Crypto Project Funds 1,000+ Student Loans Fully On the Blockchain

Pencil Finance completed a $1M student-loan cycle entirely on blockchain, helping fund loans for thousands of students in Southeast Asia.

Imagine lending money to students and being able to track every single repayment in real time, from anywhere in the world. That's exactly what a crypto project called Pencil Finance says it just did.

Pencil Finance completed a $1 million student-loan cycle entirely on-chain (meaning every step of the process — raising money, lending it out, and collecting repayments — was recorded on a blockchain, a public digital ledger that anyone can inspect and that can't be secretly altered).

Here's how it worked. A company called ErudiFi actually gave out the loans to students. Pencil Finance then bundled these loans into an investment package that people could put money into, then watch the repayments come back — all tracked on the blockchain.

Key facts about the project:

The $1 million helped fund loans for more than 6,600 students at 118 schools and universities
About 1,050 students got funding directly tied to Pencil Finance
Loans went to students in Southeast Asia, including Indonesia and the Philippines
93% of borrowers come from lower-income households
Half of the borrowers are women, and 52% were using formal credit (official borrowing from a registered lender) for the first time

Investors were split into two groups, called tranches (French for 'slices'). The senior tranche got fixed, safer returns and got paid back first. The junior tranche got higher potential returns but took the first hit if any loans weren't repaid (a 'default').

The big idea, according to co-founder Frank Li, is that education lenders in developing countries are often reliable but 'invisible' to global investors who can't verify their track record. Putting everything on the blockchain creates a public, trustworthy record that makes it easier to attract funding next time.

A few things to note: the company did not reveal the interest rates, investor returns, or how many loans went unpaid. It also claims this is the 'first fully on-chain student-lending cycle,' but that couldn't be independently confirmed.

This is an AI-generated summary. Read the original article at: https://decrypt.co/377494/pencil-finance-1-million-student-loan