DAPPCON 2024: A Journey from Fund Management to Modular Finance - Mona El Isa

Transcript

I'm Mona for those of you who don't know me I founded enzyme uh back in 2016 which was the first decentralized onchain Asset Management protocol today I still contribute a lot uh to the enzyme Dow um but I spend most of my time with avanguard Finance we are one of the leaders in onchain asset management and we um have a regulated chain funds business but we also support Dow treasury management and DOW treasury advisory it's a real pleasure to be back at dcon today so thanks for having me today I'm going to uh start my talk by um giving you some hopefully new insight into uh where onchain asset

management is going from the trends that we're seeing I'm then going to uh talk to a little bit how enzyme is evolving in order to better service and adapt to these needs and hopefully I'm going to finish off um by talking to you a little bit about why certain projects are choosing to build on enzyme so if we look at the data the onchain data on enzyme today it's interesting to observe that more than 90% of assets on under technology are being used uh for def native onchain management use

cases now I sort of say this is interesting because anyone who's familiar with enzyme today might know that um it's usually associated with traditional fund management um so the fact that we're seeing all of these kind of new and Innovative new onchain Asset Management use cases I think is a really interesting observation and I'll talk to those a little bit in a bit um the second interesting observation is that if you look at um the top two vaults on enzyme um by assets received last quarter or another way to say that is the fastest growing vaults on enzyme in q1 um again they're not funds uh they're these kind of new defin native

use cases which are emerging so I thought it would be interesting to share uh a couple of case studies um from our top 10 user base um and show you how and why they're using enzyme the first one I'm sharing here um is one of our top 10 users um and Nexus Mutual I hope most of you are familiar with them if not they're a great uh defi Insurance protocol and the way that Nexus works is that it accepts um e collateral as deposits from users and on the other side of that collat Al it's selling cover to ensure the def space and

actually more broadly the the blockchain space um so it's it's a really critical piece of infrastructure um in the space and it keeps defi secure now the interesting thing is that until last year the eth was sitting in the Nexus Vault not earning any interest or yield um and so the the sort of decision that Nexus had to make was do we um build out and add to smart contracts which was a little bit of a distraction from growing their existing Insurance business to adapt it to you know have Integrations that we need the policies that we need to protect assets in a trustless way um and also monitor the assets on chain to make sure that we're

not ever the protocol is never becoming under collateralized it turns out actually that they heard about enzyme and together we were able to very quickly um integrate Nexus and enzyme such that Nexus didn't have to build anything in the end all they needed to do was connect to enzyme and the way they did that was they created their own enzyme Vault the Nexus vault which was owned and controlled by the Dal um they configured and customized it in such a way that they could delegate uh third um execution uh to a third party in a in a trustless way in a way that um that third party couldn't misappropriate

funds um couldn't interact with any Integrations that were not pre- permissioned so essentially setting smart contract enforced roles and permissions um this they deposited assets into the Vault from enzyme and in return uh received back Vault tokens and a crucial bit of the infrastructure is that those Vault tokens had an onchain oracle onchain price um which tracked in real time uh the performance of the assets in the vault so they Incorporated the yield uh from staking and other activities now that's important because at all times Nexus now knows what the assets are as a whole and can ensure is a protocol that uh the Nexus um protocol

isn't under collateralized so all of these benefits um were extremely useful to Nexus and prevented a bunch of development work from them uh it prevented saved them a lot of time and money and it was also uh enabled them to move very quickly um so the assets that Nexus have in enzyme today that number is slightly out of date um is $52 million and um yeah and we're really excited about um working with them the second case study that I thought I would share is swell Network so for those of you who don't know swell swell is a staking protocol and um swell was looking to diversify staking away from some of the

Giants um and into swell um um in order to boost liquidity for their protocol and when they approached us the solution they wanted to do was create uh a swell um a super SW campaign what that meant was creating uh a a super swth Vault um owned and controlled by the swell Dow and um creating it such that the Vault was denominated in Lio Stak e which is the you know uh largest uh liquid staking token so depositors of lostak eth could deposit into the Vault and then they designed a um uh Rewards program uh for people who um

participated in there and stayed in there and what the Vault did is it used enzymes automation to as soon as the lostak eth was accepted it was redeemed from lostak eth and then uh swth was minted within the enzyme Vault so the result for them again zero Dev work um were able to turn this around in a couple of days um they were also able to integrate this into their website through enzymes white label solution and the end result was that they managed to uh grow their tvl by 22 million uh with 639 new uh depositors unique depositors and that's an additional 6,000 uh eth Stak for

them the last case study I have is Diva staking similar but slightly different use case um similar because again uh trying to uh bootstrap market share um but different because interestingly Diva was not live as a protocol when they launched their Diva um when the D.A Community decided to launch uh this Vault um so the diva Community voted on creating an enzyme Vault and the idea for this vault is that uh they wanted to attract an incentivized pre-launch support for Diva so the idea again they have two vaults here on enzyme one is

denominated in lostak teeth and the other is denominated in eth and the idea is people could deposit into these vaults and um the the longer they stayed or if they stay till the end they receive uh Diva rewards for their loyalty and the idea is that when D.A goes live again there's a set of policies to control that uh the behaviors of what can be done with these assets will not be misappropriated or done anything else will be done with them other than going to Diva um so the idea is as soon as D.A goes live um enzy will facilitate an integration into diva the Dow will vote uh to uh redeem from um Lio Stak teeth and into diva and

because the aggregate amount of tvl in the diva vaults is $52 million that guarantees them a day day one launch of 52 million um before they're even live um and again from this program we've seen 636 unique depositors which will result in 12 a half thousand uh e Stak when they go live um another interesting characteristic of all these three projects is because enzyme has um apis and white label they can integrate all of these folds into their interface with their own branding very quickly very easily and the apis also make it really easy for them to calculate um the rewards owned to each uh depositor

display them on the interface and um eventually distribute the rewards um so those are um three interesting use cases um that I thought I would share hopefully you found them interesting and I think what's clear from these um use cases is that enzyme is starting to show itself as a versatile onchain Asset Management infrastructure which is really fostering diverse verticals built on top of its foundation and it's able to do that um because at the core level the protocol has taken a very modular approach and that modular approach makes it much easier to build and innovate on top of the

protocol so we've talked a little bit about what we've been seeing in the onchain asset management and I've shared a few case studies for how some defy native use cases are emerging on top of enzyme but now I want to talk to you a little bit about why projects are choosing to build on enzyme and there's two parts to this there's the tech component and there's the sort of business e component um so here I have a diagram of We did an exercise to try and break enzymes value ad down into like really simp building blocks and if you look at the first five horizontal lines in white

um you can see like this is how we see the protocol in a in a very abstracted way um there's really five areas that we see time and time again where users find Value in the protocol the first is the concept of vaults and shares um the fact that you can deposit receive shares and manage in the vault while those shares have an onchain value and Oracle the second is the pricing Gateway and by that I mean there's a a method built into the protocol and a and that method is uh used to Value assets on chain the third is defy Integrations the way that we do defy Integrations is at a smart contract level between enzyme and

the third party protocol so today we have dozens of Integrations with various um defi protocols and also some staking and governance protocols the fourth is policies um some people might relate to policies better when I say roles and permissions but the idea of policies is really um just codifying what Vault managers can and can't do so Vault owners can do anything so let's say a vault owner is a dow but if you assign management to a third party you can control their paroles and permissions um in a smart contract enforcable way and very user friendly way through the interface and these can be things allowed to trade not allowed

to trade protocols they're allowed to interact with or not it can even be things because we have this knowledge of price on chain for the the value of the Assets in the fund we can also um deal with things like maximum slippage stop- loss or even p&l stop loss and the last is uh reporting um so because we run seven subgraphs underpin the enzyme protocol we're collecting uh onchain data in lots of different vertical and then um putting that data into a user friendly API which can easily be used for many other things so that's the modular protocol um core protocol and then what we've spent the last 12 to 18

months really focused on is the tooling around the protocol the tooling I'm going to go into a little bit on the next couple of slides but um really at a high level encompasses SDK API automation tools the white label which I briefly touched on configurations and customizability now the combination of the core protocol plus the tooling lends itself to lots of verticals being built um on top of enzyme in the onchain asset management space and lots of front ends being built in a really easy userfriendly way so that's what we're hoping to see a lot more of in the coming months and years and those verticals could be anything from active trading like funds indexes

protocol and DOW Asset Management liquid reaking products uh Structured Products fintech and crypto banking Etc um this is exactly the same slide but I've just mapped out here my three case studies that I shared with you and you can see uh let's see if I can you can see here yeah our Nexus Mutual is using reporting policies Integrations and price way modules as well as using reporting policies Integrations and vaults and diva is using all five of the modules uh so again just to reiterate this is all you know smart contract based modules that they would have had to build from scratch it would have set

them back and uh cost up a lot of death time and distracted from their main kind of value uh proposition so some of the areas that have been growing and that we have been seeing some Traction in um um on the asset management side are uh a regulated fund platform uh so that is something avanguard Finance has been focused on uh we became as far as we know last year the first ever uh company to become regulated to launch onchain funds on enzyme in as light way as possible and we're able to open up that infrastructure to third party managers so any fund manager that wants

to come and launch their own fund uh can now do that on our platform without having to go through I think it took 18 months to get all the licenses um the second uh area which we've been focused on we'd love to um or you know we we we're very aware that we can't build this all ourselves so um we've we've been very focused on building through partnering as well and this easy facilitation of indexes in AIG agents is a great example of area where we've um funded grants in the ecosystem to help further build out um that functionality so in terms of facilitating indexes the key thing that uh we've been asked time and time again for is the possibility to

rebalance portfolios automatically um we uh funded 313 um to build that out for us through a grant um that's nearing completion hopefully we're going to launch that um end of May or early June and uh we also um have become really interested in how AI agents can be useful in onchain Asset Management and so we recently partnered with Giza um um to uh fund their hackathon um to build AI agents on top of enzyme so we're really I think that's happening this week and next week so we're really happy and excited to see the results from that um the third area that we're very focused on um is defi automation strategies so um building uh

automation Tools around much more complicated um defin native strategies um and uh We've made huge progress in that and we're starting to actually on board a few projects in that respect we've also um started to explore our waas and Structured Products a bit more and we have uh it's no secret that we're working with Signum bank for a pilot on a pilot uh since last year and uh we funded a project called gorilla funds um which very excitingly built um a direct um bridge between monium and enzyme so through their through them you can uh deposit into an enzyme Vault through um man through gorilla funds from monium

account and in terms of uh you know why Builders are choosing to use enzyme uh as I said earlier the tools have developed a lot since um we first set out we have uh sophisticated sdks apis we have automation tools and libraries we're also building out python libraries now um in addition to the ones we already have um we've also built out the service team to support teams that want to build on enzyme but maybe don't have all the right skill sets um and the white label is also very helpful uh to get people building faster so those were the sort of more technical benefits in terms of um more kind of busy benefits um the obvious one is it's a huge

reduction in cost for team to build on top of enzyme as anyone here probably knows uh hundreds of thousands of dollars to launch you know a set of contract protocol and audit that and maintain it per year um so being able to plug into one that's existing is much easier it also accelerates your time to Market all three of those examples that I shared were uh you know it took about from the time they made the decision it took less than 2 days to actually launch them um the infrastructure is reliable and battle tested which says a lot in this space we've been on chain for more than 5 years um enzyme can also help projects accelerate their tvl growth as we saw with Diva and swell and uh we're

also starting to explore more offchain Integrations as the space of rwas really increases um so to summarize um the way we're seeing enzyme today is a protocol that accelerates growth for asset managers and Builders and if any of you in the room are thinking about building anything or even want to contribute towards the tooling side of things or even the protocol uh as I said I would definitely encourage everyone to check out the grants section on um enzyme. Finance uh and uh or and or reach out to me I'll be here um this week so thank you very much uh I don't know if anyone has any

questions I think we do have time if there are any but uh yeah thanks