Dharma.io – Framework for tokenized debt agreement


Link to whitepaper.

Developer portal.

Dharma protocol plans to propose a framework and solution for debt financing in Crypto world. The white paper was published by Nadav Hollander in April 2017.

Dharma protocol provides out of the box tools and smart contracts for developers to build a lending platform based out of crypto assets. Entire loan life-cycle and agreements are based out of smart contracts and are registered on the blockchain. Debt smart contracts are already implemented for free usability.

Dharma protocol is heavily influenced and guided by 0x protocol and team. Also, competitors for Dharma include Makerdao, and ETHLend. Current crypto loan transactions can be reviewed on LoanScan.

Current development of Dharma protocol is focused on Ethereum, but the protocol can be applicable on any blockchain.The concept of debt financing can also be applied for borrowing and lending crypto assets on any other blockchain.

Credibility of a Debtor is also registered on the blockchain for future loans.

There are multiple players involved in the debt process:

  • A marketplace of Relayers who earn fees for hosting “order books” that connect borrowers and lenders
  • A marketplace of Underwriters who earn fees for pricing borrower default risk
  • A standardized message schema for connoting intent to borrow / lend, referred to as a Debt Order, enables increased liquidity through programmatic lending


The Debt Kernel contract will issue a debt token (ERC721) to the creditor, and store the details of the debt agreement in the Debt Registry contract

The good:

  • An out of box protocol with smart contracts for debt financing for crypto.
  • Out of the box Javascript interface for building rich client applications. https://github.com/dharmaprotocol/dharma.js
  • There is privacy of who owns the debt and who is the lender.
  • Provides framework for token based collateral.
  • Sample smart contracts provided.
  • Provides a blockchain based uncollateralized loans, which can be unique concept.

The bad:

  • Financial institutions prefer permissioned blockchain.
  • Permissionless blockchain creates trust building overhead.
  • Competitors like Makerdao, are ahead in market adoption.
  • Makerdao intends to address the stability of coins associated.
  • Current implementation is only focused towards ERC-20 tokens over Ethereum.
  • There are already production ready lending and borrowing platforms like ETHLend.
  • Crypto volatility is not addressed in the protocol.
  • Multiple players are required to co-ordinate together to get this working in an open-sourced environment.
  • Trust and safety is a critical aspect of the protocol, which is left over the developers on top of the Dharma protocol.
  • Token based collateral might face the risk of high volatility that crypto assets currently face.

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