Today, we’re excited to launch a new version of Dharma — the easiest way to save money from anywhere in the world. Leveraging the Compound Protocol, Dharma offers anyone in the world with an internet connection a way to save that’s as easy as creating an email account — and, soon, the ability to easily borrow against your crypto at a fixed interest rate.

The new Dharma is in closed Beta, meaning it’s only available to existing users of the V1 Dharma product. If you have a Dharma account, simply visit https://beta.dharma.io to begin moving your funds — and be on the lookout for an email from our team with more detailed instructions. For those who are not yet Dharma users, you can sign up for the waitlist. In the coming weeks, we will be opening the closed Beta to the public.

Our beginnings and vision

When we launched Dharma V1 to the public in April, we announced our aspiration to become the easiest place to borrow and lend cryptocurrencies. Since then, our north star has evolved. We saw in our user base people who were using a crypto product for the first time not for speculative gain, but as a route to accessing USD savings in places where local alternatives left much to be desired — or didn’t exist at all.

This was an “a-ha” moment for our team. We set our sights on a new, audacious mission: to build the first internet-native, borderless bank — so that everyone, everywhere has the tools to prosper.

From Argentina to Zimbabwe, billions of people worldwide don’t have access to simple financial tools like a checking account, let alone the ability to earn interest on their savings. Even in developed countries like the United States, nearly a quarter of all adults are either under- or un-banked, simply because banks don’t want to support savings accounts with small balances. Moreover, for those fortunate enough to have a bank account, the interest rates for these accounts are paltry, and in the US range from ~0% for checking accounts to ~2.5% for savings accounts. One day, we’ll look back and find it absurd that billions of people worldwide could load WellsFargo.com into their browser, but only a fraction of a fraction could actually use the product to manage their money.

Stablecoins like USDC / DAI and emerging DeFi (Decentralized Finance) lending protocols have unlocked the ability for large parts of the global population to access USD-denominated financial services — it’s time for our community to exit our echo chamber and emphatically introduce this vehicle to the broader public.

How we got to where we are today

When we launched Dharma Protocol in mid-2018, our goal was to build standardized, generic rails for peer-to-peer lending on Ethereum — infrastructure we continued to leverage even as we pivoted to building the end-user product most of you know today simply as Dharma. As a product team first and foremost, we believe in starting from the user and working backwards — and our users were vocal in their desire to:

Earn a high rate of USD-denominated returns instantly

Withdraw at any time , with no lockups

, with no lockups Borrow against their bitcoin and ether indefinitely at a fixed rate

rate Avoid cumbersome Chrome extensions or specialized digital wallets

or specialized digital wallets Trustlessly know Dharma “can’t be evil” in enabling all the above

An order-based, peer-to-peer lending protocol does not naturally lend itself (no pun intended) towards these design constraints, but we nonetheless went down a tortured, multi-week path of attempting to shoehorn the existing Dharma Protocol infrastructure towards this use case (you may have seen various related announcements).

Though theoretically possible, the practical implementation of this approach proved far too technically complex and brittle. We were plagued with reliability issues across the platform and had limited confidence in the security of the system. Though we (thankfully) never had a smart contract error that put user funds at risk, it became clear that we’d be better served by adopting a wholly-new, simpler smart contract infrastructure purpose-built for our users’ needs and open-sourced from day one, and so we set off down that path.

After a thorough investigation, we decided that the best way to make this vision a reality is to leverage the Compound Protocol as a foundational layer in our technical stack. Through a combination of smart contracts layered on top of Compound and application-layer infrastructure for delivering a web2-caliber product experience, we decided the fastest way for us to bring the best product to market was to bootstrap on top of liquid, battle-tested infrastructure. We’re thrilled to collaborate with our friends at Compound in order to build the product we earnestly believe will bring DeFi services to the mainstream.

Where we’re going

Dharma V2 (in closed beta) is simple & beautifully minimal — an easy, fully-custodial means to earn interest through the Compound protocol with no frills.

Over the coming weeks we’re excited to ship against an ambitious roadmap of features, including:

A non-custodial, 2-of-2 multisig smart wallet that allows you to use Dharma without downloading any special plugins — and which also prevents us from doing anything without user permission

that allows you to use Dharma without downloading any special plugins — and which also A dedicated deposit address you can send funds to at any time that automatically & trustlessly relays funds to Compound to start earning interest on your behalf

you can send funds to at any time that to start earning interest on your behalf Borrowing and saving at fixed interest rates

Seamless fiat on- and off-ramps that don’t take days to settle or cost a fortune

Additionally, in this new chapter for Dharma, we want to do things a little bit differently than we have in the past — namely with regards to our philosophy on open-source software.

When we started building the smart contracts that enabled the Dharma v1 product, we made a decision not to open-source the contracts until an undefined later date. Our rationale was that, with a closed-source contract codebase, we’d have more latitude to ship quickly & iteratively, enabling us to defer open-sourcing the contracts to a time in which our product roadmap was more stable. For a lot of reasons — reasons we’ll elaborate on in a forthcoming blog post — this was a mistake.

Fundamentally, the cryptocurrency space has a lot of bad actors in it, and, perhaps more saliently, smart contracts have a wide surface area of risk. Having a closed-source smart contract codebase in production made minor, reversible application-layer bugs indistinguishable from immutable smart contract errors (or worse, malicious behavior on our part).

We want to press “reset” on this front — from here on out, we plan on categorically open-sourcing smart contracts before our users interact with them in production. We have a trust deficit to make up with many of our technically-discerning users, and we’re open to feedback on other ways we can improve.

In the spirit of transparency with our community, here are some disclosures about the risks associated with the closed beta product:

The initial version of the product is intermittently custodial — if Dharma were to get hacked or go rogue, your funds could be compromised. Users will be transitioned to the non-custodial, 2-of-2 multi-sig wallet system in the coming weeks by default , but this is the nature of the system today — buyer beware!

, but this is the nature of the system today — buyer beware! Dharma is not an FDIC-insured bank or savings account (today) — we are simply a conduit that allows users to earn interest on the underlying Compound protocol. There are many risks associated with lending into Compound Protocol, as well as with the base-layer Ethereum chain, that could lead to (in cases that have yet-to-be seen) loss of user funds.

— we are simply a conduit that allows users to earn interest on the underlying Compound protocol. There are many risks associated with lending into Compound Protocol, as well as with the base-layer Ethereum chain, that could lead to (in cases that have yet-to-be seen) loss of user funds. Dharma V2 is in Beta — expect application-layer bugs / hiccups / etc — We will try to maintain a timely support SLA for our closed beta users, but please be patient with us as we bring the product into a state where we feel comfortable sharing it with the broader public.

We’re excited for this new chapter, and excited to finally share what we’ve been working on with the DeFi community. We look forward to your feedback and having many of you kick the tires on Dharma V2.

Onwards,

Nadav