About Dharma

Dharma is a user friendly, smart contract wallet that doubles as the easiest mobile fiat onramp to DeFi (for those of you in the US). Their slogan: “Dollars to Defi in a tap”.

Using Dharma you can earn interest by lending tokens on Aave and Compound, use Uniswap to buy any ERC-20 tokens and find the best automated yield strategy on yearn finance. The cool thing for US users is that you can enter these positions directly using $ in your bank account and can save a ton in fees while doing so!

Overview

• DeFi integrations and features
• Dharma’s answer to high Gas fees
• Wallet security
• Fees - How does Dharma make money?
• Dharma team & investors
• Where can I use Dharma?

DeFi integrations and features

Lending on Aave and Compound

Earn yield on your tokens by depositing them in lending pools available directly through the Dharma app. When you deposit your tokens, receive cTokens (compound) or aTokens (Aave) in return that represent a claim to your deposited tokens and earn interest for you automatically. The process is much easier in Dharma than if you would do it directly on Compound or Aave via Metamask.

Note that not every asset is available for lending on Aave and Compound. Only the most popular tokens like USDC, USDT, GeminiUSD, WBTC, SUSHI, YFI, AAVE and a dozen others.

Invest in vaults via Yearn

Yearn is another protocol Dharma gives you access to to earn yield. However, here assets are not lent but used for "yield farming". By depositing assets within vaults, yearn aggregates a number of protocols like Aave, Compound and Curve to search for the best available yield for that asset.

Moreover, Yearn implements specific strategies to enhance your yield. For example, on Compound when you lend assets like USDC, Compound rewards you by giving you $COMP tokens on top. If you deposited by yourself, these rewards would be insignificant and you would claim them perhaps once or twice a year to avoid paying too much transaction fees. In Yearn is slightly more complicated to use for some strategies due to the tokens required for deposit, but any of the tokens needed for entering vaults can be acquired in-app using Uniswap.

Swap any Ethereum based (ERC-20) token via Uniswap

A limitation of many crypto exchanges like Coinbase is that you're bound to the tokens listed there for purchase. DeFi is moving extremely quickly and new projects with their own governance tokens are being announced every week. Waiting for coin listings on centralized crypto exchanges can mean missing out on exciting new projects. With Dharma's Uniswap integration you have access to over 50'000 ethereum based tokens and won't have to worry about missing out on an exciting new project.

Dharma gives you 2 options to buy:

1. Market order (standard - buy at the current market prices)
2. Limit order (set a pre-defined price a trade should be executed at). This feature is especially cool as Uniswap doesn't let you do limit orders usually!

DeFi directly from your bank account (US only)

One of the coolest features on Dharma's is their dollars to DeFi onramp. Why is this great? Getting your money from your bank account to Defi requires multiple steps and various apps. Usually, this is the way you need to do it:

1. Set up an account with coinbase/binance etc. (KYC)
2. Transfer money/credit card on coinbase to go from fiat to crypto
3. Set up another separate wallet like MetaMask
4. Interact with each protocol individually via MetaMask

Now you need just 1 app to do it all. Fund, store, lend, invest, swap. Simply complete the KYC on Dharma, link your bank, and enter DeFi directly. Read more

Apart from Dharma's awesome integrations, they also tick the remaining boxes we consider when considering a wallet. We'll look at security, Dharma's solution to high gas fees and what fees Dharma charges.

##How safe is the Dharma wallet? Well, there are two things Dharma does to make sure your funds are safe.

• First, it's non-custodial, meaning nobody has access to your funds besides you, not even Dharma. Your private key is encrypted and stored on your device ( in iOS in the Keychain, in Android in SharedPreference). Dharma has no control over your deposits, lending, swapping or withdrawals within the wallet. Even if your phone is stolen, the person with your phone won’t have access to your private keys, as they are encrypted. (more info)
• Dharma has an account recovery feature that enables you to request a new private key to your account if you've lost access to your device for any reason. (more info)

Normally, when a wallet is non-custodial it means you have to backup your private keys on a piece of paper and need to make sure that piece of paper is well protected. Dharma offers the same level of ownership and control over your own funds, while offering unique account recovery features which take the storage burden off you and let you sleep tight. The way Dharma achieves this is by using [smart contracts](smart contract wallets) similar to Argent.

Dharma’s answer to high gas fees - Gas light

High network fees (aka. Gas fees) on ethereum are seen by many as one of the biggest bottlenecks for DeFi adoption for the average investor. Depending on the type of transaction you do, ranging from more simple ones like sending tokens to more complex ones like interacting with various DeFi smart contracts, you can easily find yourself paying 10’s to hundreds of dollars in fees. For example, at the time of writing this review, a transaction to deposit $ETH for lending on Aave costs 100$ in [gas fees]https://cryptotesters.com/blog/ethereum-gas).

As an answer to this, Dharma has introduced Gas Light, which helps users save between 50-80% on gas fees. How does it do this? Dharma pre-pays for deposits to aave/compound/yearn from their trade reserve for multiple users in one transaction. By batching the transaction, they split the transaction cost between a larger number of users, instead of each paying the full amount individually. (More details here, tweet by @hasufl and tweet by @iamDCinvestor). Gas savings won’t stop here, Dharma has also mentioned working on Layer 2 solutions to further reduce costs in the coming months. Keep an eye out for future updates about this!

Other features on Dharma

• Send and receive tokens
• Vote on governance proposals
• Claim protocol rewards (e.g. $COMP token earned when lending on compound)
• Wrap and unwrap ETH (ETH -> wETH) - wETH is an erc-20 compatible version of Ether used commonly within DeFi. Whats wETH?

Fees

How does Dharma make money?

Depending on the size of your transaction Dharma will give you rebates on fees - more info’s on fees here.

Who is behind Dharma?

Dharma was founded by Brendan Forster and Nadav Hollander. Both founders have a background in tech, working at Microsoft, Uber Eats, Coinbase and Google in the past. Along with an impressive founding team, Dharma has also attracted top tier investors, like Y-combinator, Polychain capital and Coinbase ventures. Their last financing round was in 2019, where they raised a $7m series A.

Fun fact: Their first whitepaper was published in November 2017 and they initially launched a fixed interest rate lending & borrowing service called Dharma lever.

Where can I use Dharma?

Dharma is available in most countries. You can check this list to see here if it's in your countries app store (iOS and Android). As we’re used to with DeFi, all protocol integration features seen in Dharma are permissionless and usable by anyone internationally.

However, the features that are geo-restricted are the banking on-ramp and "gas light" feature since it's related to the on-ramp. As of now, they are only available to US citizens. Since last week Dharma supports all 50 US states.

Conclusion

We recommend Dharma for anyone new to DeFi looking for a mobile wallet with DeFi functionalities. Especially for users in the US, their “Dollars to Defi” bank on-ramp and Gas light features are unique selling points that make it much easier and cheaper to use than traditional wallets. Dharma makes lending, swaping and investing intuitive and doable in just a few clicks. Ps. keep an eye out for upcoming integrations and the move to L2’s - there’s lots in the works!

Any more questions? Follow Dharma on Twitter Connect to Dharma’s discord channel