Melonomics refer to everything related to the token model and the rationale behind its economics.
The MLN token model is unique for an Ethereum-based protocol token because it creates a direct link between the usage of the protocol and the value of the token. Here, we will explain how this is the case.
The MLN token is used as “asset management gas”. The asset management gas is collected on three functions in the protocol: setting-up a fund; investing in a fund and; claiming any fees (rewards). Notably, the protocol does not charge fees on trading or redemptions in order to keep barriers to entry low.
The asset management gas paid on a specific function is calculated by using the number of Ethereum gas units consumed in that function multiplied by the asset management gas price. The fees are collected in ETH and transferred to the Melon Engine Smart-Contract which then purchases MLN tokens at a premium and burns them. Crucially, this buy and burn model directly links the usage of the network to the value of the token.
Another aspect of the token model is that the protocol inflates by a fixed amount of 300,600 MLN tokens per year. This inflation pool can be used to fund future maintenance and development. The Melon Council DAO (see below) can decide to allocate these tokens towards developer talent if they deem the overall value of their proposal to outweigh the dilution effect. Otherwise, the Melon Council DAO can burn the un-spent tokens at the end of the year. Importantly, this model was designed to look after MLN token-holders and future maintainers and developers once Melonport AG was dissolved. Users are represented through the Melon Council. More information on our token can be found in the Melonomics series 1, 2 and 3 blog posts with Melonomics 2 being the most crucial one to understand.
In summary though, the essential point to grasp is that the MLN token model directly links the usage of the Melon network to the value of the token.