Per the launch announcement, users can interact with the service with any wallet, and only Ethereum (ETH) and the decentralized stablecoin (DAI) are supported for the time being. The service is also reportedly non-custodial, and the users remain in control of the private keys granting access to the assets.
The post explains that this has an advantage over custodial centralized crypto exchanges, which can sustain losses of customers funds in the case of a hack. The non-custodial implementation of lending and borrowing is purportedly made possible by the Dharma Key system.
In the launch announcement, which refers to cryptos as “magical internet money,” Dharma explains that its vision is that users should be able to use cryptocurrency in their everyday life to earn interest, pay their bills or taking out loans. The post notes:
“While speculative investing was an important first use case for the ecosystem, crypto must do more in order to reach a mass-market audience. Users won’t be compelled to join a new financial system if they can’t access the basic financial services they currently rely on.”
The announcement claims that the aforementioned system allows users to seamlessly authorize transactions while retaining control over their private keys using a four-digit pin. The service’s website claims that users can earn 2.5% yearly interest on ETH and 8% on DAI. Furthermore, the page also claims that over $1 million has been borrowed on the platform, while over $1.6 million has been offered.
At the end of January, a report released by cryptocurrency lending company Genesis Global Trading claimed that it processed $1.114 billion in borrows and lends last year.