Dharma Protocol, a tokenized lending and debt trading platform, has announced that users cannot make fresh deposits or take new loans until the team implements a few new developments. This news comes mere days after the project admitted there was a frontend bug that muted lending activity and reduced overall platform usage, August 7, 2019.
Network at a Standstill
Dharma gained a lot of media hype as well as on-chain traction in the first half of 2019. In the last month, outstanding loans on Dharma have reduced from $10.43 million to $7.29 million. Compound v2, on the other hand, has been gaining market share at an alarming rate, going from $6.3 million on June 1, 2019, to $43 million as of August 8, 2019.
Dharma’s current market share is five percent and a prolonged absence from the ecosystem may just push them out of the game. The likes of GetNuo launching a successful campaign could be enough for them to overtake Dharma’s dormant share in Ethereum’s robust DeFi ecosystem.
The reasons for the halt are unknown and the company hasn’t responded to queries on social media. However, their temporary cessation is undoubtedly going to be a major obstacle for them to overcome operationally and psychologically.
When users know a platform has done this before, it is fairly obvious that nothing will stop them from doing this again. Dharma would effectively lose potential customers even though they have a well functioning product.
Ethereum Stands Strong
The bigger picture, which is the entirety of decentralized finance on Ethereum, is as bright as ever with more upgrade and additions happening on a weekly basis.
Ethereum has performed relatively strong this year, but the fundamentals have grown multifold. $500 million worth of funds is now locked in DeFi, which is actually much lower than the mid-June number of $683 million.
Dharma still ranks in the top 10 in terms of value locked on the platform. But once again, it cannot be stressed enough that this technology is growing rapidly and the pace of project development has picked up big time.
They could have been gaining market share as their platform was strong and gaining significant traction. This impedance could lead to long term obstacles for Dharma.