Joe Petrowski:        00:02        Welcome to Relay Chain. A podcast produced by Parity Technologies where we discuss all things Substrate, Polkadot and Web3. Welcome to The Relay Chain, Mona. You're from Melonport. Can you introduce yourself?
Mona El Isa:        00:27        Hi, yes. So, thanks Joe for having me here. I am or I was from Melonport. I was the co founder of Melonport in 2016. Prior to that, I had a career in finance where I started off as a trader and market maker at Goldman Sachs for eight years in London. I then moved to the hedge fund world and became an investor, running a portfolio for four years and then I tried to jump out of that and launch my own long short equity fund in Zurich with a much smaller amount of capital. It may seem big to us, it was about $30 million dollars but it was actually very small for the industry standard. And due to the size of that fund, I actually ended up having to shut it down after a year being swamped by the overheads and the operational and administrative costs around that.
Mona El Isa:        01:16        So that came to an abrupt end. But one of the biggest learning experience from that was how inefficient the financial system. Especially the engine that supports the financial industry. And being for the first time the one doing all the operations and dealing with all that was a huge learning curve and a huge eye opener into how these processes actually worked. So I went out of that experience looking to take a year out and in that year out one of the things I was really passionate about was fintech and seeing, like there must be something happening in the technology world that could improve these processes that lead me to blockchain and ultimately led me to co-founding Melonport.
Joe Petrowski:        02:01        Okay, so before going into the inner workings and the problems it's trying to solve, we're kind of addressing two audiences and one group that comes in the crypto and they are kind of like fuck the banks. On the other end banks are looking at blockchain technology but a lot of them are looking at we want blockchain but we don't want permissionless or public or censorship resistance.
Mona El Isa:        02:21        Yeah, how can I use a blockchain in a way that doesn't disrupt me and kill my business?
Joe Petrowski:        02:25        Yeah so to get everyone on the same page. Why is banking and asset management valuable to society? And then why should be banks be interested in open, permissionless tools?
Mona El Isa:        02:36        I think some of the blockchain applications that are coming up in finance are hugely empowering to end users, to savers, to people who ultimately want to preserve the capital they work hard to earn. And this can be done in like many different ways and it depends on what use case you're talking about, within the kind of whole financial sphere of blockchain. We have always focused on asset management. And asset management is usually capital preservation of some kind. So how you invest your savings? How do you create a return on capital which ultimately exceeds inflation because otherwise there is no point? How can you do that in a way where you're not suffering for being a smaller player in the market?
Mona El Isa:        03:19        The way it works today is most of the top investment funds that you could invest in have minimum ticket sizes of maybe $5 million and they have huge caveats attached to them. There are huge fees attached to running an asset management firm. That means this eats away at returns and ultimately it means that the barriers to entry in asset management are incredibly high. So when you think about what that means, it means that in order to survive past the first year, it's estimated you need to have about 200 to 300 million assets under management to survive as a fund manager or an asset management group.
Mona El Isa:        03:52        If you think about that, then that means that you're not staying in the market because you're the best at what you do. It means you're staying in the market because you're big. So a great statistic I read in a report a couple of years ago was that something like 95% of the world's assets are invested in 500 of the largest funds, which means that people go for a bigger is better not performance is better. To make matters worse, the small guys can't get into some of the better funds or even see the better funds because there is no visibility.
Mona El Isa:        04:24        So what protocols like Melon do is they completely dramatically reduce the barriers to entry so setting up, managing, operating, regulating of funds can be completely automated by smart contracts. It makes the assumptions that all assets are going on chain in some kind of digital format and that's a really long term view we have but it's something that we fundamentally believed from day one. It means that if you take that assumption that means that the cost of setting up a fund goes from several hundred thousands and several months to a few dollars worth of eth in a few minutes. That's ultimately what we've believed we've done.
Mona El Isa:        05:00        We've reduced the barriers to entry. So, hopefully now performance and track records can be on chain. People can easily access investible vehicles through Melon protocol based vehicles. Ultimately, they can transparently see or assess which managers or asset management strategies they want to be a part of and gain access to that easily, regardless of their ticket size. Regardless of any other constraints and in a permissionless transparent way.
Joe Petrowski:        05:29        And what's the advantage to doing that in a permissionless transparent way compared to some other record keeping?
Mona El Isa:        05:36        Well, it's public and accessible to everyone to see. If it was done in a private way, again, it would come with restrictions of some sort. You'd need to probably be, if it was done in some private bank blockchain, you'd probably only be able to access that data if you were a client of that bank. Maybe you could only be a client of that bank, let's say, if you had a minimum account size of $10 million and so on and so forth, it's again, it's exclusive and we aim to be inclusive to everyone and anyone out there who wants to participate.
Joe Petrowski:        06:07        Yeah so when we talk about tokenization of assets, you're working a little bit lower in the protocol. Like you're more tools for the coordination and not necessarily just a tokenization platform.
Mona El Isa:        06:18        Exactly.
Joe Petrowski:        06:19        What are the advantages of tokenizing assets because a lot of people mention liquidity as the first one. But Meltem Demirors and Jill Carlson did a really good episode of their podcast about why that's not really true. Can you talk about some of the other advantages? Or if you disagree with them?
Mona El Isa:        06:35        Yeah, to be honest, I see the advantages and the disadvantages of having these kinds of tokenized assets. At least when the vehicles are less liquid, there can be a quite a lot of negative or disadvantages associated with it. For me, what I get so excited about is not so much the transferability of the securities but it's about what you can do within the tokenized vehicle. I think that's where we really focus. So often what eats up a lot of the overheads in the financial space is inefficient operational administrative and compliance needs, right? So when you're managing other people's money, the regulators really put a big emphasis on making sure you don't run away with that money. You don't want another Maddoff. You don't want another rogue trader situation because ultimately it impacts the retail investors who are the innocent people trusting you with their money.
Mona El Isa:        07:24        So as a result, regulation has gone up, up, up in the last few years, especially since Lehman. And as a requirements banks and financial institutions and asset managers have to hire more people in order to make sure that they are compliant with those regulations and all of this stuff is still done absolutely manually, paper based or spreadsheet based. It's subject to error because trade subtly plus 2, T plus 3, and it's incredibly expensive and inefficient and very often if you do catch a mistake, it's like three days later and it's already cost you a fortune.
Mona El Isa:        07:57        So what we're trying to do within the tokenized vehicles is also technology regulate and operate those vehicles so that the rules are pre written in smart contract code and can't be breach from the outset, so it's almost like a pre trade check enforced by the blockchain.
Joe Petrowski:        08:12        Yeah I actually have some personal experience with this. I didn't set up a fund or anything, but even setting up a small company that managing investors money, even if it was just buying hardware or some other asset to work with, I could see very quickly that you need a lot of investments in order to just pay the up front legal costs. I don't want to raise millions of dollars because this is my first business. I don't want to have that kind of responsibility. So like for an asset manager, it seems almost counter productive to start out ... oh I need $300 million because would you even want that.
Mona El Isa:        08:49        Exactly.
Joe Petrowski:        08:49        That's not like a good learning experience.
Mona El Isa:        08:51        Yeah absolutely.
Joe Petrowski:        08:54        A really cool thing that you guys did is you actually over delivered on a two year road map. And a lot of these crypto companies in the last couple years said oh we're going to create this thing and then dissolve the centralized entity that controls it and they never do. You guys actually did.
Mona El Isa:        09:10        It's in the process of being wound down yeah. Yeah I mean, first of all meeting the roadmap was challenging. I'm not sure we would ever commit ourselves to doing that again in such a public and loud capacity but we got there and it was made possible due to a lot of personal sacrifice and hard work from the team and some really excellent teamwork in some cases. The team that carried us through to the end, really did an absolutely brilliant job. But it did take a lot of late nights. A lot of weekends. A lot of sacrifices. I'm just going to leave it at that.
Mona El Isa:        09:47        We did deploy in Q1 this year and we did stick to our promise and we have started liquidating Melonport. We handed over the protocol to the Melon Council which was put in place in February this year. The Melon Council, as you may know, is a user-representative and technically skilled group of people or entities that we initially selected. It's currently eight people I believe.
Mona El Isa:        10:14        And from this point on, it grows by consensus. The idea behind that is the token model looked after two of the stakeholders in our ecosystem, namely the token holders and the maintainers and developers. So those are kind of, you can put them in two buckets, developers and token holders. That left a very big stakeholder in our ecosystem which was not represented or looked after in any way. And that's why we came up with the idea of putting in place ... you can call it an off-chain decentralized governing structure in the form of consortium based structure.
Mona El Isa:        10:50        We emphasized that this consortium has to be made up of technically skilled and user representative people because technically skilled because it's looking after the security of the users and ultimately, you know if they don't feel that there are technically skilled people voting on decisions, the impact upgrades and the impact changes in the code versus let's say token holders who are anonymous and may not necessarily have the right skills sets to be making upgrade decisions and also you could have on chain decisions which are made which can affect the users and in our case, which is an asset management use case, you have real assets and funds at stake which would just scare off any user.
Mona El Isa:        11:29        So that was the kind of thinking behind that. That Melon Technical Council or Melon Council as we call it is really there to represent the stakeholder group that had been under represented in our ecosystem.
Joe Petrowski:        11:42        And which group is that? I'm sorry. I don't think you ever said. The underrepresented group?
Mona El Isa:        11:47        The users. So they would either be the fund managers themselves or the investors in the Melon Funds.
Joe Petrowski:        11:53        So that can kind of still split into two directions?
Mona El Isa:        11:56        It's split into two but you can generalize it as one because neither of those users will use the protocol if they fear that there can be some malicious behavior or malicious upgrades. The other element that we felt was necessary is making those parties known, publicly known, that there are somehow held to some kind of fiduciary duty and some kind of reputational duty, because all of them are all quite well known people in the space and making sure that being known they have some kind of responsibility or feel some kind of responsibility to making sure they are doing what is best for the governance and maintenance of the protocol.
Joe Petrowski:        12:33        So you put a lot of thought into the token economics and the governance which we've already started talking about. Can you explain some more about the Melon protocol and how the economics work?
Mona El Isa:        12:43        Yeah sure. So, I mean, maybe just taking a step back what does the Melon protocol layer allow you to do. It's an infrastructure for any kind of asset management. I mean it could be used for insurance, VC. In the past we've focused more on hedge fund like structures, but it can be used for ETFs, trackers. It can be used for ... we have Ash or Midas finance building some kind of gamification app where people can challenge each other to battles on fund performance and stuff like that. But you can basically use this infrastructure for any use case you want which is within the asset management or management of assets on chain.
Joe Petrowski:        13:21        So the assets have to be on-chain?
Mona El Isa:        13:23        Oh yeah. They definitely have to be on-chain yeah. And basically what the protocol allows you to do is it allows you to set up some kind of collective investment scheme vehicle with a predetermined set of rules. So it allows you to determine things like what assets is this vehicle allowed to trade with? So it's kind of like pre-selecting an asset universe which decentralized exchanges, can this collective investment vehicle interact with? We currently have integrated with 0X, Relayers, Kyber Network, OasisDEX, and soon ETHFinex.
Mona El Isa:        13:54        It also allows you to predetermine things like which Ethereum addresses can invest into this vehicle. So you can whitelist addresses if you want to, but you don't have to. It allows you to set some risk management rules like what's the maximum number of positions this vehicle is allowed to take? What's the maximum position size this vehicle is allowed to take? Concentration risks. Whitelisting. Blacklisting. So on and so forth. But you can also add a fee structure and say I want to charge 2% for managing this portfolio per year and 20% performance fee. If I make performance I want to take 20% of that as my fee for managing this portfolio.
Mona El Isa:        14:28        And this can go on and on and basically because we built it in a modular way, you can keep extending these rule sets. But basically once you've selected your kind of rule sets, you can then deploy that rule set to the blockchain and that becomes your fund address, your fund address which is tokenized. And now Joe comes along, for example, wants to invest in that vehicle. He's already whitelisted or commissioned to invest in that vehicle. He just sends crypto directly to the fund address which creates new shares in the vehicle, sends them back to you and now the manager has those assets to invest but can only invest them in those predetermined ways.
Mona El Isa:        15:04        So with those asset universes, with those exchanges, there is no kind of embezzlement or fraud that can occur where I can take them out into my private wallet and run away. I can't spend them on handbags and shopping. I can only basically trade in the way that the rule sets have predetermined that I can trade. My performance is on-chain, so the protocol also takes care of the fund accounting or the collective investment vehicles performance on chain.
Mona El Isa:        15:31        We publish the price feed every 24 hours, and therefore the performance is recorded on chain and also the performance and management fees are calculated via the smart contract and distributed to the manager whenever they call the function of claim rewards. So that's how it works. Then you asked about the tokenomics or we call it Melon-omics.
Joe Petrowski:        15:53        Just to interrupt you here with like ... a lot of the things you said, you mentioned their, in almost a trivial way, like you send money to the address and then it just creates new shares and all of these things are kind of done manually now and I could speak from personal experience that if somebody wants to invest in your company, after you've started it, it's like another hundred pages of paperwork and contracts and you need everybody to sign.
Mona El Isa:        16:18        Exactly.
Joe Petrowski:        16:18        Just basically start over and that's a huge mess. So just being able to take new investors or have people exit, depending on your rules is ... I know you could save like a small business tons of money and just legal fees.
Mona El Isa:        16:32        Yeah totally. It would save you huge amounts of money. We'll get to that later though then you have to cross the whole, a few other considerations, but absolutely. I mean when you set up a fund in the real world, you need to put together a fund prospectus, a legal fund prospectus which is often over a hundred pages long, which requires input from lawyers, a fund administrator, custodian, so on and so forth. And this basically, all the rules I just elaborated on but written in legal speak, taking up tons of lawyer capacity and fees and money. And obviously trying to fit into the regulatory box, the appropriate regulatory box and ticking off all their needs.
Mona El Isa:        17:11        What I sometimes say about Melon is, it's almost like an uncoded fund prospectus. Like it's almost like all the rules you would get in a fund prospectus but coded up and enforced by the blockchain instead of enforced by financial intermediaries. But that does cause a little bit of discomfort when you speak to institutions and the asset management or financial world because they are kind of like so keen to get involved in blockchain but then when they realize that actually hang on this actually displaces what we do ...
Joe Petrowski:        17:39        They give up a little control.
Mona El Isa:        17:41        Yeah some are still open to it, but you see a lot of discomfort when they start to realize, you know, wait this means that we would become obsolete. I'm not sure we should be supporting this. So it's a tricky one.
Joe Petrowski:        17:52        So what kind of experiments have you seen, because it's still very new but it is functioning. So have you seen any of these funds trying to experiment on it?
Mona El Isa:        18:01        Yeah.
Joe Petrowski:        18:01        Put some of their other assets under it?
Mona El Isa:        18:02        Yeah, we've seen two funds, crypto funds experiment. Two well-known crypto funds experiment on it. KR1 or they used to be called Kryptonite in the UK have set up some tracker funds on there, which has been really cool. I think they were one of the first people to experiment with it and they seem to be having a great experience so far. But they are sending us a lot of feedback which is great, because we realize it's still very buggy and user unfriendly and that's one of the big challenges in the blockchain space in general. So we're working towards a new release to hopefully address a lot of those issues and hopefully it will become a smoother experience over time.
Mona El Isa:        18:38        There is also another very large fund in the UK which I don't think we can really talk about. But they are experimenting with it and they've been sending us a lot of feedback as well. One cool experiment we did recently was in collaboration with the University of Lichtenstein where through their blockchain course, they have some kind of blockchain course they teach their students and they did an on-chain finance segment and as a case study, the lecturer brought in a couple of former Melonport employees to teach a little bit about on-chain finance. Educate them about decentralized exchanges and the concept of what we call TROFs technology regulated and operated finance.
Mona El Isa:        19:19        And at the end of the course, they basically had to get into groups of six and set up Melon funds which interacted with decentralized exchanges like the 0X Kyber network and OasisDEX and trade and compete against one another for two weeks and we're talking about very small assets under management here obviously. But according to the students, it was one of the highlights of the course and that was an amazing success as an experiment because you've got these guys just really ... it's not just, it stops becoming theory and it starts becoming more of an insight into what the future of finance could look like. And on the back of that, we've now had six requests from different universities globally asking us to come and give a similar course.
Mona El Isa:        20:01        So our challenge now is how to scale this idea because there is a few of us and there's a lot of them and they are all distributed all over the world and we just need to figure out a way to scale this idea on a global basis but ultimately I think working from maybe kind of the younger generation up makes a lot more sense than trying to get the old-school generation accepting that they may be disrupting in the future.
Joe Petrowski:        20:25        A decentralized finance academy seems like just another association to start on the side.
Mona El Isa:        20:30        Yeah. Maybe not even an association, I think just maybe putting it in some kind of online form because otherwise it's not scalable.
Joe Petrowski:        20:38        Yeah. So you mentioned DEXes and you're exclusively trading through decentralized exchanges, how has that played out and I haven't used DEX in a long time but they used to be really slow. Are there any high frequency funds on there? Or automated trading in general?
Mona El Isa:        20:57        Without scalability it's very hard to see high frequency strategies working on Melon right now. It's easier to imagine discretionary strategies, medium to long-term strategies.
Joe Petrowski:        21:09        Discretionary meaning like a human makes the decisions?
Mona El Isa:        21:12        Yeah it could be algorithm too. We've played around with that. We have a few trading bots we've played around with in the past. But yeah, what I mean, anything that is not high frequency basically. And ETFs would work. Trackers work. But yeah one of the challenges we have is we absolutely need liquidity to work on DEXes in the future or to increase and improve in the future. We believe it will. We are obviously big believers it will, otherwise we wouldn't be still doing this. One thing that we have done which helps the situation a little bit, is for all the DEXes we've integrated, we've also aggregated the order books so from a Melon user perspective while they still know what exchange they are trading with when they are actually trading, they always see the amalgamated bits and offers and therefore they can always -
Joe Petrowski:        21:58        That's like a broker?
Mona El Isa:        22:01        I mean yeah, it's just aggregated order books. So you can always see, you always get the best price and the full depth of the order book. Not just of one single exchange but of all the exchanges that you have permissioned into your vehicle.
Joe Petrowski:        22:13        But Melon is routing the orders to the exchanges?
Mona El Isa:        22:18        The orders are done directly with the smart contract to the exchange, to the exchange smart contract. But just from a user interface perspective, if you're interacting with the contracts through our interface or through the interface that we deployed in February you basically see the order book in a more user friendly kind of way and you get to tap into any better offer you want in a more user friendly kind of way.
Joe Petrowski:        22:44        Okay. Now I understand.
Mona El Isa:        22:47        Yeah I should have mentioned that we also built an interface that was part of the project and the interface, it's not something ... it's not kind of our, it's not the thing that we're most proud of. We were very focused on the protocol, the interface is almost for us just a way for non-technical people to be able to test out what we've done on the protocol level but it's something that we'll definitely be focused on maintaining and improving over the next few years.
Joe Petrowski:        23:15        Yeah so like in the kind of bigger architectural view point, you're sitting on the infrastructure of DEXes and then a higher level from you is all the tokenized things, assets, whatever they are. You're kind of assuming those exist and able to trade them via DEXes. So you're a manager to connect all these.
Mona El Isa:        23:35        Yeah, so the exchanges, I mean the exchanges the way it works is we just build, we've built adapters to connect the exchanges to our smart contracts. We've had to build different adapters for every type of exchange just because every DEX works in a different way. Although there will be some synergies we can extract because some DEXes do work similar to others. And then yes, the asset universe, as it grows, we can add to the Melon asset universe as long as the assets are tradable on Kyber Network and we can derive a price feed from them. And yeah the governance is planned to be run on, the governance decisions, most of the governance decisions will be run on Aragon.
Mona El Isa:        24:14        So from a Melon Council perspective, the votes occur on Aragon. For most decisions now, although we're taking a phased in approach so that will increase over time.
Joe Petrowski:        24:24        So yeah we actually started by talking about economics and governance and we ended up talking about decentralize exchanges, so now that we're back, can you talk about the tokenomics and you have a buy and burn model I think it's called? How does that work and benefit everyone?
Mona El Isa:        24:39        It's very simple. So basically in order to transact with our contracts, when you call certain functions you get charged asset management gas and that gas or the total amount the user pays gets calculated by the asset management gas units times the Melon gas price or the asset management gas price. So we preset the gas price. The gas units at the contract level, we've actually used the same notation or way of calculating gas as Ethereum does, so the same ... whatever the computational requirement is and gas unit is for Ethereum it would be for Melon as well. We've just used a different gas price to multiply those units by.
Mona El Isa:        25:18        Now we thought it was really important to remove as much friction as possible from the user and we wanted to keep costs low in keeping with the whole ethos of what we're doing. So we don't charge any fees on trading, additional fees on trading or anything like that. There are only three functions that are really charged. It's the set up fund, so it's a one off at the beginning. We also charge or the protocol, not us, the protocol also charges on the invest function, so whenever an investor invests in a fund, they have to pay a small gas fee. And we charge on claim fees. So whenever the manager is claiming a performance fee or a management fee, they also pay gas.
Mona El Isa:        26:01        The gas is collected in ETH and sent to the Melon engine smart contract. Basically the Melon engine smart contract sells ETH and buys Melon or continuously puts out bids to buy Melon. Once it buys the Melon it burns it. So what you have there is a direct link between the usage of the network and the purchasing power or the think model related to the Melon token, the purchasing power of the token. It's pretty simple.
Joe Petrowski:        26:26        Okay. Maybe easier with a picture also.
Mona El Isa:        26:29        Yeh we have a picture.
Joe Petrowski:        26:31        We'll put a link to it. So you close down Melonport and now you're doing a multi-chain asset management association, MAMA.
Mona El Isa:        26:42        Yes. I've been doing that from the beginning actually, so I co founded the Multichain Asset Managers Associated which we call for short MAMA in October 2017. MAMA was put into place, mainly because we thought some obstacles for some portion of potential future users and the fact that one of the questions we get asked a lot from the community are how can I set up a compliant fund on Melon? And based on the rules and regulations that exist for collective investment schemes today, they require you to have certain restrictions or a certain ... well requirements that are there by law which were created for a completely different asset class in mind. So they require that you have a fund administrator by law. They do require that you have a custodian by law. And that's down to the reasons we discussed before because those guys, those financial intermediaries are supposed to be there to protect the end customer.
Mona El Isa:        27:44        So, basically in a nutshell what MAMA advocates for is that if the technology can do the job of the financial intermediary the same or better, than why do we need to have a legal requirement that requires a custodian or a financial intermediary. We take it a step further with custody. That's quite fun and actually I love having this debate with people. But we take it a step further we crypto and custody because the financial law often, you'll see like with all crypto funds, they have to have a legal custodian.
Joe Petrowski:        28:16        Which is actually a risk, not a protection.
Mona El Isa:        28:18        So it's supposed to be ... I mean if you think about the origins of that law, yeah it was supposed to be a protection. Of course it is a protection when you're talking about paper based assets and certificates of equities and stuff. But when you're talking about crypto it's like the craziest rule you could have for the safety of the retailer and the investors right.
Mona El Isa:        28:36        Then when you think about some of the custody solutions out there, I could talk about this for hours ...
Joe Petrowski:        28:42        Go ahead.
Mona El Isa:        28:43        But then you want to pull your hair out some more because some of the custody solutions that some crypto funds use, for example, allow withdrawals to any address including private addresses, etc and that's just one of the most dangerous things you could have in a crypto fund. Allowing the assets to be withdrawn to any address has just got recipe for disaster written all over it.
Mona El Isa:        29:08        So MAMA really tries to educate and lead the thinking around this. We engage with regulators, law makers, and institutions and we kind of try to attract as many DeFi projects to the association as possible because we're all kind of solving the same ... we're all advocating for the same kind of issues. So we've been fortunate in order to have 65 members I think so far. We've had some small victories last year which we're very proud of, more on the European front then on the kind of US and Asia front but I think we're going to start to slowly dial up the volume there as well with some interesting partners who will be joining us that will be announced soon.
Mona El Isa:        29:47        But yeah we've had some great feedback that was provided to Esma which was provided to the European Commission which on the back of that we are now in a working group leading a working group on digital and open finance in that capacity. We provided feedback to the FCA, to the Swiss Federal Council. There was a report published by the Swiss Federal Council last year which had several pages devoted to on-chain finance and one of the best quotes out of that 170 page painful read was that they said it was conceivable that in the future we can see a completely technology-regulated and operated fund vehicle being run entirely by technology.
Mona El Isa:        30:29        Now, I mean for me, that's one of the most forward thinking things any government has ever said.
Joe Petrowski:        30:36        Just that it's possible or conceivable.
Mona El Isa:        30:38        Yeah. Most of them are still trying to figure out how to regulate ICOs but like the Swiss are already moving onto the kind of use cases which is encouraging to see.
Joe Petrowski:        30:48        What were some of the victories you mentioned, besides those?
Mona El Isa:        30:51        Okay, so in France, they made a call for feedback on crypto custody last year. We managed to team up with AFJC and the AFG. AFG is the largest asset management association in France where if you're an asset manager you have to be a member of it by law. They are extremely powerful, extremely close to the law makers there. Not limited to crypto at all. They collaborated with us on the crypto custody piece and basically agreed with the stance that we took and presented it in the name of AFG to the finance ministry.
Mona El Isa:        31:28        The Swiss have been open doors and like I said, they publish several pages on chain finance in the December 14th report last year which I think was very forward-thinking and wouldn't have been there I think without MAMA's feedback to the federal council. I think we're making some good headway in Lichtenstein and Malta with pilot use cases on unchained finance with the support and backing of the regulators as well.
Joe Petrowski:        31:57        Yeah how do you deal with geographic regulation?
Mona El Isa:        32:01        Tough. It's tough. We try to keep the operational costs of MAMA as low as possible, that's why we try to mainly include members who have an incentive to push and advocate for these kinds of things. It's just pulling our resources together. So what we're trying to do now through out new wave of memberships is we've made a little bit more emphasis on US and Asian participants who can help us and generally speaking we're not just looking for a check to be written but for people who are already doing things in house, that advocate for these kinds of policy and basically instead of just doing it as a single entity can now do it as a group and it's a lot more powerful coming from an association which represents 65 people, 65 companies then just one small company making a pitch about why something should be this way or that way.
Joe Petrowski:        32:57        Yeah so if like changing regulations and hopefully changing for the better. You mentioned earlier, when you create a fund on Melon you're kind of locked into these rules, right? So how do you deal with the stakes if like your rules become illegal after two years, how do you upgrade your funds to be ...
Mona El Isa:        33:16        Well unlike in the traditional world, shutting down a fund becomes the press of a button, so it's ... you can set up a fund and start a new fund which is compliant in a matter of minutes. You just need, you need your investors to redeem and reinvest in the new fund, but we can make that possible with the press of a button or two presses of the button ultimately down the line. But it's still early days.
Mona El Isa:        33:41        This is a journey that will take several years to really fulfill our vision the way we really see it because there are still so many frictions in the industry. Some of them are Melon specific but some of them are technology and infrastructure related that we all have to work on together as an ecosystem.
Joe Petrowski:        34:00        So you mentioned or in some of your blog posts, for MAMA, there's a lot of self regulation among the group in anticipation of state regulation down the road. For a finance outsider that kind of sounds like the fox is guarding the hens. What kind of self regulation initiatives have you seen among the members?
Mona El Isa:        34:21        So actually we don't do much self regulation at all actually. We're just an advocacy body. We just try to raise awareness and steer the direction of which future adaptations to the law will be made and we're now really having deeper conversations with the Swiss Federal Council for example and how some of those adaptions may look. It's a slow process when you're talking at a federal level or with a governmental level, these things will happen. They will take time.
Mona El Isa:        34:54        That's why MAMA is there. MAMA is there for a 20-year journey to really hand hold. Make sure there is someone representing us and it's not just the big banks sat in the room with the legislators saying, "I don't think you should do this. It's too dangerous because technically who can trust technology. People want to trust the banks." We don't want to be subject to JP Morgan and Jamie Diamond setting the rules of how the future is going to look.
Joe Petrowski:        35:18        No, we don't.
Mona El Isa:        35:19        So it's just putting the force out there that challenges those views.
Joe Petrowski:        35:25        Okay. So poor research or interpretation on my part. So, most of the Melonport group went onto this group called Madeeba. Can you talk about what that's going to do?
Mona El Isa:        35:37        So Madeeba is a spin out of some of the former Melonport team. We are currently in kind of stealth mode. We will probably be ramping things up September, October this year and making a lot more noise. We have one seat on the council and we hope to continue developing on the protocol level but also building an application layer on top of the Melon which again adds to the user friendliness issues that we discussed because in the past we've very much been focused on the protocol layer. I think going forward we also want to work on the usability and build a product which is much easier to access for kind of a non technical user and also bringing in functionalities that can aid and help users that are not necessarily blockchain-related.
Joe Petrowski:        36:26        Yeah so it sounds like the Melon Council is kind of guiding the future of the Melon protocol and then Madeeba will be using the Melon protocol.
Mona El Isa:        36:32        Yeah. You know I think there's still a lot of work to be done at the protocol level over the next at least two to three years. So I think Madeeba will be interested in taking over some parts of that protocol development, given that we have the expertise and the credibility with that. But that would be a Melon Council decision I think at some point whether they want to allocate that work to us or to other parties. And at this point we haven't made any official claims or pitches for that work.
Mona El Isa:        37:05        We're just giving some time to the rest of the community to see who else is interested. Until now there has been one grant made by the Melon Council and that was to a group called Midas or Ash Finance which I mentioned before and they are the ones building the gamification kind of app location on top of Melon but they are also adding on the protocol layer. They are building additional models, copy trading modules, and other kind of interesting modules on Melon which is great too. But there is a pool available for other people to pitch in and make proposals. So we're just watching to see what happens and maybe towards the end of the summer if there is room and once we're sort of all back out of the stealth mode, we'll probably be pitching for work there as well.
Joe Petrowski:        37:50        So this last thing is not really a question. I think it's just really cool how so many daps will go to replace some middle man and they just change the fees from 20% to 2% and you didn't do that. You just built an infrastructure to do that without just being like we'll just reduce the fees. And now you're kind of building on top and doing the education, the interaction with regulators and banks and Madeeba for building the tools to actually use the protocol. Sorry I don't have a question. I just think that's very admirable.
Mona El Isa:        38:22        Thank you. That's really cool to hear. Well you know I think that we wouldn't do all of this if we didn't really believe in the power that infrastructure gives to democratizing finance. It's really an enabler but if I were to be self critical in one aspect of our work, it's probably that we haven't done enough and maybe we haven't done enough educating and raising awareness around Melon on a global basis. We've been very kind of Swiss, European focused. I'm not sure that we're as recognized in the US as we should be, given we were one of the first or maybe even the first but definitely one of the first D-5 protocols to start developing but also one of the first to ever go to main net.
Mona El Isa:        39:06        I think the complexity of our protocol and the abilities of our protocol are powerful in terms of what they can enable users to do and I think that's something that we need to think about going forward. How to improve our community outreach. Not to just big wealthy economies, but also how do we get into China? How do we get into Russia? How do we get into India? Translating documentation. Finding local representatives who can help us build communities there.
Joe Petrowski:        39:35        Yeah I think a lot of people feel like they didn't do a good job with education. Not just you. But also, the 2017 bubble caught a lot of people off guard. We're talking about protocols that are kind of analogous to TCP and you didn't really have to go around explaining TCP to everybody who wants to use Amazon or something.
Mona El Isa:        39:57        That's true.
Joe Petrowski:        39:57        So everyone is like wait a minute. What's this blockchain thing? Why do we have to explain this?
Mona El Isa:        40:03        I think ultimately though the view we took at the time because we were conscious of the fact that we were putting this on the back burner. We need to build something first before we start marketing. Before we start too much community outreach. There needed to be something there. I think now there is something there. There is something that is good enough to be really called a MVP on the main net, which will over time become something which is production ready, you know? And I think now is really the time to start spreading the word, because it's something tangible for people to play around with, to test out, and we just need to focus on building ways into that which are as user friendly as possible because ultimately your end users are not going to be technical.
Mona El Isa:        40:41        They are not going to care whether you're using the latest, coolest technology out there. They are just going to care if they can buy, sell, funds, check performance, make some kind of interesting educational assessments out of it, and get access to finance basically.
Joe Petrowski:        41:00        Yeah with Melon, Madeeba, and MAMA, where are the best places for people to follow you or keep track of what you're doing?
Mona El Isa:        41:07        So our Twitter account Melon Protocol is very active. We're also very active on Melon Project on Reddit. We're on LinkedIn. Our Medium post is very active. Again, that's Melon Protocol. And the Melon Protocol Medium post is interesting because we've opened up to all members of the community so anyone can basically pitch an article as long as it's related to or interesting to Melon. So it can be the SO station MAMA. It can be Ash Finance. It can be Madeeba. It can be anyone. So for all amalgamated news, I would stick to Medium or Twitter which is Melon Protocol.
Joe Petrowski:        41:43        And for developers, you actually have an SDK out so people can go use.
Mona El Isa:        41:49        Yeah absolutely. We have documentation all on GitHub under Melon Project. If you have any questions, we have a developer hub in the a Gitter channel and yeah we're happy to help. We are always interested and excited to have more developers on Melon.
Joe Petrowski:        42:05        Thank you for coming on Mona.
Mona El Isa:        42:06        Thank you so much for having me.
Joe Petrowski:        42:09        Thanks for listening to Relay Chain. We'd love to keep in touch. Follow us on Twitter @RelayChain or email podcast@parity.io. Our team at Parity includes some of the leading peer to peer networking developers, consensus algorithm inventors, blockchain innovators and Rust developers. If you want to learn more about our work or want to work with us, visit our website at parity.io and sign up for our newsletter at parity.io/newsletter.