Pencil Finance has marked a historic turning point in the world of finance and education, becoming the first platform to issue capital for student loans entirely on-chain. Thanks to this innovation, the financing of education enters a new era, where transparency, accessibility, and decentralized technology merge to offer concrete solutions to students and investors.
The protocol, developed on EDU Chain and incubated by Animoca Brands and HackQuest, has announced the release of its first bundle of student loans valued at 1 million dollars, raised and managed entirely through blockchain. This milestone represents a concrete example of how decentralized finance (DeFi) can expand educational access opportunities, especially in emerging markets.
The functioning of Pencil Finance: a transparent and accessible platform for students
Pencil Finance stands out for its ability to manage the entire life cycle of student loans in a transparent and secure manner thanks to the blockchain. Eligible users can provide liquidity to loan pools, choosing between fixed or variable returns, based on their risk profile.
The model adopted by the platform includes a dual-tranche structure:
- Senior Tranche: offers a fixed annual yield of 15% (APY), ensuring greater stability for investors.
- Junior Tranche: offers a variable yield, assuming the first loss risk but potentially offering higher returns.
This division allows Pencil Finance to attract different types of participants, from the more cautious to investors willing to take greater risks in exchange for higher returns.
Pencil Finance: from on-chain fundraising to loan disbursement
The capital raised through the platform is allocated to educational financing providers like ErudiFi, which converts the funds into local currency to grant loans to students. The latter receive the direct payment of university fees, which are settled with academic institutions. The students, in turn, repay the loan in accessible monthly installments.
As students repay their loans, the financing providers reimburse the principal and interest to the users who have provided liquidity on Pencil Finance. This mechanism not only makes education more accessible, but also allows investors to achieve real returns, backed by concrete and socially relevant assets.
The protagonists of the first on-chain issuance
The first issuance of on-chain student loans, valued at 1 million dollars, was made possible thanks to the contribution of leading entities such as Animoca Brands, Open Campus, and NewCampus. Of this amount, 750,000 dollars were allocated in the Senior Tranche and 250,000 dollars in the Junior Tranche.
ErudiFi, provider of educational financing, has received capital to support university and online students in the Philippines and Indonesia, key markets where access to credit for education represents a significant challenge. In parallel, the Transcend Network has obtained funds to support education entrepreneurs in its fellowship program, which involves edtech startup founders in over 60 countries.
The voices of the protagonists
According to Yat Siu, co-founder and executive chairman of Animoca Brands:
“Today marks a historic turning point for blockchain and education. Pencil Finance has introduced a new real asset class, where users can obtain returns generated from educational loan repayments. The issuance of student loans with funds originated on-chain demonstrates how decentralized technology can directly empower students and transform access to education globally.”
Frank Li, co-founder of Pencil Finance, emphasizes how this result represents much more than a technical milestone:
“For the first time, students from emerging markets can benefit from transparent and efficient financing thanks to on-chain finance. We are proud to contribute to opening new opportunities for the next generation of talents.”
Even Cameron Wang, co-founder and COO of HackQuest, highlights the revolutionary value of the initiative:
“We are witnessing blockchain providing practical and impactful solutions for students and families. This is just the beginning of our journey to tokenize the student loan market and expand access to education.”
The strategic partners behind Pencil Finance
Open Campus is a community-led DAO that aims to build an on-chain educational network, empowering both teachers and students. Among the main contributors are Animoca Brands, TinyTap, NewCampus, RiseIn, and HackQuest. Open Campus launched EDU Chain, a Layer 3 blockchain on Arbitrum Orbit, designed for educational applications and on-chain education finance (EduFi) solutions, powered by the EDU token.
Animoca Brands is recognized as one of the leading global players in the Web3 sector, thanks to the use of tokenization and blockchain to guarantee digital property rights to consumers and promote the open metaverse. The company has received numerous accolades, including Fortune Crypto 40 and Financial Times High Growth Companies Asia-Pacific.
HackQuest offers a comprehensive educational infrastructure for developers and non-developers, facilitating entry into the Web3 world. The goal is to improve the training of Web3 developers, considered the key to the mass adoption of these technologies.
Pencil Finance: a new asset for real finance
Pencil Finance positions itself as a decentralized lending protocol, focused on the tokenization of real student loans. By connecting eligible users to verified loan originators, it transforms student debt into a transparent asset class, using blockchain infrastructure, a dual-tranche structure, and smart contracts to offer structured and sustainable returns, with a concrete social impact.
The issuance of the first capital for student loans entirely on-chain represents just the beginning of a revolution destined to change the way education is financed globally. With Pencil Finance, the blockchain proves to be a powerful tool not only for finance, but also for social inclusion and the growth of new generations.