San Francisco based Dharma Labs is positioning itself as a leader in the peer-to-peer (P2P) lending market. Since the platform launched on 8th April it has facilitated more than $6.4 million in crypto loans with the emphasis on ethereum (ETH).
Coindesk reports: “For comparison, Dharma has more than $10 million worth of ethereum in its system while the industry incumbent BlockFi garnered roughly $18 million in both bitcoin and ethereum deposits over the past month.”
Dharma Labs COO, Brendan Forster, told CoinDesk that, based on the noncustodial mobile app’s user accounts, roughly 650 people have acted as either a borrower or lender to date.
Forster also commented that the platform’s short-term, fixed-rate loans allow borrowers to lock up ether and borrow the dollar-pegged stablecoin DAI, or vice versa, with lenders earning roughly 2.7 percent interest over a 90-day period.
Dharma loans are part of the DAI ecosystem and Polychain Capital is one of the investors. Coinbase Ventures was also involved in Dharma’s $7 million funding round earlier this year.
Forster told Coindesk that the rise in DAI fees means Dharma’s interest rates have also increased. Both of the loan platforms use the same smart contract to determine the price feed that defines the collateral’s liquidation rate. If the price of ETH drops too low, users on either platform could lose their deposits. Dharma Labs business development manager Max Bronstein told CoinDesk, “As DAI slips under a dollar, trading at like $0.97, people can actually go buy DAI and lend it on Dharma for 11 percent annual [interest] rate.” He added, “With Dharma, we’re actually helping push the [DAI] price back up to a dollar. We’re helping to create [demand] there and filling this gap. Right now DAI holders really don’t have a way to earn interest.”