Crypto Lender Dharma Officially Launches on Ethereum Blockchain

Opportunities to earn interest on your crypto are increasing, and Dharma is the latest to enter the fray.

Lenders and borrowers are matched peer-to-peer to set up crypto lending terms in a non-custodial fashion, governed by Dharma's smart contracts.

Dharma will differentiate itself from others in the market by offering depositors a fixed rate of return on the crypto they make available to lend.

Dharma has changed a lot since its white paper, which described a platform where outside parties would set themselves up to underwrite loans and facilitate identifying borrowers.

Like the other collateralized crypto lending products out there, Dharma asks that borrowers put up 150 percent of the value of their loan as collateral.

Because there is much more demand to lend crypto than to borrow it, borrowers should be matched with a lender fairly quickly.

Either way, "There is much more interest in lending cryptocurrencies than there is in borrowing them," Hollander said.

For now, Dharma is subsidizing lenders somewhat, as rates paid for borrowing are lower than the return lenders receive.

Borrowers only pay 2 percent while a lender earns 4 percent on ETH and 5.5 percent on DAI, when their capital is in a loan.

With Compound, users lend and borrow in crypto, but all the rates float continuously based on real-time demand.