15 ms·

Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

184 points by nahollander 8y ago

Greetings HN! My name’s Nadav Hollander, and I’m the founder of Dharma Labs (https://dharma.io https://dharma.io). At Dharma, we are creating a suite of protocols, standards, and developer tools for issuing and administering tokenized debt agreements on the Ethereum blockchain. After three extensive external security audits of our smart contracts, we are releasing the public beta of Dharma Protocol v1 on the Ethereum mainnet -- developers can take a crack at building decentralized lending applications at docs.dharma.io, and non-developers can try out borrowing and lending a wide variety of crypto-assets using Dharma Plex (https://plex.dharma.io https://plex.dharma.io). I first became interested in the cryptocurrency ecosystem in 2015, when I took Dan Boneh’s class on Bitcoin & Cryptocurrencies at Stanford. Though the technology was (and still is) quite immature, I fell in love with the nascent space, and subsequently worked as an engineer at Coinbase. At Coinbase, I was struck by the fact that a huge amount of users’ cryptocurrency was sitting idle in cold storage, instead of being deployed in some capacity as dollars would in a savings account. The advent of generic, programmable blockchains like Ethereum presented an intriguing possibility -- what if we could build borderless infrastructure for borrowing and saving that wouldn’t require a company like Coinbase to sit in the middle? That’s why I started working on Dharma -- a framework for originating, issuing, crowdfunding, and trading debt on blockchains like Ethereum. In essence, what we do is create tools, standards, and smart contracts that developers can use to build profitable lending applications that can tap into a borderless pool of credit liquidity. These tools are all fully open source and free to use -- there is no native “Dharma token” that users are forced to leverage in some capacity. We look forward to hearing HN’s feedback / thoughts!

zitterbewegung 8y ago
Your product looks interesting and I really like the website. I'm going through the Tutorial and it is AMAZING. I like that you put in the time to make it game. Do you think that your product would be useful for Insurance contracts on the Ethereum blockchain?
- nahollander 8y ago
  Thank you! Glad to hear that you enjoyed the tutorial. There are numerous ways in which Dharma debt agreements can interface with insurance contracts: 1. We've already seen some members of our developer community working on trustless credit default swaps -- which are functionally insurance contracts that use the programmatic endpoints of Dharma debt agreements to assess claims on defaults. 2. For non-fully-collateralized insurance contracts, Dharma debt agreements can serve as the mechanism for tracking and administering the tokenized bonds that capitalize the insurance contract.
zanek 8y ago
I didnt see this mentioned on the website, but what about the legality of this ? Is this legal in the US ? Or where is it legal , illegal to use ?
- nahollander 8y ago
  Yes -- two parties are permitted to lend money to one another in a mutually agreed environment. It's important to note, though, that developers who build end-user applications on top of Dharma ought to be cognizant of lending regulations / securities law in the jurisdictions they are active in. However, we've opted to build Dharma in a non-jurisdictionally-biased manner -- we think that jurisdiction-specific regulatory restrictions are better implemented at the application layer rather than the protocol piping.
  - L_Rahman 8y ago
    That this choice happens to reduce the technical and regulatory complexity of your product is I'm sure just a happy co-incidence :)
  - jbob2000 8y ago
    That is a dangerous position to put yourself in. AML and Terrorist financing laws make everyone responsible, you generally cannot claim innocence if you take no precautions and are involved in some kind of incident. Good luck.
    - seibelj 8y ago
      No, this is akin to building a protocol. The creators of HTTP are not in trouble when someone uses the web for illegal activities.
      - jbob2000 8y ago
        HTTP is not intrinsically tied to finance, though. This is specifically a protocol for financial transactions, for sure it would fall under AML laws.
xur17 8y ago
This looks really neat! - I was talking to a friend about something similar to this a few weeks ago. It looks like you'd need to trust the counterparty right now unless they put up substantial collateral. Do you intend to add something similar to a credit rating / history to make it possible for random strangers to lend to each other? Or do you have other ways to handle this?
- nahollander 8y ago
  Thanks for the kind words! In the short-term, as you correctly alluded to, we're focused on loans that are fully-collateralized on-chain. In the future, however, we hope to integrate trusted third-party underwriters into the network in order to open the door for unsecured loans. There are many technical / game theoretic challenges to be solved on this front, though, so we've included unsecured loans as an "experimental" feature set in this initial release.
  - xur17 8y ago
    Is a public marketplace in the works? Right now you have to paste a json string from the counterparty.
    - nahollander 8y ago
      Yup -- there are several. The most mature relayer project on Dharma we're aware of is Bloqboard (bloqboard.com), though I believe they are not ready to launch on mainnet quite yet.
djstein 8y ago
lot of components did not load on initial landing of the page on FireFox Nightly 62.0a1
- nahollander 8y ago
  Thank you for pointing this out -- I've flagged our team and we're looking into it.
schaefer 8y ago
Nadav, "Dharma" is widely recognized as the term to denote the teachings of Buddha. I feel the use of the term in this new context is cultural misappropriation. Would you care to address that concern with your thoughts on the topic?
- indiafoodie 8y ago
  Not the author here, but Dharma has several other meanings in Indian languages. A predominant one is virtue, righteousness, and duty. I hardly think of this usage as cultural misappropriation; just loanwords from a different language.
- jacquesm 8y ago
  One persons's cultural mis-appropriation is another one's wealth. Mis-appropriation is how words spread historically, I don't think you're going to stop that from happening.
- krapp 8y ago
  ... said schaefer, on a site that calls its comment scoring "karma."
romgrk 8y ago
`dharma` is the term we buddhists use to designate the (sacred) teachings of Buddha. Would you use `Coran` or `Bible` to name your project? Probably not. It would have been a good idea to take more time to reflect on your choice of name.
- malvosenior 8y ago
  There are a ton of products named “The X Bible” where X = photoshop, c++, whisky... I don’t think it’s particularly controversial but then again I’m not a Christian.
  - RightMillennial 8y ago
    In general, no, we don't find it offensive. The word "bible" is simply from the Greek word for book or books.
    - flatline 8y ago
      How would you feel about Bible.io being a company page for a crypto project promoting the Bible protocol? You have to admit it sounds a little confusing, no?
      - RightMillennial 8y ago
        Sure, naming a cryptocurrency protocol "Bible" would be confusing at first. But if it was meant to be the Bible of protocols or the one protocol to use, I would understand the gist of its name.
      - austenallred 8y ago
        What if it were, say, “the C Bible?”
      - Geee 8y ago
        There is JesusCoin https://jesuscoin.network/ https://jesuscoin.network/
    - 8y ago
perfunctory 8y ago
When one lends cryptocurrency I assume the loan comes with an interest? Given the fixed supply of bitcoins or what have you, where will the coins to pay the interest come from? Or does it work differently in cryptocurrency world? Genuinely curious.
- tlrobinson 8y ago
  I'm not the op, but fractional reserve lending isn't the only form of lending, and fixed supply isn't the only form of cryptocurrency.
  - nahollander 8y ago
    Beat me to the reply :) Indeed, even with a fixed supply token, a borrower would simply have to come across the necessary amount of principal + interest in the loan term.
    - perfunctory 8y ago
      But that's kind of the point, isn't it. With the fixed supply the "+ interest" would be harder to come by. Wouldn't it lead to elevated levels of defaults?
      - bpforster24 8y ago
        One way or another, the borrower has to come up with the principal + interest or they will forfeit their collateral. So they will want to use the loan in some sort of income generating capacity: financing a project, speculative trading, etc. If they are able to use the loan to earn more than the interest rate they've committed to, they'll make money overall. If not, they'll lose money. Bottom line: we don't think the monetary policy of crypto-assets will have much of an impact on default rates in the short term.
matte_black 8y ago
With any new lending platform I have to ask: What happens if I borrow assets, spend them, and never pay back the lender?
- nahollander 8y ago
  In the current implementation / use cases we're focused on, your collateral, which is held in a smart contract, would become eligible for seizure by the lender.
  - TekMol 8y ago
    How can this make sense? If the collateral is X, then the borrowed amount (Y) has to be less then X. Why lend anything in the first place, when that means you can only spend Y while otherwise you could have spent X which is more?
    - nahollander 8y ago
      This happens quite regularly in the world of margin trading. Imagine the following: 1. I own ETH, and want to hold my ETH position so I can enjoy price increases, but I need liquidity to live my day to day life and, well, it's hard to pay for things with ETH. 2. Instead of selling ETH and exiting my position, I put ETH up for collateral and borrow a stable-coin (like DAI) against it. That way, I maintain my price exposure to ETH, but have liquid cash to use for my day-to-day needs.
      - matte_black 8y ago
        And if you don’t use coins for day to day living expenses?
        cortesoft 8y ago
        You could cash out the borrowed coins for cash.
      - 8y ago
xiphias 8y ago
It looks like reintroducing fractional reserve banking, the main thing Bitcoin was supposed to be stopping (a good enough reason for me to help friends to take out all their money from Coinbase).
cvaidya1986 8y ago
How is this different from EthLend or SALT
- bpforster24 8y ago
  EthLend and SALT are both lending applications. While we have created a lightweight lending app in Dharma Plex, our core offering is Dharma Protocol. Dharma Protocol is a suite of developer tools that enables entrepreneurs to create apps like Ethlend or SALT easily and securely. It's open source and entirely free to use.
  - cvaidya1986 8y ago
    Ah thanks for the response. What's the business model?
    - bpforster24 8y ago
      We discuss our business model a bit in this blog post: https://blog.dharma.io/dharma-isnt-currently-doing-a-token-sale-and-here-s-why-afa04e78247b https://blog.dharma.io/dharma-isnt-currently-doing-a-token-s... Happy to discuss more, but that's a good start
      - hekfu 8y ago
        You don't really though? Unless I missed the bit on how you want to get payed. All I see is 'building a great open source infrastructure', which while I applaud and is noble, is not widely accepted to pay rent so far
        bpforster24 8y ago
        Ha, you're right, sorry. We think we'll be able to sell value added services to our ecosystem (for example, consulting services, insurance, data feeds, etc.). We will also investigate token models to see if there is a way to make the underwriting process less trustful, and this token model may be a revenue generator as well.
iMuzz 8y ago
What stops someone from putting up some collateral, disappearing with the loan and then just creating a new account?
- nahollander 8y ago
  The collateral is held in a smart contract -- if the borrower disappears and fails to make a repayment, his collateral becomes eligible for seizure.
  - iMuzz 8y ago
    Are the collaterals always worth equal or more than the amount borrowed? I asked that assuming people put up 1 eth as collateral to borrow 2 eth.
    - cortesoft 8y ago
      Usually collateral is supposed to be equal or more than the amount borrowed, especially in a situation like this where there is no 'credit score' to use to determine likelihood of default.
      - ghthor 8y ago
        The protocol doesn't have a credit score. That's a concept better suited for the application layer built on top.
        cortesoft 8y ago
        Right, which was why my point was that the collateral is probably going to be at least equal in value to whatever is borrowed.
        bpforster24 8y ago
        Dharma Protocol doesn't require that the value of collateral be greater than the principal of the loan, but we do expect the market will demand full- or over-collateralization.
nowarninglabel 8y ago
Congrats on getting to this point! Been following Dharma closely for a little while now as we (Kiva) have an interest in trying to increase financial inclusion and decrease lending costs for the world's poor and have been hoping Dharma may end up being one piece to the future of our work. Could you possibly speak to how you intend to enable KYC (Know Your Customer) / AML (Anti-Money Laundering) to work with Dharma? The best bet so far has seemed to be trying to incentivize it through providing automatic fees to external parties to perform these actions and holding the money in escrow until it goes through. However, it would be great if you could share if you'll have discussed this problem at all. I'd love a world where we didn't have to deal with KYC & AML, but we do, and the sooner we figure out how to make it work in an efficient and inexpensive manner for the world's poor, the sooner we can reach the UN Sustainable Development goals around financial inclusion.
- nahollander 8y ago
  Thank you! :) We've pretty deliberately opted out of baking jurisdiction-specific protections (be they KYC / AML, accreditation, etc.) into the protocol insofar as we really want this to be a universal standard that's jurisdiction-agnostic -- to give a somewhat crass analogy, most developers would agree that it does not make sense for content-protection against, say, child pornography, to sit at the level of TCP / IP. Jurisdictions vary widely in how they treat lending law, and so we've opted to be as flexible as possible on a technical level. With that being said, we're actively working on making sure that, at layers above the protocol, developers have an easy time plugging in / restricting functionality on the basis of regulatory parameters. There are several interesting projects in the decentralized identity space that are tackling ways of natively attesting to KYC / AML screening on blockchains like Ethereum, and we're actively in conversations with them to make sure we maintain compatibility.
  - CryptoBard 8y ago
    I also work in the exchange space like you used to and my thinking is pretty much fully aligned with the way you pose the issue and I'm very excited about your intention behind Dharma. I also agree with your current thoughts on approaching KYC and AML (please see my post in response to this one's parent). I'll reach out to you via your website if you don't mind since HN doesn't have PMs, would love to figure out if there's a way I can contribute.
TekMol 8y ago
How is paying the debt back enforced or incentivised?
- bpforster24 8y ago
  Right now we expect most loans will be fully collateralized by other crypto-assets. So the default deterrence would be that if you don't pay back your loan, you lose your collateral. We also support unsecured loans (i.e., loans that are not fully collateralized). We consider these pretty experimental and lenders should do a lot of diligence before investing. For unsecured loans, counterparties can agree to any kind of default deterrence that they want. Could be off-chain legal agreement, could be a reputation scheme, etc.
  - aphextron 8y ago
    What exactly is the use case for a 100% secured loan?
    - bpforster24 8y ago
      Even if you 100% collateralize, you can get 2x leverage. That leverage can be applied to all sorts of use-cases, but we think one of the main ones that will be common today is speculative margin trading (e.g., short selling)
      - spookthesunset 8y ago
        So basically, like all crypto it’s just another layer of speculative trading, fraud and scams all the way down? Congratulations, I guess...
- cargo8 8y ago
  Collateral is staked ahead of time
edent 8y ago
There's something I don't understand about Smart Contracts. Normal contracts are written by lawyers. They are reviewed by both parties' lawyer. Sometimes, after the contracts are signed, the lawyers disagree what a particular provision or clause means. At which point, they either negotiate or sue. In which case, a human judge weighs up the case and decides. How do disagreements work with smart contracts? I assume some contracts will be buggy - mostly because programmers are just as fallible as lawyers. So how are disagreements resolved in an equitable way?
- TekMol 8y ago
  How do disagreements work with smart contracts? If you are big or popular or have connections, then the guys in power will bend the rules in your favour. Google 'The DAO' for an example. Otherwise, an algorithm will decide.
  - sillysaurus3 8y ago
    Not quite. The ecosystem was much smaller back then. Nowadays, I'm not sure one company would be able to make a case for forking the currency. Besides, you can still buy ETH classic, if you disagree with the decision. It's just not worth much.
    - fapjacks 8y ago
      I am 100% sure that if I went and "the code is the contract"ed whatever ends up being DAO2.0 out of 5% of all existing ETH, that Vitalik would come save it "just this once" one more time... I absolutely do not believe for one second that there wouldn't be another fork. And I say this as someone with a substantial interest in the currency.
      - sillysaurus3 8y ago
        Well, the point is, Vitalik can't do that. The community would have to agree with him. If the situation were sufficiently dire, then presumably it would be easy to get community support. But the opposite is true too.
seibelj 8y ago
My company[0] will be using Dharma later this year to put personal loans on the blockchain. Dharma is the best of the bunch in our opinion, and we are very pleased with the support the Dharma team has provided. [0] https://airfox.com https://airfox.com
atomical 8y ago
How is this different than SALT and MakerDao?
- bpforster24 8y ago
  Similar to the question about SALT and EthLend, these are both applications. See our answer there fore more details. Re. MakerDao, they offer one type of loan, the Collateralized Debt Position, in which a borrower collateralizes ETH and the principal is denominated in DAI. And they have built in many automated mechanisms to keep DAI stable against the value of a US Dollar. Dharma can support a similar use-case (getting liquidity on crypto-assets without selling them) -- you would collateralize any currency and borrow in DAI. That way you can get fiat liquidity today, but if you pay back your loan on time you can still benefit from appreciation of the asset you collateralized. In addition, Dharma is capable of supporting other lending use cases: short selling, speculative leverage, venture debt, corporate bonds, muni bonds, etc. etc. We are a platform for any kind of debt agreement and for companies that want to issue these debts.
himom 8y ago
Shouldn’t money be Dukka, not Dharma? Or is money too often an amoral scapegoat for many individual acts of greed?
jakecrouch 8y ago
What is the advantage of using the blockchain rather than creating a fully centralized debt exchange?
- scoot 8y ago
  Investor buy-in.
- TTPrograms 8y ago
  A privately owned centralized debt exchange company can go out of business.
  - spookthesunset 8y ago
    And one of these can fork itself to leave you stranded if the mob (or top of the pyramid) switch to another more popular fork. You’ll be left holding a bag of worthless tokens. You’ve traded the entire legal infrastructure for mob rule. This project, like all crypto projects, is fundamentally flawed. The only difference is this one somehow managed to con a bunch of VC folk into funding it.
    - TTPrograms 8y ago
      If a blockchain forks you have copies on both forks. What are you talking about?
- dharma1 8y ago
  I guess easier access to global markets, and reduced counter party risk with the exchange. Having the loans fully or over-collateralised (in the absence of credit scoring and real world debt collection) definitely reduces potential applications though. Congrats on the launch still, great name ;)
- bpforster24 8y ago
  I'd recommend reading this blog post we put out. It explains better than I can in a short comment: https://blog.dharma.io/dharma-an-open-protocol-for-generic-tokenized-debt-agreements-9a4e6a4e6fc0 https://blog.dharma.io/dharma-an-open-protocol-for-generic-t...
simonebrunozzi 8y ago
Congrats for the Dharma team for this anticipated launch! Been following them for a while, great team and very focused exection! Our company [0] is building an API platform to transact on digitized real estate assets, and we intend to leverage Dharma as much as possible in the future. [0]: www.fabrica.city
integration 8y ago
Maybe you don’t realize but this name is offensive to Buddhists... It’s like an insurance company calling itself “Gospel”
- asdsa5325 8y ago
  > It’s like an insurance company calling itself “Gospel” Is that offensive? Doesn't seem like it to me.
  - integration 8y ago
    Does “disrespectful” instead of “offensive” satisfy your need to play semantics?
    - cfadvan 8y ago
      What about it is disrespectful, and why should anyone care? It’s true that if you look hard enough, you’ll always find an offended party, but so what?
      - yusee 8y ago
        This is a successful global branding strategy...NOT!
    - asdsa5325 8y ago
      No, it doesn't, since I don't think it's disrespectful either.
    - dang 8y ago
      Please don't cross into incivility in Hacker News comments. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- repsilat 8y ago
  Insurance would be fine (though Christians might suggest "Numbers" as a more accurate biblical name.) I think as a business they'd have more of an objection to Christianity being associated with moneylending.
arcaster 8y ago
This service sounds incredible! However, naming it "Plex" seems like a bit of a hiccup since most just think of Plex as the most pervasive home media server in existence...
- sambull 8y ago
  Or that currency I used to buy my first space ship. In eve online.
  - imdsm 8y ago
    ISK was the currency, PLEX was the subscription, right? Or did you use PLEX to buy it?
dmitrygr 8y ago
So, you've reinvented fractional reserve banking, minus all the protections we've built into the modern version of it we all use today through decades of hard lessons? Should be fun.
- spookthesunset 8y ago
  Welcome to the crypto “space”. It is a bunch of people who don’t understand math, finance, politics, monetary policy, legislation, government, economics, computer science, or seemingly life itself. All sit around and rediscover why society is shaped the way it is...
atomical 8y ago
How do you make money?
blahnow 8y ago
https://plex.dharma.io/request https://plex.dharma.io/request spins forever... website down?
- bpforster24 8y ago
  Are you using a web3 browser? Chrome+metamask, cipher, toshi, brave, etc.
KasianFranks 8y ago
Nice, a trading vehicle https://hackernoon.com/its-not-about-the-ico-it-s-about-the-trading-vehicle-38fa3425e9e3 https://hackernoon.com/its-not-about-the-ico-it-s-about-the-...
murwebb 8y ago
Love the idea
beefield 8y ago
I propose one more tiny step. Instead of having to use these cumbersome cryptocurrencies as payments method, you could also use these IOU's of selected trustworthy institutions as payment tokens. I mean, Instead of you needing to get your currency back from Coinbase and then transfer it to your coffee shop owner, you would just say to Coinbase that hey, you do not need to pay me this cryptocurrency, pay the coffeeshop instead. Wouldn't that be much more efficient? This is actually one of the more frustrating issues for me in cryptocurrency discussions. The underlying monetary policy is of fixed or predefined money supply, that is supposed to somehow stabilize the price/value of the cryptocurrency in the long term because of hand waving, wishful thinking and reasons, all the while having exactly no way to stop fractional reserve banking emerging nor regulating it or the additional monetary supply it will create. This being one of the main reasons why current crop of cryptocurrencies will never be used as economy-wide payment method and why their price will always stay chaotic (unless the price stabilizes to zero...)
dvfjsdhgfv 8y ago
You may ponder longer on the name. As the comments in this thread show, not everybody is happy with your capitalizing on a word that for centuries was at the center of Buddhism.
techaddict009 8y ago
Is there any simple explanation of what exactly it is? I tried to understand it by reading various places on site but too heavy words used like credit liquidity, tokenized debt. When you are targeting normal people can you explain how exactly this works? Is it like I give bitcoin/ethereum and you give me fiat money and when I repay fiat money you give my bitcoin/ethereum back?
orasis 8y ago
What does this have to do with helping all sentient beings to awaken in this lifetime? Consider a name change.

184 points by nahollander 8y ago

zitterbewegung 8y ago

Your product looks interesting and I really like the website. I'm going through the Tutorial and it is AMAZING. I like that you put in the time to make it game. Do you think that your product would be useful for Insurance contracts on the Ethereum blockchain?

nahollander 8y ago
Thank you! Glad to hear that you enjoyed the tutorial. There are numerous ways in which Dharma debt agreements can interface with insurance contracts: 1. We've already seen some members of our developer community working on trustless credit default swaps -- which are functionally insurance contracts that use the programmatic endpoints of Dharma debt agreements to assess claims on defaults. 2. For non-fully-collateralized insurance contracts, Dharma debt agreements can serve as the mechanism for tracking and administering the tokenized bonds that capitalize the insurance contract.

zanek 8y ago

I didnt see this mentioned on the website, but what about the legality of this ? Is this legal in the US ? Or where is it legal , illegal to use ?

nahollander 8y ago
Yes -- two parties are permitted to lend money to one another in a mutually agreed environment. It's important to note, though, that developers who build end-user applications on top of Dharma ought to be cognizant of lending regulations / securities law in the jurisdictions they are active in. However, we've opted to build Dharma in a non-jurisdictionally-biased manner -- we think that jurisdiction-specific regulatory restrictions are better implemented at the application layer rather than the protocol piping.
- L_Rahman 8y ago
  That this choice happens to reduce the technical and regulatory complexity of your product is I'm sure just a happy co-incidence :)
- jbob2000 8y ago
  That is a dangerous position to put yourself in. AML and Terrorist financing laws make everyone responsible, you generally cannot claim innocence if you take no precautions and are involved in some kind of incident. Good luck.
  - seibelj 8y ago
    No, this is akin to building a protocol. The creators of HTTP are not in trouble when someone uses the web for illegal activities.
    - jbob2000 8y ago
      HTTP is not intrinsically tied to finance, though. This is specifically a protocol for financial transactions, for sure it would fall under AML laws.

xur17 8y ago

This looks really neat! - I was talking to a friend about something similar to this a few weeks ago. It looks like you'd need to trust the counterparty right now unless they put up substantial collateral. Do you intend to add something similar to a credit rating / history to make it possible for random strangers to lend to each other? Or do you have other ways to handle this?

nahollander 8y ago
Thanks for the kind words! In the short-term, as you correctly alluded to, we're focused on loans that are fully-collateralized on-chain. In the future, however, we hope to integrate trusted third-party underwriters into the network in order to open the door for unsecured loans. There are many technical / game theoretic challenges to be solved on this front, though, so we've included unsecured loans as an "experimental" feature set in this initial release.
- xur17 8y ago
  Is a public marketplace in the works? Right now you have to paste a json string from the counterparty.
  - nahollander 8y ago
    Yup -- there are several. The most mature relayer project on Dharma we're aware of is Bloqboard (bloqboard.com), though I believe they are not ready to launch on mainnet quite yet.

djstein 8y ago

lot of components did not load on initial landing of the page on FireFox Nightly 62.0a1

nahollander 8y ago
Thank you for pointing this out -- I've flagged our team and we're looking into it.

schaefer 8y ago

Nadav, "Dharma" is widely recognized as the term to denote the teachings of Buddha. I feel the use of the term in this new context is cultural misappropriation. Would you care to address that concern with your thoughts on the topic?

indiafoodie 8y ago
Not the author here, but Dharma has several other meanings in Indian languages. A predominant one is virtue, righteousness, and duty. I hardly think of this usage as cultural misappropriation; just loanwords from a different language.
jacquesm 8y ago
One persons's cultural mis-appropriation is another one's wealth. Mis-appropriation is how words spread historically, I don't think you're going to stop that from happening.
krapp 8y ago
... said schaefer, on a site that calls its comment scoring "karma."

romgrk 8y ago

`dharma` is the term we buddhists use to designate the (sacred) teachings of Buddha. Would you use `Coran` or `Bible` to name your project? Probably not. It would have been a good idea to take more time to reflect on your choice of name.

malvosenior 8y ago
There are a ton of products named “The X Bible” where X = photoshop, c++, whisky... I don’t think it’s particularly controversial but then again I’m not a Christian.
- RightMillennial 8y ago
  In general, no, we don't find it offensive. The word "bible" is simply from the Greek word for book or books.
  - flatline 8y ago
    How would you feel about Bible.io being a company page for a crypto project promoting the Bible protocol? You have to admit it sounds a little confusing, no?
    - RightMillennial 8y ago
      Sure, naming a cryptocurrency protocol "Bible" would be confusing at first. But if it was meant to be the Bible of protocols or the one protocol to use, I would understand the gist of its name.
    - austenallred 8y ago
      What if it were, say, “the C Bible?”
    - Geee 8y ago
      There is JesusCoin https://jesuscoin.network/ https://jesuscoin.network/
  - 8y ago

perfunctory 8y ago

When one lends cryptocurrency I assume the loan comes with an interest? Given the fixed supply of bitcoins or what have you, where will the coins to pay the interest come from? Or does it work differently in cryptocurrency world? Genuinely curious.

tlrobinson 8y ago
I'm not the op, but fractional reserve lending isn't the only form of lending, and fixed supply isn't the only form of cryptocurrency.
- nahollander 8y ago
  Beat me to the reply :) Indeed, even with a fixed supply token, a borrower would simply have to come across the necessary amount of principal + interest in the loan term.
  - perfunctory 8y ago
    But that's kind of the point, isn't it. With the fixed supply the "+ interest" would be harder to come by. Wouldn't it lead to elevated levels of defaults?
    - bpforster24 8y ago
      One way or another, the borrower has to come up with the principal + interest or they will forfeit their collateral. So they will want to use the loan in some sort of income generating capacity: financing a project, speculative trading, etc. If they are able to use the loan to earn more than the interest rate they've committed to, they'll make money overall. If not, they'll lose money. Bottom line: we don't think the monetary policy of crypto-assets will have much of an impact on default rates in the short term.

matte_black 8y ago

With any new lending platform I have to ask: What happens if I borrow assets, spend them, and never pay back the lender?

nahollander 8y ago
In the current implementation / use cases we're focused on, your collateral, which is held in a smart contract, would become eligible for seizure by the lender.
- TekMol 8y ago
  How can this make sense? If the collateral is X, then the borrowed amount (Y) has to be less then X. Why lend anything in the first place, when that means you can only spend Y while otherwise you could have spent X which is more?
  - nahollander 8y ago
    This happens quite regularly in the world of margin trading. Imagine the following: 1. I own ETH, and want to hold my ETH position so I can enjoy price increases, but I need liquidity to live my day to day life and, well, it's hard to pay for things with ETH. 2. Instead of selling ETH and exiting my position, I put ETH up for collateral and borrow a stable-coin (like DAI) against it. That way, I maintain my price exposure to ETH, but have liquid cash to use for my day-to-day needs.
    - matte_black 8y ago
      And if you don’t use coins for day to day living expenses?
      - cortesoft 8y ago
        You could cash out the borrowed coins for cash.
    - 8y ago

xiphias 8y ago

It looks like reintroducing fractional reserve banking, the main thing Bitcoin was supposed to be stopping (a good enough reason for me to help friends to take out all their money from Coinbase).

cvaidya1986 8y ago

How is this different from EthLend or SALT

bpforster24 8y ago
EthLend and SALT are both lending applications. While we have created a lightweight lending app in Dharma Plex, our core offering is Dharma Protocol. Dharma Protocol is a suite of developer tools that enables entrepreneurs to create apps like Ethlend or SALT easily and securely. It's open source and entirely free to use.
- cvaidya1986 8y ago
  Ah thanks for the response. What's the business model?
  - bpforster24 8y ago
    We discuss our business model a bit in this blog post: https://blog.dharma.io/dharma-isnt-currently-doing-a-token-sale-and-here-s-why-afa04e78247b https://blog.dharma.io/dharma-isnt-currently-doing-a-token-s... Happy to discuss more, but that's a good start
    - hekfu 8y ago
      You don't really though? Unless I missed the bit on how you want to get payed. All I see is 'building a great open source infrastructure', which while I applaud and is noble, is not widely accepted to pay rent so far
      - bpforster24 8y ago
        Ha, you're right, sorry. We think we'll be able to sell value added services to our ecosystem (for example, consulting services, insurance, data feeds, etc.). We will also investigate token models to see if there is a way to make the underwriting process less trustful, and this token model may be a revenue generator as well.

iMuzz 8y ago

What stops someone from putting up some collateral, disappearing with the loan and then just creating a new account?

nahollander 8y ago
The collateral is held in a smart contract -- if the borrower disappears and fails to make a repayment, his collateral becomes eligible for seizure.
- iMuzz 8y ago
  Are the collaterals always worth equal or more than the amount borrowed? I asked that assuming people put up 1 eth as collateral to borrow 2 eth.
  - cortesoft 8y ago
    Usually collateral is supposed to be equal or more than the amount borrowed, especially in a situation like this where there is no 'credit score' to use to determine likelihood of default.
    - ghthor 8y ago
      The protocol doesn't have a credit score. That's a concept better suited for the application layer built on top.
      - cortesoft 8y ago
        Right, which was why my point was that the collateral is probably going to be at least equal in value to whatever is borrowed.
        bpforster24 8y ago
        Dharma Protocol doesn't require that the value of collateral be greater than the principal of the loan, but we do expect the market will demand full- or over-collateralization.

nowarninglabel 8y ago

Congrats on getting to this point! Been following Dharma closely for a little while now as we (Kiva) have an interest in trying to increase financial inclusion and decrease lending costs for the world's poor and have been hoping Dharma may end up being one piece to the future of our work. Could you possibly speak to how you intend to enable KYC (Know Your Customer) / AML (Anti-Money Laundering) to work with Dharma? The best bet so far has seemed to be trying to incentivize it through providing automatic fees to external parties to perform these actions and holding the money in escrow until it goes through. However, it would be great if you could share if you'll have discussed this problem at all. I'd love a world where we didn't have to deal with KYC & AML, but we do, and the sooner we figure out how to make it work in an efficient and inexpensive manner for the world's poor, the sooner we can reach the UN Sustainable Development goals around financial inclusion.

nahollander 8y ago
Thank you! :) We've pretty deliberately opted out of baking jurisdiction-specific protections (be they KYC / AML, accreditation, etc.) into the protocol insofar as we really want this to be a universal standard that's jurisdiction-agnostic -- to give a somewhat crass analogy, most developers would agree that it does not make sense for content-protection against, say, child pornography, to sit at the level of TCP / IP. Jurisdictions vary widely in how they treat lending law, and so we've opted to be as flexible as possible on a technical level. With that being said, we're actively working on making sure that, at layers above the protocol, developers have an easy time plugging in / restricting functionality on the basis of regulatory parameters. There are several interesting projects in the decentralized identity space that are tackling ways of natively attesting to KYC / AML screening on blockchains like Ethereum, and we're actively in conversations with them to make sure we maintain compatibility.
- CryptoBard 8y ago
  I also work in the exchange space like you used to and my thinking is pretty much fully aligned with the way you pose the issue and I'm very excited about your intention behind Dharma. I also agree with your current thoughts on approaching KYC and AML (please see my post in response to this one's parent). I'll reach out to you via your website if you don't mind since HN doesn't have PMs, would love to figure out if there's a way I can contribute.

TekMol 8y ago

How is paying the debt back enforced or incentivised?

bpforster24 8y ago
Right now we expect most loans will be fully collateralized by other crypto-assets. So the default deterrence would be that if you don't pay back your loan, you lose your collateral. We also support unsecured loans (i.e., loans that are not fully collateralized). We consider these pretty experimental and lenders should do a lot of diligence before investing. For unsecured loans, counterparties can agree to any kind of default deterrence that they want. Could be off-chain legal agreement, could be a reputation scheme, etc.
- aphextron 8y ago
  What exactly is the use case for a 100% secured loan?
  - bpforster24 8y ago
    Even if you 100% collateralize, you can get 2x leverage. That leverage can be applied to all sorts of use-cases, but we think one of the main ones that will be common today is speculative margin trading (e.g., short selling)
    - spookthesunset 8y ago
      So basically, like all crypto it’s just another layer of speculative trading, fraud and scams all the way down? Congratulations, I guess...
cargo8 8y ago
Collateral is staked ahead of time

edent 8y ago

There's something I don't understand about Smart Contracts. Normal contracts are written by lawyers. They are reviewed by both parties' lawyer. Sometimes, after the contracts are signed, the lawyers disagree what a particular provision or clause means. At which point, they either negotiate or sue. In which case, a human judge weighs up the case and decides. How do disagreements work with smart contracts? I assume some contracts will be buggy - mostly because programmers are just as fallible as lawyers. So how are disagreements resolved in an equitable way?

TekMol 8y ago
How do disagreements work with smart contracts? If you are big or popular or have connections, then the guys in power will bend the rules in your favour. Google 'The DAO' for an example. Otherwise, an algorithm will decide.
- sillysaurus3 8y ago
  Not quite. The ecosystem was much smaller back then. Nowadays, I'm not sure one company would be able to make a case for forking the currency. Besides, you can still buy ETH classic, if you disagree with the decision. It's just not worth much.
  - fapjacks 8y ago
    I am 100% sure that if I went and "the code is the contract"ed whatever ends up being DAO2.0 out of 5% of all existing ETH, that Vitalik would come save it "just this once" one more time... I absolutely do not believe for one second that there wouldn't be another fork. And I say this as someone with a substantial interest in the currency.
    - sillysaurus3 8y ago
      Well, the point is, Vitalik can't do that. The community would have to agree with him. If the situation were sufficiently dire, then presumably it would be easy to get community support. But the opposite is true too.

seibelj 8y ago

My company[0] will be using Dharma later this year to put personal loans on the blockchain. Dharma is the best of the bunch in our opinion, and we are very pleased with the support the Dharma team has provided. [0] https://airfox.com https://airfox.com

atomical 8y ago

How is this different than SALT and MakerDao?

bpforster24 8y ago
Similar to the question about SALT and EthLend, these are both applications. See our answer there fore more details. Re. MakerDao, they offer one type of loan, the Collateralized Debt Position, in which a borrower collateralizes ETH and the principal is denominated in DAI. And they have built in many automated mechanisms to keep DAI stable against the value of a US Dollar. Dharma can support a similar use-case (getting liquidity on crypto-assets without selling them) -- you would collateralize any currency and borrow in DAI. That way you can get fiat liquidity today, but if you pay back your loan on time you can still benefit from appreciation of the asset you collateralized. In addition, Dharma is capable of supporting other lending use cases: short selling, speculative leverage, venture debt, corporate bonds, muni bonds, etc. etc. We are a platform for any kind of debt agreement and for companies that want to issue these debts.

himom 8y ago

Shouldn’t money be Dukka, not Dharma? Or is money too often an amoral scapegoat for many individual acts of greed?

jakecrouch 8y ago

What is the advantage of using the blockchain rather than creating a fully centralized debt exchange?

scoot 8y ago
Investor buy-in.
TTPrograms 8y ago
A privately owned centralized debt exchange company can go out of business.
- spookthesunset 8y ago
  And one of these can fork itself to leave you stranded if the mob (or top of the pyramid) switch to another more popular fork. You’ll be left holding a bag of worthless tokens. You’ve traded the entire legal infrastructure for mob rule. This project, like all crypto projects, is fundamentally flawed. The only difference is this one somehow managed to con a bunch of VC folk into funding it.
  - TTPrograms 8y ago
    If a blockchain forks you have copies on both forks. What are you talking about?
dharma1 8y ago
I guess easier access to global markets, and reduced counter party risk with the exchange. Having the loans fully or over-collateralised (in the absence of credit scoring and real world debt collection) definitely reduces potential applications though. Congrats on the launch still, great name ;)
bpforster24 8y ago
I'd recommend reading this blog post we put out. It explains better than I can in a short comment: https://blog.dharma.io/dharma-an-open-protocol-for-generic-tokenized-debt-agreements-9a4e6a4e6fc0 https://blog.dharma.io/dharma-an-open-protocol-for-generic-t...

simonebrunozzi 8y ago

Congrats for the Dharma team for this anticipated launch! Been following them for a while, great team and very focused exection! Our company [0] is building an API platform to transact on digitized real estate assets, and we intend to leverage Dharma as much as possible in the future. [0]: www.fabrica.city

integration 8y ago

Maybe you don’t realize but this name is offensive to Buddhists... It’s like an insurance company calling itself “Gospel”

asdsa5325 8y ago
> It’s like an insurance company calling itself “Gospel” Is that offensive? Doesn't seem like it to me.
- integration 8y ago
  Does “disrespectful” instead of “offensive” satisfy your need to play semantics?
  - cfadvan 8y ago
    What about it is disrespectful, and why should anyone care? It’s true that if you look hard enough, you’ll always find an offended party, but so what?
    - yusee 8y ago
      This is a successful global branding strategy...NOT!
  - asdsa5325 8y ago
    No, it doesn't, since I don't think it's disrespectful either.
  - dang 8y ago
    Please don't cross into incivility in Hacker News comments. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
repsilat 8y ago
Insurance would be fine (though Christians might suggest "Numbers" as a more accurate biblical name.) I think as a business they'd have more of an objection to Christianity being associated with moneylending.

arcaster 8y ago

This service sounds incredible! However, naming it "Plex" seems like a bit of a hiccup since most just think of Plex as the most pervasive home media server in existence...

sambull 8y ago
Or that currency I used to buy my first space ship. In eve online.
- imdsm 8y ago
  ISK was the currency, PLEX was the subscription, right? Or did you use PLEX to buy it?

dmitrygr 8y ago

So, you've reinvented fractional reserve banking, minus all the protections we've built into the modern version of it we all use today through decades of hard lessons? Should be fun.

spookthesunset 8y ago
Welcome to the crypto “space”. It is a bunch of people who don’t understand math, finance, politics, monetary policy, legislation, government, economics, computer science, or seemingly life itself. All sit around and rediscover why society is shaped the way it is...

atomical 8y ago

How do you make money?

blahnow 8y ago

https://plex.dharma.io/request https://plex.dharma.io/request spins forever... website down?

bpforster24 8y ago
Are you using a web3 browser? Chrome+metamask, cipher, toshi, brave, etc.

KasianFranks 8y ago

Nice, a trading vehicle https://hackernoon.com/its-not-about-the-ico-it-s-about-the-trading-vehicle-38fa3425e9e3 https://hackernoon.com/its-not-about-the-ico-it-s-about-the-...

murwebb 8y ago

Love the idea

beefield 8y ago

I propose one more tiny step. Instead of having to use these cumbersome cryptocurrencies as payments method, you could also use these IOU's of selected trustworthy institutions as payment tokens. I mean, Instead of you needing to get your currency back from Coinbase and then transfer it to your coffee shop owner, you would just say to Coinbase that hey, you do not need to pay me this cryptocurrency, pay the coffeeshop instead. Wouldn't that be much more efficient? This is actually one of the more frustrating issues for me in cryptocurrency discussions. The underlying monetary policy is of fixed or predefined money supply, that is supposed to somehow stabilize the price/value of the cryptocurrency in the long term because of hand waving, wishful thinking and reasons, all the while having exactly no way to stop fractional reserve banking emerging nor regulating it or the additional monetary supply it will create. This being one of the main reasons why current crop of cryptocurrencies will never be used as economy-wide payment method and why their price will always stay chaotic (unless the price stabilizes to zero...)

dvfjsdhgfv 8y ago

You may ponder longer on the name. As the comments in this thread show, not everybody is happy with your capitalizing on a word that for centuries was at the center of Buddhism.

techaddict009 8y ago

Is there any simple explanation of what exactly it is? I tried to understand it by reading various places on site but too heavy words used like credit liquidity, tokenized debt. When you are targeting normal people can you explain how exactly this works? Is it like I give bitcoin/ethereum and you give me fiat money and when I repay fiat money you give my bitcoin/ethereum back?

orasis 8y ago

What does this have to do with helping all sentient beings to awaken in this lifetime? Consider a name change.