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The consumption of dyes is increasing worldwide in line with the increase of population and demand for clothes and other colored products. However, the efficiency of dyeing processes is still poor and results in large amounts of colored effluents. It is desired to develop a portfolio of enzymes which can be used for the treatment of colored wastewaters. Herein, we used genome sequence information to discover a dye-decolorizing peroxidase (DyP) from <i>Pseudomonas fluorescens</i> Pf-01. Two genes putatively encoding for DyPs were identified in the respective genome and cloned for expression in <i>Escherichia coli</i>, of which one (<i>Pf</i>DyP B2) could be overexpressed as a soluble protein. <i>Pf</i>DyP B2 shows some typical features known for DyPs which includes the ability to convert dyes at the expense of hydrogen peroxide. Interestingly, <i>t</i>-butyl hydroperoxide could be used as an alternative substrate to hydrogen peroxide. Immobilization of <i>Pf</i>DyP B2 in calcium-alginate beads resulted in a significant increase in stability: <i>Pf</i>DyP B2 retains 80% of its initial activity after 2 h incubation at 50 &#176;C, while the soluble enzyme is inactivated within minutes. <i>Pf</i>DyP B2 was also tested with aniline and ethyl diazoacetate as substrates. Based on GC-MS analyses, 30% conversion of the starting material was achieved after 65 h at 30 &#176;C. Importantly, this is the first report of a DyP-catalyzed insertion of a carbene into an N-H bond.