“Dharma is the easiest place to save your money from anywhere in the world.”
That's the new mission statement for decentralized finance (DeFi) platform Dharma as described by Brendan Forster, co-founder and COO of Dharma Labs, which built the Dharma protocol.
On Thursday, Dharma Labs announced it would be relaunching its services in closed beta beginning with a new savings product.
“We let people save in stablecoins,” Forster told CoinDesk. “What the new product enables is the instant depositing of stablecoins and the instant earning of interest on those stablecoins.”
Having raised $7 million in February 2019, Dharma Labs launched its first product on the ethereum blockchain in April. At the time, Dharma was meant to facilitate peer-to-peer lending and borrowing of cryptocurrencies at fixed interest rates and for fixed durations.
Now, by using existing liquidity pools of crypto on the lending platform Compound, Dharma V2 moves away from fixed interest rates and loan terms to variable ones that dynamically change and don't require users to lock-up their funds. The company's new site advertises interest rates of up to 11.2 percent.
The importance of such a pivot, according to Forster, is all about “ease of use.” In spite of the early success Dharma displayed in its first few weeks, Forster said Dharma users wanted more flexibility – which the original Dharma protocol could not provide.
“[Dharma] was successful but what we heard from our users was that it was too narrow of a use-case. What they wanted was far more tailored around the saving of money, rather than the lending directly of money,” said Forster. “That led to a several-month-long investigation in which we first attempted to build our vision for the savings products on Dharma V1 but ultimately decided ... to build Dharma V2 on the Compound protocol.“
Adding to this, Dharma investor and Autonomous Partners founder Arianna Simpson said:
Building on the strengths of other DeFi platforms and creating synergies within the broader ethereum ecosystem is exactly how Compound founder and CEO Robert Leshner also characterized Dharma's next phase.
"The Dharma team is building an extremely user-friendly interface that has the chance to onboard to the next 100K users of decentralized finance," Leshner told CoinDesk. "Compound is thrilled for more on-ramps to exist."
Next steps
Starting today, all existing Dharma users will be grandfathered into the closed beta product. In addition, no new deposits of cryptocurrencies will be allowed on the original Dharma V1 platform. Dharma V1 will only continue to operate until all existing loans have been paid out.
This process of phasing out Dharma V1, according to Forster, actually started in July. With existing Dharma loans in the process of expiring and no new ones being created, the total value of cryptocurrencies locked in Dharma fell from a high of $30 million to now just under $10 million.
What may have looked like an unusual drop-off in platform value to any observer in the DeFi space was actually an intentional result of relaunching the Dharma platform as a variable savings product, according to Forster.
In the months to come, Dharma Labs will be expanding Dharma V2 to also include borrowing services, non-custodial smart wallets and fiat on- and off-ramps. Forster's goal is for Dharma to rank as one of the most popular DeFi applications in the ethereum ecosystem.
“It's a matter of months before we reach that peak and, in all honesty, we have our sights set substantially higher than that,” said Forster. “In short, we want to create a borderless bank.”
As such, it’s not just the ethereum ecosystem Dharma could have a major impact on, according to Simpson, but crypto more broadly.
"Dharma is playing a very important role in making the DeFi ecosystem usable by a class of consumers which is much wider than the early crypto adopters who were previously the only ones who had the technical sophistication to use most of these products and services," said Simpson, adding:
Brady Dale contributed reporting.
Team photo via Dharma Labs