Decentralized Finance Project Dharma Labs Dishes Out Over $6 Million In Loans During First Month
Decentralized Finance Startup Dharma Provides $6.4 Million In Crypto Loans in Just Three Weeks
Cryptocurrency and Decentralized Finance (DeFi) applications are expanding in the market. Ether (ETH) holders are trying to mitigate portfolio losses that they experienced in 2018. Last year has been very negative for digital currencies as a whole. Most of them have fallen more than 80% after reaching all-time highs. This time, Dharma Labs is growing as an industry leader. In just three weeks, the company was able to facilitate more than $6.4 million in crypto loans.
DeFi Startup Dharma Provides $6.4 Million in Loans
Dharma is a San Francisco-based company that wants to become a leader in the cryptocurrency market by providing loans to interested users. The firm has more than $10 million worth of Ethereum in its system. Meanwhile, BlockFi, another recognized DeFi company, was able to manage $18 million in Bitcoin (BTC) and Ether in deposits.
The COO of Dharma Labs, Brendan Foster, explained during a conversation with CoinDesk that 650 people worked as lender and borrowers since April 8. These are short-term loans with a fixed rate that allow borrowers to lock up Ether and borrow DAI for 90 days. Lenders earn around 2.7 percent interest for their coins.
Polychain Capital helps guide the Maker Foundation and has voting power on the DAI ecosystem. The firm has also invested in Dharma Labs. Another investor in this DeFi company is Coinbase Ventures, that placed its funds during Dharma’s $7 million funding round.
Dharma Labs business development manager Max Bronstein explained:
“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. 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.”
As CoinDesk reports, Foster said that the startup is subsidizing the market in order to encourage growth. This is why lenders are earning a little bit more than borrowers.
At the moment, Dharma Labs does not have fees but it could place a fee scheme in order to replace subsidization. As they explained, the firm will be making revenue in a very standardized way. In the future, the intention is to add support to other stablecoins and Bitcoin (BTC) as well.