The reaction mechanism and the electronic structure were investigated using QM/MM calculations for the snapshot from the MD trajectory. The QM regions included the oxidant HM1 and the substrate tetralin (TLN), for which the coordinates for the QM region for QM/MM optimized geometry can be found in this SI. The entire supramolecular modeled cage and solvent molecules within 8 Å of HM1 were included in the 'active region' of the QM/MM calculations. The atoms in the 'active region' interact with the QM atoms through electrostatic and van der Waals interactions and the corresponding polarization effects were considered in the subsequent QM/MM calculations. All the QM/MM calculations were performed using ChemShell , by combining Turbomole for the QM part and DL_POLY for the MM part. The MM region was described using the Amber force field generated for cage, and the electronic embedding scheme was used to account for the polarizing effect of the enzyme environment on the QM region.