What’s Enzyme? and why its next release (Sulu) is all about DeFi

Summary:

  1. Enzyme is a decentralized on-chain asset management platform built on Ethereum. It allows for individuals or entities without any software engineering background to manage wealth in a customizable and safe environment. Its infrastructure provides the building blocks for seamless upgradability, direct composability with DeFi protocols and customizable rulesets for various investment strategies. For investors, they retain full custody of their assets while obtaining full transparency on how each strategy performs.

Overview:

  1. Problem: In the traditional asset management world, spinning up an investment vehicle and executing its strategy can be costly. Despite the high cost, third-party intermediaries are valuable in the process to provide legal and operational oversight for both investment managers and investors. The process is often opaque, complex and long which creates an environment where errors and frauds can happen.
  2. Solution: To address the frictions mentioned above, Enzyme leverages the blockchain technology to level up asset management. The platform allows investment managers to create products that allocate investor funds within the decentralized finance ecosystem. Investors will always have custody of their own assets while being able to track managers activity in a transparent way.

How it works:

  1. Enzyme addresses the problem for both the investment manager (Vault Managers) and investor (Depositors).
  2. Vault managers can be defined as either an Ethereum address for an individual or an Ethereum Multi-sig (Gnosis Safe).
  3. Vault managers go through a process in creating the “Vault” by defining fields such as name, benchmark, assets, fees, etc. Managers may also enable risk management features (e.g. blacklisting assets) and delegate certain functionalities (e.g. trading).
  4. Managers may invest in the vaults with the assets they already own instead of having to convert to the predefined “denominated” asset (this may be a more efficient approach from a cost perspective).
  5. Managers can trade across several different DEX’s and aggregators (Uniswap, Paraswap, Kyber, Kwenta, etc…) and participate directly in DeFi by providing liquidity to pools, lending and claiming airdrops.
  6. Accounting is done in real time, key performance metrics are calculated for you on-chain and fees are automatically calculated and accrued.
  7. Investors, on the other hand, can browse the leaderboard and apply filters to help find products they would like to invest in. Once a search is narrowed, they may go deeper to analyze returns, holdings, fees, activity and anything else the manager has shared.
  8. To invest, investors will need to connect their wallet to the Enzyme app that has sufficient ETH to pay for gas and the manager specified “denomination” asset to purchase shares of the product.
  9. Once investors confirm purchase they will receive a ERC-20 token that represents their ownership in the Vault. The token will be required for redemption at a later time.
  10. Unfortunately, redeeming your share will not give you your portion in the denominated asset but a proportional amount of every asset that is held in the Vault (in future releases there will be an option to specify which token you prefer to receive your redemption in).

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Founder and Contributor @DigitalBankr. I write exclusive research, analysis and market news on all things blockchain, including crypto-assets.

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James Chung

James Chung

Founder and Contributor @DigitalBankr. I write exclusive research, analysis and market news on all things blockchain, including crypto-assets.

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