MAMA, the Multichain Asset Managers Association, is a global community of organisations working to transform asset management through blockchain technology

We believe that investment funds of the future will be entirely set up, operated, audited and regulated using blockchain technology.

These ‘decentralised funds’ will deliver greater efficiency, transparency, security and dramatically lower costs for investors and investment managers. In the future, all financial assets and investment products – such as equities, gold, real estate and diamonds – will be tokenised and when that happens, blockchain-based asset management will provide the best investment vehicles for both crypto and traditional, real-world assets.

Developments in legal and regulatory frameworks have not, however, kept pace with these innovations. We will work with and on behalf of our membership organisations to raise awareness of the benefits of blockchain technology and make the case for change to regulatory and legal frameworks by showcasing the best of blockchain through action-research, pilots and experiments. In this way we hope to realise our vision for on-chain asset management.

Thought leader
Mona El Isa is the President of MAMA, the Multichain Asset Managers Association. She is also the CoFounder and CEO of Avantgarde Finance Ltd. Mona was formerly the Co-Founder and CEO of Melonport AG which developed Melon, the on-chain asset management protocol. Mona is a former star-trader at Goldman Sachs, promoted to Vice President by the age of 26 and made the “top 30 under 30” list in Trader Magazine in 2008 and Forbes Magazine in 2011 after profitably trading the 2008 and 2011 crashes.

Q&A with Mona El Isa

How is DLT and Blockchain reshaping wealth and asset management? Where is the industry today and how do you foresee things changing in the future?
Decentralised technologies - blockchains, smart contracts, digital assets - represent a radical, paradigm shifting technology which has the potential to disrupt business models based on establishing trust between parties, particularly in the asset management industry.

Decentralised Finance (DeFi), or open finance, is one of the fastest growing developments in the blockchain space. One overlapping element is on-chain asset management. This includes all those protocols, products and services which enable people to set up, operate, administer and invest in funds - on-chain. Smart contracts replace a significant proportion of functions which have traditionally been carried out by third party service providers. This is decentralised and trustless.

Decentralised funds make it possible to invest in the rapidly growing field of digital assets - from innovative ERC-20 tokens and on-chain synthetic products to derivatives, loans, insurance underwriting and cryptocollectibles. By the end of August 2020, more than $8 billion was locked up in DeFi protocols. This increased from roughly $250m at the beginning of 2019. We expect this trend to continue. Moreover, we believe that all traditional financial assets and investment products – such as equities, bonds, gold, real estate and diamonds – will eventually be tokenized. When that happens, blockchain-based asset management will provide the best investment vehicles for both crypto and traditional, real-world assets. Avantgarde Finance is the lead developer and maintainer of Melon, the first full-featured, on-chain asset management protocol.

Melon is the first and only protocol which provides the underlying infrastructure for on-chain asset management across the whole value-chain of an investment fund. It’s essentially a library of smartcontracts which can be used to customize the set up and management of pooled digital assets on the Ethereum blockchain. Each smart contract performs a specific function relating to the set up and operation of a fund (e.g. accounting, investment/redemption, asset custody, trading, fee distribution etc). These smartcontracts automate the majority of back and middle office processes, enabling asset managers and fund sponsors to create their own tokenized investment vehicles on-chain, whilst adhering to traditional asset management principles.

Using Melon, asset managers and fund sponsors are able to define the key parameters of the vehicle (including fee structure, trading exchanges, asset universe, risk management, pre-trade checks, whitelisting of investors etc). These parameters are deployed to the blockchain and enforced by smart contracts - instead of being set out in fund documents and overseen by financial intermediaries. Investors are thereby assured that the pooled digital assets will be managed and administered exactly as specified in the set-up of the on-chain investment vehicle. The whole process of setting up a Melon fund currently costs less than $60 (in Ethereum and Melon gas costs).

Once a fund is established, its performance is tracked by the Melon Monitoring Tool. This includes a factsheet for each fund, (setting out NAV, the number of shares, the price of shares, management fees and performance fees etc.), portfolio holdings, investments/redemptions and trading history. The Melon Monitoring Tool therefore makes it possible to view on-chain data in real time, making visible the investment actions of all funds.

Eventually this reporting tool will make it possible to extract reports over any historical time period which is typically required for investor and regulatory reporting. It will therefore be relatively straightforward to audit and report on any Melon Fund. This means that (technically) anyone can set up a Melon Fund, anyone can invest in a Melon Fund and keep track of that fund’s performance, and anyone managing a Melon Fund can compare the performance of their fund to that of other Melon Funds.

However, developments in legal and regulatory frameworks have not kept pace with these innovations. Currently, any investor setting up a collective investment fund using decentralised technologies cannot do so while being fully regulated and compliant. There remains a considerable lack of clarity and lack of standardized classifications of crypto-assets (and therefore which regulatory regime different projects fall under). The authorities have so far focused overwhelmingly on AML/KYC which, although understandable, is certainly not the only regulatory issue facing DeFi.

With MAMA, the Multichain Asset Managers Association, we’re spearheading the vision of onchain asset management and actively engage with regulators, fund managers, industry players and tech builders to make this vision come true and build and support better asset management for all of us.

We work with and on behalf of our members to realise the vision for on-chain asset management. We carry out the following activities:

• Work with regulators to raise awareness of the benefits of decentralised technologies and ensure a suitable regulatory regime for on-chain asset management.
• Carry out projects and pilots to test how blockchain technologies can best be deployed to transform asset management.
• Disseminate resources and insights about on-chain asset management, including the latest insights from regulators, policymakers and academics.
• Organise events to grow and strengthen the MAMA community and to foster discussion between industry, academia, policymakers and regulators.

ACCESS THE FULL WEALTHTECH VIEWS DLT & BLOCKCHAIN REPORT HERE