After opening to depositors and lenders in April 2019, cryptocurrency lender Dharma is is now closed to new depositors and new borrowers. The company's vague tweet, "we're pausing new deposits and loans in Dharma" and a promise of exciting things to come is not very clear. Depositors can still withdraw their funds which are not lent out.
Dharma doesn't have custody of user's money. Users have a Dharma Key and they authenticate transactions with a four-digit pin. Users don't actually deposit cryptocurrency, they are sending their coins to a smart contract. The digital assets are offered as a loan on the Dharma Credit Market. Depositors only earn interest if someone borrows their cryptocurrency.
Dharma allowed depositors to lend their ETH, USDC and DAI stablecoins to borrowers for short-term loans anywhere in the world. The company announced they plan to add WBTC shortly. Borrowers put up 150 percent collateral on their loan, which Dharma liquidates if they default.
The company understood that there was more demand from people who wanted to lend their cryptocurrency and earn interest than there was from people who wanted to borrow it. Dharma would initially charge borrowers less interest than lenders earned, which is common among other cryptocurrency lenders.
These are peer-to-peer loans. Dharma facilitates the loans and is the underwriter which means they are the sole determiner of the borrower's ability to pay back the loan. In June 2019. Dharma announced a new borrowing experience which gave borrowers more control over their loan. Borrowers can control the digital asset they wish to borrow and the quantity they wish to borrow. They can also set the length of the loan and the interest they will pay. Dharma matches the borrower with lenders accepting their terms. Obviously, a loan with a loan interest rate would take longer to match.