nahollander

The collateral can be any other asset that is represented by a cryptographic token. Right now, few crypto-assets map to real world assets in some capacity, but we're willing to make a bet that this will change faster than most expect.

Already, though, there are many interesting assets in the world of crypto that are particularly well suited to being put up for collateral -- namely, the emerging class of crypto-collectibles such as CryptoKitties.

The collateral is held in a smart contract -- if the borrower disappears and fails to make a repayment, his collateral becomes eligible for seizure.

This happens quite regularly in the world of margin trading.

Imagine the following:

1. I own ETH, and want to hold my ETH position so I can enjoy price increases, but I need liquidity to live my day to day life and, well, it's hard to pay for things with ETH. 2. Instead of selling ETH and exiting my position, I put ETH up for collateral and borrow a stable-coin (like DAI) against it. That way, I maintain my price exposure to ETH, but have liquid cash to use for my day-to-day needs.

In the current implementation / use cases we're focused on, your collateral, which is held in a smart contract, would become eligible for seizure by the lender.

Thank you! :)

We've pretty deliberately opted out of baking jurisdiction-specific protections (be they KYC / AML, accreditation, etc.) into the protocol insofar as we really want this to be a universal standard that's jurisdiction-agnostic -- to give a somewhat crass analogy, most developers would agree that it does not make sense for content-protection against, say, child pornography, to sit at the level of TCP / IP. Jurisdictions vary widely in how they treat lending law, and so we've opted to be as flexible as possible on a technical level.

With that being said, we're actively working on making sure that, at layers above the protocol, developers have an easy time plugging in / restricting functionality on the basis of regulatory parameters. There are several interesting projects in the decentralized identity space that are tackling ways of natively attesting to KYC / AML screening on blockchains like Ethereum, and we're actively in conversations with them to make sure we maintain compatibility.

Beat me to the reply :)

Indeed, even with a fixed supply token, a borrower would simply have to come across the necessary amount of principal + interest in the loan term.

Yes -- two parties are permitted to lend money to one another in a mutually agreed environment. It's important to note, though, that developers who build end-user applications on top of Dharma ought to be cognizant of lending regulations / securities law in the jurisdictions they are active in. However, we've opted to build Dharma in a non-jurisdictionally-biased manner -- we think that jurisdiction-specific regulatory restrictions are better implemented at the application layer rather than the protocol piping.

Thank you for pointing this out -- I've flagged our team and we're looking into it.

Yup -- there are several. The most mature relayer project on Dharma we're aware of is Bloqboard (bloqboard.com), though I believe they are not ready to launch on mainnet quite yet.

Thanks for the kind words!

In the short-term, as you correctly alluded to, we're focused on loans that are fully-collateralized on-chain. In the future, however, we hope to integrate trusted third-party underwriters into the network in order to open the door for unsecured loans. There are many technical / game theoretic challenges to be solved on this front, though, so we've included unsecured loans as an "experimental" feature set in this initial release.

Thank you! Glad to hear that you enjoyed the tutorial.

There are numerous ways in which Dharma debt agreements can interface with insurance contracts:

1. We've already seen some members of our developer community working on trustless credit default swaps -- which are functionally insurance contracts that use the programmatic endpoints of Dharma debt agreements to assess claims on defaults. 2. For non-fully-collateralized insurance contracts, Dharma debt agreements can serve as the mechanism for tracking and administering the tokenized bonds that capitalize the insurance contract.