Pencil Finance Completes First Fully On-Chain Student Loan Cycle

Pencil Finance Completes Innovative Loan Cycle

Pencil Finance has marked a significant achievement by concluding its first $1 million student loan cycle entirely on the blockchain, providing funding to over 6,600 students from 118 educational institutions.

A Unique Funding Approach

Supported by Animoca Brands, the initiative employed blockchain technology for every aspect, from raising capital to tracking repayments. The loans, issued by ErudiFi, were structured into an on-chain private credit investment vehicle, allowing transparency and real-time tracking for investors.

Impact on Education

This funding, secured in July 2025, has primarily targeted students in Southeast Asia, including Indonesia and the Philippines. Of the beneficiaries, approximately 1,050 students were directly linked to Pencil Finance's efforts. Notably, 50% of the borrowers are women, with a majority coming from low-income backgrounds and many accessing formal credit for the first time.

Investment Structure

Investors in the program were divided into senior and junior tranches, with the former receiving fixed returns and repayment priority, while the latter faced the initial risk of defaults. However, specific details on interest rates and investor returns remain undisclosed.

The Future of On-Chain Lending

Frank Li, co-founder of Pencil Finance, highlighted the potential of blockchain in enhancing the creditworthiness of education lenders in emerging markets, emphasizing that the on-chain cycle provides an auditable record that can facilitate future funding opportunities. This initiative is expected to pave the way for more efficient access to capital for educational loans globally.