For those of you who have been keeping track of the DeFi lending space, Dharma gained a lot of attention with the release of Dharma Lever in October of 2018. For those unfamiliar, Dharma Lever allows anyone to trustulessly access additional leverage to all assets supported on the platform.
More recently, there was some skepticism surrounding the status of the project during the brief period in which they stopped accepting new account registrations during July and August.
Introducing Dharma v2
Since inception, Dharma has been very vocal about wanting to create a product that isn’t limited to those with specialized knowledge of digital assets. In this sense, Dharma has been striving towards creating a suite of products that are intuitive and accessible to any user, anywhere in the world.
“One day, we’ll look back and find it absurd that billions of people worldwide could load WellsFargo.com into their browser, but only a fraction of a fraction could actually use the product to manage their money.”
While the claim of creating “the first internet-native, borderless bank” may be one that many of us have heard before, Dharma is doing a few things differently to make sure that this idea comes to fruition:
- Trustless – v2 will offer a non-custodial, 2-of-2 multisig smart wallet, allowing you to use Dharma without downloading any special plugins while simultaneously preventing Dharma from doing anything without your permission.
- Convenient – Every account will come with a unique deposit address that automatically relays funds to Compound, earning interest on your behalf with little to no hurdles.
- Stable – Borrowing and saving rates are fixed, meaning that you won’t have to worry about keeping tabs on different asset trend in the market at large.
- Convenient – v2 will offer fast, low-cost fiat on and off-ramps, making it that much easier to get started.
With the upcoming shift to Dharma v2, the project has decided to shift gears from closed-source contracts to an open-source ethos. This means that all new smart contracts will be posted live by Dharma for testing prior to users interacting with them directly in the product(s). Furthermore, rather than all foundational infrastructure being built in-house, Dharma will be relying on Compound Finance’s infrastructure as a trusted base layer for future expansion.
With this exciting new announcement, Dharma also took a bold leap by sharing a few risks that currently exist and are worth noting as the new version is rolled out in the coming months.
- Custody – With v1, if Dharma were to get hacked or go rogue, your funds could be compromised. This will be changed with the multi-sig wallets in v2.
- Licenses – Dharma is not an FDIC-insured bank or savings account. Rather, Dharma acts as a conduit, allowing users to earn interest on the underlying Compound protocol. As such, there are still a number of inherent risks associated with lending via Compound and using Ethereum as a base layer, both of which could (in cases that have yet-to-be seen) result in a loss of user funds.
- Early-Stage – V2 is still in beta, meaning that there are likely a few minor application-layer bugs.
Overall, this is a big step forward for Dharma and the DeFi lending community. With more and more support being shown for Compound as a trusted base-layer, it’s safe to assume the sector will continue to see increased improvements surrounding speed, convenience and opportunities at large.
Dharma has shown a tremendous amount of maturity by foregoing that notion that they could do it all themselves in favor of a base-layer that is being widely accepted by the community at large.
For those who are interested in checking out what v2 has to offer, be sure to register for the beta here. Please note that existing Dharma account holders will be given priority and that there may be a brief waitlist for new users.
In the meantime, be sure to stay up to date with new updates surrounding Dharma progress via their official blog.
Cooper is focused on building compelling blockchain products. He currently works as the managing director at Fitzner Blockchain Consulting and is a contributor to DAOs like MetaCartel and Moloch. He is an active member of the Ethereum community and has a strong interest in for-profit businesses such as The Block Crypto and Messari.