What is Dharma?
Dharma is a protocol on Ethereum for tokenized peer-to-peer debt assets. Dharma lets anyone issue or underwrite nearly any type of debt agreement. Dharma has no native token. Like 0x, the Dharma protocol uses relayers to provide order interfaces. Unlike other lending protocols, uncollateralized loans are possible on Dharma through underwriters, trusted entities who originate loans, assess creditworthiness, and service debt.
Recently, Dharma launched Dharma Lever, a non-custodial margin trading service that acts as a two-sided market for lenders and borrowers. With Dharma Lever, a prospective borrower submits a loan order with collateral to Dharma’s smart contract. The loan order is broadcast to the Dharma Credit Market for matching. Each loan has a 28-day term. Like other DeFi lending protocols, Dharma Lever requires 150% collateralization (i.e., the debt’s value can’t exceed 66% of the collateral’s value). If a loan becomes undercollateralized, designated actors can liquidate. But Dharma alerts borrowers via email when their loans drop to critical levels, giving them a chance to preserve assets before liquidation. As of March 2019, Dharma Lever supports ETH, USDC, and Dai, but more assets are planned for the future.