Product & Ecosystem
Validity of Enzyme Finance main use cases [ Score 4/5 ]
Treasury management
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Flexible purpose-built asset management toolkit enabling DAOs and companies to implement custom treasury management architecture
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Possibility to grant limited operational power on specific treasury management process to a small subset of members or to a specialized third party.
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Built-in integration of Gnosis Safe* allowing the creation of a layered treasury management structure implementing different signature thresholds for each treasury management actions.
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Complete treasury management transparency thanks to Enzyme’s user-friendly UI enabling DAO members and token holders to easily monitor treasury state at all time
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Publication of transparent and easily readable reports on assets being managed
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Reduction of admin private key operational risk through the leveraging of Gnosis multi-sig wallet
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Custom policy features allowing the limitation of asset managers rights to a limited number of actions pre-vetted by users through community vote on Snapshot.
Investment Clubs
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Possibility to implement main DeFi services in Fund strategy thanks to Enzyme’s integration with several external DeFi protocol (Aave, Maple Finance, Compound …)
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Current available services:
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Yield Farming
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Synthetic asset & Derivative
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DEX’s swap
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AMM pools
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Borrrowing & Lending
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Unique possibility to create strategies relying on external positions not resulting in a simple exchange of ERC20 assets (Compound cTokens, Uniswap v3 LP positions, …)
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Unique possibility to create strategies relying on external positions not resulting in a simple exchange of ERC20 assets (Compound cTokens, Uniswap v3 LP positions, …)
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Large set of available policy features allowing to create a variety of gated and public investment clubs with varying level of trust towards the asset manager
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Possibility for investors to withdraw liquidity without restriction 24/7
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Easy implementation of trading bot through Enzyme policy feature enabling the community to grant revocable trading rights to a given address
Current Ecosystem State [ Score 3/5 ]
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Development of interesting new features diversifying the type of holdings available for investment strategist (External position, airdrop claims, …)
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Mature and successful decentralized governance architecture
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Limited set of adapters enabling the integration of Enzyme with external DeFi protocol:
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16 available adapters on Ethereum
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Only 8 adapters on polygon
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2 upcoming adapters (Notional Finance & Pool together)
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Asset pricing mechanism still heavily reliant on Chainlink price feeds
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Ecosystem still mainly targeting crypto native users given the technological understanding required to use the platform (Web3 wallet private keys management, handling of different networks, …)
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Investors token ownership preventing most institutional investors to take part in that ecosystem due to regulatory limitations
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Limited set of supported networks (only Ethereum & Polygon)
MOAT (Long-Term stability of use case and ecosystem) [Score: 3/5 ]
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Recent move of crypto native users towards more decentralized investment platforms following the recent FTX meltdown which will most likely attract new users towards Enzyme asset management solution.
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Continued growth of the DeFi space and of DAOs in a broad array of sectors ranging from gaming to social media (Lil Miquela, …) structurally supporting the demand for decentralized asset management solutions such as Enzyme
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Huge future opportunities in the investment sector with hedge funds and investment banks most likely to start leveraging platforms like Enzyme once the regulatory framework around token ownership will have been clarified by regulators worldwide.
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Strong insurance regarding the continuing development of the core Enzyme protocol thanks to the recent renewal of Avantgarde Finance contractor agreement as lead protocol developer up until September 2025.
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Additionally with the recent growth of investment clubs, Enzyme could also become an ideal decentralized investment solution for retail traders communities such as WallStreetBets willing to invest on crypto
Project maturity / Age token (years since existence) [ Score: 4/5 ]
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July 2016 — Creation of Melonport AG as a privately domiciled company in Zug, Switzerland with the sole mandate of developing an asset management computer built on top of Ethereum.
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February 2017 — ICO raising $2.9M in one day
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February 2019 — Launch of Mainnet v1.0
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August 2019 — Ownership of the protocol transferred to the Melon Council DAO
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December 2020 — Rebranding from Melon Protocol to Enzyme
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January 2021 — Launch of Mainnet v2.0 (after failure of v1.0) implementing a brand new smart contract architecture as well as a full suite of new features developed in partnership with the community (lending, synthetic assets, yield farming, …)
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February 2022 — Launch of Mainnet v4.0 (Sulu) building on top of the success of mainnet v2.0 and implementing a whole suite of new features and integrations.
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Unknown — Release of Mainnet v5.0 (Eve) aiming to iterate on the success of Sulu and expand further the range of applications and potential use cases of Enzyme
Analyst Observation
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High level of community governance enabling to pivot quickly and align at best with the need of users as shown by the quick pivot from mainnet v1.0 to mainnet v2.0
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Continuous development led by a team of seasoned developers with deep understanding of the space and true beliefs in the long-term mission of Enzyme as shows the grant token vesting enforced in the recent contactor agreement renewal
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Currently among the top three decentralized asset management solutions in terms of TVL.
Revenue Potential
Last 12M Revenue [ Score 3 /5 ]
AAGR = - 83%
Analyst comment
By comparison with the annual growth returns exhibited by other major crypto assets such as Bitcoin (-72%) and Ethereum (-73%) the current AAGR of Enzyme does not seem worrying especially in the current context of severe contraction of the crypto space due to the consecutive occurrence of black swan events all throughout the year (Terra, Three Arrows Capital, FTX, …).
Revenue Trend (Last 3 months vs Last 12 months) [ Score 3/5 ]
3 month Growth rate = - 23%
Analyst comment:
The comparison here between those two revenue trends does not really help us getting a clear picture on the intrinsic protocol revenue generating power given the occurrence of consecutive black swan events during both of those time periods.
Revenue flow to token holder [ Score 2/5 ]
Cryptoeconomic design
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Current token circulating supply: 2,038,518 MLN
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Maximum mintable tokens per year: 300,600 MLN
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Built-in burning mechanism of protocol fee
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Governance burning of any unused residual amount of MLN minted for development purposes
Value accrual mechanism
The burning of all protocol fees applies a deflationary pressure on the overall circulation supply of MLN tokens which in return enable token holders to benefit from the token price appreciation.
→ The goal being that the protocol becomes deflationary in the long run given enough usage.
Current state
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Overall MLN tokens burned since launch = 382,522 MLN
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MLN Circulating supply = 2,038,518 MLN
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MLN tokens burned / MLN circulating supply = 18.7%
Observation
This means that in three years the Enzyme council has effectively burned 18.7% of the circulating supply of MLN tokens.
Valuation [ Score 3/5 ]
Given that all protocol fees get burned by the protocol it appears more interesting here to compare the market cap with the TVL instead of with the amount of protocol fees.
Current market cap/TVL ratio = 1.11
As demonstrated by the current market cap to TVL ratio, the protocol seems a bit overvalued at present. As such, it would appear better for investors to wait additional token price corrections before investing in the project.
Comparison with competitors in terms of TVL (source DefiLlama)
Global in/out of the money
As shows the above graph from IntoTheBlock, most of MLN token holders are currently out of the money suggesting a high selling pressure on the token and strong levels of resistance ahead, especially in the range $20 - $50.
Number of Large Transactions
Daily number of on-chain transactions greater than $100,000
Not a lot of activities currently on the protocol outside of small retail investors.
Average Balance growth ($)
Average Balance growth = - 81%
AAGR = - 81%
Interesting to note that users didn’t massively exit the protocol over the past year and globally stayed invested in the protocol in the same relative proportion.
Twitter sentiment
Mixed user sentiment over the past week but overall good twitter sentiment over the past year.
Team
Governance architecture [ Score 4/5 ]
The overall Enzyme protocol governance is ensured by the Enzyme Council DAO itself divided into two sub DAOs :
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The Enzyme Technical Council (ETC) — Providing technical expertise and in charge of making decisions on core technical topics such as protocol upgrades, resource allocation or network parameters.
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The Enzyme Users Representatives (EUR) — Collecting, prioritizing and delivering users feedback to the Enzyme Council on behalf of users.
Current Enzyme Council members
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Chain Security (ETC)
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Exa: Co-founder of Exponent (ETC)
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Janos Berghorn: Investor @KR1 (ETC)
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Giel Detienne: User representative (EUR)
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Mona El Isa: Founder & CEO @Avantgarde Finance (ETC)
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Felix Hartmann: Founder @Hartmann Capital & User (EUR)
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Will Harborne: Founder & CEO @Deversifi (ETC)
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Nick Munoz-McDonald: Smart Contract Auditor & Researcher @G0 Group (ETC)
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Paul Salisbury: Founder @Blockchain Labs (ETC)
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Zahreddine Touag: Founder @Woorton (ETC)
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Theophile Villard: Co-founder of Multis wallet, contributor to Enzyme codebase (ETC)
Tech leadership and ability to fill gaps [ Score 4/5 ]
As per the recent approval by the Enzime Council of the new protocol development grant defended by Avantgarde finance, this latter will continue to be up until September 2025 the lead developer of the core Enzyme protocol as well as of its growing ecosystem.
Additionally, as per this new grant, Avantgarde finance will also support and develop in partnership with Enzyme a new marketing strategy on par with similar effort across the space in order to attract new users to the platform.
Past achievements of Avantgarde Finance as lead protocol developer:
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Three major releases in the space of 28 months.
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Integrations with some of the biggest and most widely used protocols in DeFi
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Development of a sophisticated set of subgraphs tracking important metrics
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Complete UX/UI development
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Management of numerous bug bounty programs
Overall the Enzyme protocol benefits from a high level and dedicated core dev team with an impressive past track record which will most likely have no difficulty to further continue the development of its core features in order to ensure its long term success.
General team business dev and marketing capabilities [ Score 3/5 ]
Generally speaking, the Enzyme Council is in charge of the marketing efforts alongside Avantgarde finance through the distribution of grants allocated through vote proposals.
Example
$35,000 grant approval for Messari coverage of Enzyme through a dedicated webinar as well as a serie of dedicated reports published on Messari’s website and distributed through its newsletter.
Backers and funding strength [ Score 2/5 ]
Enzyme finance exhibits two main sources of funding:
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ICO held in 2017:
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Start Date: Feb 15, 2017
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End Date: Feb 16, 2017
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Total raised: $2.9M
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Country: Switzerland
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Yearly protocol minting allocation of 300,600 MLN for ensuring protocol development
Given that the main current source of funding of the protocol is by design denominated in MLN, it is critical for the project that the MLN price doesn’t fall too low at the risk of hindering any future development and even create a sort of a death spiral if breaking a certain floor price (not enough funds to pursue development further decrease of the price even less found to upgrade the protocol …)
Security
Token governance [ Score 3/5 ]
As highlighted before, the token governance is ensured by the Enzyme Technical Council.
Main token governance topics:
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Resource allocation: The yearly inflation of MLN being the sole resource available to fund the development of the Enzyme protocol, prioritizing and executing its allocation in a mindful manner is of the utmost importance.
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Network parameters: Asset management gas price per amgu as well as protocol fees needs to be set according to network usage and market conditions in order to ensure the optimal performance of the Enzyme protocol.
Token holder concentration [ Score 3/5 ]
Top 10 holders distribution
Top holders incentives: Given the perspective of the protocol becoming deflationary in the mid/long term, top holders are incentivized to hold their tokens in order to then be able to profit from a passive source of profit due to the mechanical price increase of the MLN token.
Sources
Protocol documentation and additional information sources
Data sources
Disclaimer: All information/documents contained in this blog rely solely on my personal beliefs, and do not constitute professional investment advice.
Be careful in your investment and do not invest more than you can afford to loose.