legal documents might be involved.

Supported Integrations

Source: Enzyme Finance

A vault on Enzyme helps interact with DeFi activities by integrating DeFi projects. Some integrations are grouped here according to their services.

• Trading: Curve Pools, Kyber Network, Paraswap, Uniswap 1inch, 0x Project
• Lending and Borrowing: Maple, Compound, AAVE
• LP Pools, Staking, Yield Farming: Aura, Uniswap, Idle, Curve Pools

Note: Check the website for a full list of supported and latest integrations.

What is MLN Token?

The MLN token is an ERC-20 utility token that grants access to the protocol and is also used to fund the development, maintenance, and marketing activities of Enzyme Finance.

Tokenomics

MLN has a circulating supply of 2,365,228 tokens, with 300,600 MLN tokens released per year, most of which are allocated to projects, developers, maintainers, and auditors who the Enzyme Council believes can add value to the Enzyme ecosystem. In rare cases of unspent tokens, they are burnt.

MLN also generates access fees calculated as 25 basis points (0.25%) of assets under your management in the protocol; these tokens are automatically burned upon collection. Users that fail to pay fees in MLN, risk diluting their vault shares by 50 basis points (0.5%).

Fund Raising

Enzyme Finance raised $2.9 million through an initial coin offering (ICO) on February 15, 2017, with funding from venture capitals, including Defiance Capital, Placeholder Ventures, and Collab+Currency. The specific contribution from each venture capital firm was not disclosed.

Partnership: Avantgarde Finance

Source: Hub71

Avantgarde Finance is a team of experienced professionals in decentralized and traditional finance. They are pioneers in developing professional-grade products and services to optimize the asset management experience. Avantgarde Finance is tasked with the core development of Enzyme Finance.

Is Enzyme Finance (MLN) a Good Investment?

In seven years, Enzyme has grown its portfolio to over $150M in assets under management. Managed by a DAO, Enzyme Finance has proven to be a solid and trustworthy project in the DeFi space. Regarding security, the United Kingdom has certified Avantgarde Finance’s principal developer for executing a thorough security management program.

Investors are encouraged to research and evaluate their risk tolerance before investing in any cryptocurrency because, like any investment, investing in Enzyme Finance carries certain risks. Investors should consider the cryptocurrency market’s volatility and potential regulatory changes.

Note: Investing in Enzyme Finance or any other crypto project does not guarantee a profit and could result in a capital loss.

How to Own MLN?

To own MLN, you can use the services of a centralized crypto exchange. Start by creating a Gate.io account and getting it verified and funded. Then, you are ready to go through the steps to buy MLN.

News on Enzyme Finance

Enzyme Integrates StakeWise V3 to Offer ETH Staking with No Minimum Deposit Limits

Source: Enzyme Finance

On January 31, 2024, Enzyme announced its latest integration with StakeWise V3. Asset managers can now stake any amount of ETH, track earnings in real-time, and help decentralize the Ethereum network with StakeWise V3.

StakeWise is a liquid staking protocol that enables non-custodial staking of ETH for individuals and organizations. It also provides the tools & software to allow anyone to launch their staking pool and earn fees by running validators for others. This integration enables Enzyme users to find the best staking terms for their ETH, allowing them to pick the best operators, lowest fees, and most decentralized setups.

Enzyme Finance Hints at Expansion; Details soon

In a post on X (formerly called Twitter) by Avantgarde Founder Mona El Isa, on February 5, 2024, she highlighted that fund management now constitutes less than 10% of Enzyme’s overall usage. Therefore, there is a need for Enzyme to evolve and expand into more niches.

She mentioned that while Avantgarde Finance will continue to focus on the fund management sector, Enzyme’s revised grants program will incentivize the development of emerging use cases.

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