Has Dharma plunged too much? Decentralization is not enough, the mode is difficult to sustain is the key

Today, some media exposed the centralized lending platform Dharma lock-up assets plummeted, users difficult to raise coins, contract code has been closed, causing anxiety and panic among community users. Some users even suspect that the team is running out of money?

Through the author's understanding, Dharma does have its drawbacks, but there is also a lack of over-interpretation.

Dharma is a platform that allows users to borrow and lend various assets at a fixed rate of 90 days. Support assets include ETH, USDC and Dai. In February of this year, Dharma announced a $7 million financing, led by Green Visor Capital, participating in Polychain Capital, Passport Capital, Y Combinator and Coinbase Ventures.

At present, everyone is most concerned about why Dharma lock-in assets have plummeted? What is the reason why Dharma is difficult to raise coins? Let us explain them one by one.

1. DeFi market locks, the overall decline

According to DeFi Pulse, the number of Dharma lock-in assets has continued to decline, and USD assets have indeed fallen from 29.3M on June 9 to 14.4M today, a drop of 51%.

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But let's take a look at the changes in the overall DeFi statistics on DeFi Pulse for nearly 30 days. Do you think it is similar to the trend above? The USD lock position fell from the highest 660.7M on June 9 to 494.7M today, a 25% drop.

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It can be observed that the decline in the amount of locks is not a special case of Dharma. Of course, as the top ten applications in the DeFi application lock position, its individual data changes will affect the overall data changes. And the overall decline of 25%, Dharma fell by 51%, indicating that it also has its own problems.

2. Subsidy decline, or potential cause

In February of this year, Dharma's product Lever was launched. In the early days, to attract customers, platform operators would subsidize both borrowers and lenders. It seems to be a profitable business. But with the normalization of operations, Dharma's subsidies began to decline. Since Dharma is implementing centralization subsidies, it is not known to whom to subsidize and how much to make up. However, according to its released May loan data, it fell 60% to 280 playing dollars in April, and it shows that it will fall further in June.

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"Do not subsidize anyone who uses Dharma's" DeFi depth user.

It is not difficult to find from the figure that Dharma experienced a rapid expansion period four months before going online, which is not related to the subsidy policy. As the subsidy decreased, the amount of Dharma locks was also dropped. Dharma offers fixed-rate loans with a fixed interest rate, and lender deposits only earn interest when the borrower uses the assets. Dharma without subsidies does not seem so attractive when there are many options for borrowing and competing.

3. Not enough to centralize, customer service manually withdraw coins

Dharma is a typical representative of DeFi eco-lending products, but in a sense, it should not even be considered a DeFi product. Dharma is unmanaged, approved by a centralized agency, with margin calls and liquidity, and the source of currency information, the determination of interest rates, and platform development and updates are central.

“Since they found out that they were manual transfers, they were no longer needed,” said an early user.

The most criticized is not enough to centralize, it is the way to withdraw coins, actually for the manual coin. Dharma currently has the problem of not being able to raise coins, but it is different from the team members going to the building in the event of running. Some community users said: "Customer service has been very enthusiastic and asked if it needs help, but the currency is not available." Because Dharma has always been slow, some users feel that they can't mention the currency is normal. Some people ridiculed that "it may be the transfer of the younger sister who gave birth to a child."

4. After changing the model for half a year, did you run without running?

Interestingly, Dharma's related news reports, although causing extensive discussion in the community, showed the phenomenon that the emperor was not in a hurry. The media generally questioned whether the Dharma team had problems? But the DeFi community that the author lurks is talking about it.

"The media title is a bit overdone; this money, what road to run; no plunging, it is a decline."

I am very curious, why do community users support Dharma? The reason they gave it was that the team is more reliable. Founder Nadav Hollander graduated from Stanford University and often went to the customer service. Investors are also a luxury lineup, including well-known capital such as Coinbase Ventures and Y Combinator. Others said that "there is no conscience, it is already very conscience."

However, the trust of these users is just not too worried about the team running, but they also have doubts about Dharma's model. Some users bluntly said that Dharma "strong team, poor model." The author asked users who are familiar with the Dharma team. He said that the recent volatility may be due to Dharma's model transformation: from P2P mode to contract mode.

He explained to Babbitt:

"P2P mode is a person who has borrowing demand, proposes mortgage ETH, how much equivalent USDC or DAI. The fund pool mode is the same as the balance treasure, and there is interest rate at any time with the borrowing, and the efficiency of the P2P mode itself has no fund pool. height of."

The author also tried to contact the Dharma team via email and has not received a response. This article mainly collects some core views of the community for your reference. If there is a team news, it will follow up on Babbitt for the first time.