Dharma: Digital Asset Lending Market (Ethereum-Dai)
The Dharma Protocol is an Ethereum Lending platform is backed by some of the most recognisable names in the technology and cryptocurrency industries. Most recently, they closed a 7 million USD Series A investment round with backers such as Y Combinator, Coinbase, Green Visor Capital and Polychain Capital.
Getting started with Dharma is actually quite easy, you set up an account with an email/password combination and then you are good to go! Seriously, the account was ready to start borrowing or lending within a few seconds. It is also quite clear that the development team have put quite a great deal of effort into the UI interface, with clean lines and design and with simply displayed information.
At present, the platform appears to be limited to borrowing or lending Ethereum against Dai, or vice versa. This means that if you want to borrow Ethereum, you will need to collateralise the loan with Dai, or conversely, if you want to borrow Dai then you are required to put up Ethereum as your collateral.
There are different APR interest rates depending on the loan that you are taking out, with the DAI borrowing rate being significantly higher than the ETH borrowing rate. However, in both cases you are required to over-collateralise to the effect of 150% of the amount that you are borrowing. This over-collateralisation is quite common on the cryptocurrency lending platforms due to the lack of a reputation system for assessing borrowers and the volatile nature of cryptocurrency prices.
Liquidation of the loan occurs at 125%, meaning that if the value of the collateral falls below 125% of the value of the loan then the loan is terminated and the collateral is passed through to the lender to recover the costs of the lost assets. At any point, the borrower is able to add extra collateral to continue securing the loan (thus pushing the 125% threshold further away).
Asset lending is currently also restricted to the two currencies, Ethereum and Dai. However, the process for adding assets to the lending pool is quite easy, you are first prompted for the amount that you want to add to the pool and the address to which any interest (or collateral) will be paid into. After this, you are asked to deposit the assets into an escrow address which will then be added to the pool as soon as the transactions are confirmed on the Ethereum blockchain. The time to set up a loan offer was limited only by the Ethereum transaction confirmation time (on the order of a minute or less), no smart contracts required for this platform.
There evidently has been a lot of thought put into the UX (User Experience) of Dharma Protocol. Everything is clean and information is simple and clear. However, this is where I would suggest that it falls short in comparison to other more complex cryptocurrency lending dApps.
There is currently only the two cryptocurrencies that are lent against each other (one serving as the loan, and the other serving as the collateral), no other ERC tokens which does restrict somewhat the utility of the platform. Also, there is no option (that I could find) to affect the interest rate or any other aspects of the loan (rate of over-collateralisation for instance), everything loan is built from the same mold, and the loan/borrower matching is all done behind the scenes.
This does have the advantage that the user doesn't need to be too knowledgeable about the workings of the borrowing market, but it does mean that there may be more competitive platforms if you are seeking to look for a better deal on lending or borrowing digital assets.
However, that said... the sheer simplicity and ease of the user interface is something that currently stands out in the often highly technical and information dense front ends of most financial dApps. So, if Dharma is able to scale out some more features for power users and perhaps start to include different tokens for lending and security then this platform might be the lending platform that captures a critical mass of users due to it's easy to use interface.
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