Enzyme is an Ethereum-based protocol that enables on-chain asset management and decentralized finance (DeFi) investing. The protocol allows for the creation and operation of customized on-chain investment funds with flexible mandates.
The native utility token of Enzyme is MLN, which enables governance of the protocol and provides access to various features. Enzyme launched in 2020 and was founded by cryptocurrency investment firm Framework Ventures.
Key Features of Enzyme
Some of the key capabilities Enzyme offers include:
- Fund Creation — Anybody can become a fund manager and launch customized on-chain investment funds.
- Investing — Investors can invest capital into created funds using ETH and ERC-20 tokens.
- Flexible Mandates — Funds have granular control over investment objectives, assets, fees, caps, etc.
- Automated Compliance — Protocol level controls like transfer limits, whitelists, and circuit breakers.
- Asset Management — Perform permitted actions like trading, lending, staking on behalf of the fund.
- Transparent Fund Tracking — All fund activities recorded transparently on-chain.
Enzyme empowers both fund managers and investors by expanding access to on-chain asset management.
Utility and Function of the MLN Token
The MLN token facilitates several functions in Enzyme:
- Used to pay gas fees for creating and managing funds.
- Provides voting power in governance decisions on protocol changes.
- Staking MLN earns yield from a portion of network fees.
- Access to advanced fund templates and features requires staking MLN.
- Controlling ENZYME tokens enables becoming a developer on protocol.
- Value accrues to MLN from growing network activity over time.
This range of utility creates perpetual demand and value for the MLN token.
Technical Architecture Behind Enzyme
Enzyme utilizes several technical components and patterns:
- Smart Contracts — Fund logic and constraints implemented as modular smart contracts.
- Oracles — Integrates decentralized price feeds to trigger investment rules.
- Zaps — Zapper API integration provides access to other DeFi protocols.
- Developer Incentives — ENZYME tokens distributed to contributors improving the protocol.
- Ethereum — Leverages Ethereum for security, immutability and composability with DeFi.
- Governance — MLN holders control upgrades, parameters and treasury.
These building blocks enable Enzyme to offer sophisticated on-chain asset management capabilities.
Enzyme Fund Use Cases
Enzyme funds are flexible enough for various investment mandates:
- Algorithmic trading funds programmed with on-chain trading logic.
- Index funds tracking baskets of crypto assets using oracles.
- Venture funds investing in early stage crypto projects.
- Lending funds automatically depositing assets on lending protocols.
- Derivatives funds transacting in synthetic assets and options.
- Staking funds focused on earning network rewards and governance power.
Much like traditional fund structures, Enzyme funds cater to diverse crypto investment strategies.
The Future Roadmap for Enzyme
The Enzyme team is building towards goals like:
- Support for additional asset classes like NFTs.
- Expanded chain interoperability beyond just Ethereum.
- Tools and templates for easy fund creation by anyone.
- Fund management analytics and reporting.
- Integrating with institutional crypto custody solutions.
- Shielded pools that encrypt fund strategies and activities.
- Decentralized governance transition and protocol ownership.
Achieving these milestones will further establish Enzyme as a leader in on-chain asset management.
In summary, Enzyme provides a robust infrastructure layer for managing crypto investments on-chain in a decentralized, yet customizable way. It unlocks an exciting new paradigm for fund managers to deploy capital in DeFi and for investors to gain exposure easily.
With its advanced feature set based on sound technical foundations, Enzyme appears positioned to become a core component of the rapidly evolving decentralized finance landscape.