In a move aimed at revolutionizing student loan financing, Open Campus and Animoca Brands have injected US$10 million into Pencil Finance, a decentralized lending protocol built on the EDU Chain.
The announcement was made today, highlighting the growing interest in using blockchain technology to address the challenges in the student loan market.
Pencil Finance aims to connect investors with trusted student loan originators via tokenized loan bundles, creating a more transparent and efficient system.
The EDU Chain, a Layer 3 blockchain on Arbitrum Orbit designed for education applications and on-chain education finance (EduFi), powers the platform.
The timing of this investment is particularly relevant, given recent policy shifts in the U.S. that could leave millions of borrowers vulnerable to defaulting on their student loans. The global student loan market is estimated to be worth around US$3 trillion, according to Market Research Future, and Pencil Finance believes blockchain can provide much-needed solutions.
Yat Siu, co-founder and executive chairman of Animoca Brands, emphasized the potential impact of this initiative:
By bringing student loans on-chain, this initiative seeks to boost transparency, efficiency, and Web3 adoption for potentially hundreds of millions of students globally, while also increasing financial literacy.
Frank Li, co-founder of Pencil Finance, added, “Blockchain technology allows us to reimagine student lending from the ground up. By bringing loans on-chain, we deliver transparency, efficiency, and access at a global scale, helping students everywhere unlock new educational opportunities.”
Pencil Finance’s model allows whitelisted users to provide liquidity to loan pools, choosing between a Senior Tranche or a Junior Tranche, each offering different risk-reward profiles. The platform manages loan deployment and repayment transparently on-chain.
The first loan issued through Pencil Finance was to HackQuest, which will use the funds to incentivize student developers learning about EDU Chain on the HackQuest platform.
Harry Zhang, co-founder and CMO of HackQuest, sees this as a demonstration of blockchain’s real-world impact on education.
Pencil Finance is a decentralized lending protocol focused on bringing student loan financing on-chain. Open Campus is a community-led DAO building an on-chain education network, with core contributors including Animoca Brands, TinyTap, NewCampus, RiseIn, and HackQuest. Animoca Brands is a Web3 leader focused on delivering digital property rights through tokenization and blockchain. HackQuest provides educational infrastructure for developers entering the Web3 space.
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