Blockchain-backed student loans receive $10 million investment from Open Campus and Animoca Brands.
New and Improved: Blockchain Student Loans Are Here!
Pencil Finance, a groundbreaking decentralized lending platform, has taken a significant step forward with a $10 million liquidity boost from major players Open Campus and Animoca Brands. This move marks the inaugural on-chain student loan disbursement through Pencil Finance's innovative blockchain-based system.
As a result of this partnership, Pencil Finance is now ready to revolutionize student loans by moving the entire process onto the blockchain. The platform connects global investors with verified student loan originators, using tokenized loan bundles to ensure loans and repayments are processed smoothly and transparently.
Pencil Finance operates on EDU Chain, a Layer 3 blockchain developed with Arbitrum Orbit. EDU Chain supports various education-related finance and apps and trades on several popular exchanges like Binance, KuCoin, Gate.io, and Bithumb.
The student loan market is valued at approximately $3 trillion worldwide, and recent policy changes in the United States have sparked concerns about the default risks of millions of borrowers. Platforms like Pencil Finance aim to offer solutions by eliminating friction from the borrowing process and making loan management more efficient using blockchain technology.
Yat Siu, co-founder and executive chairman of Animoca Brands, expressed the broader vision for this initiative:
"Blockchain is reshaping the way education is funded and developed. By moving student loans onto the blockchain, this initiative seeks to increase transparency, efficiency, and Web3 adoption for potentially hundreds of millions of students globally, while also boosting financial literacy. We believe this will have significant implications for the U.S. $3 trillion student loan market."
Frank Li, co-founder of Pencil Finance, added:
"Blockchain technology allows us to rethink student lending from the ground up. By moving loans onto the blockchain, we provide transparency, efficiency, and access at a global scale, helping students unlock new educational opportunities worldwide."
HackQuest co-founder Harry Zhang emphasized the real-world impact of this endeavor:
"This milestone demonstrates the tangible benefits of blockchain in education. On-chain loans empower students and give investors new opportunities to invest."
Pencil Finance offers whitelisted users the opportunity to fund loan pools, choosing between the Senior Tranche or the riskier Junior Tranche for varying returns and risk levels. The first loan was issued this week to HackQuest, which will utilize the funds to incentivize student developers on its learning platform.
As Pencil Finance continue to expand, they face challenges such as balancing transparency with privacy, navigating regulatory uncertainties, and effectively competing against entrenched federal loan systems. Despite these obstacles, the team is united in their pursuit of making student loans more accessible, efficient, and transparent using blockchain technology.
[Reference 1] https://www.coindesk.com/business/2022/10/24/pencil-finance-securing-10m-liquidity-from-open-campus-and-animoca-brands-to-issue-first-on-chain-student-loans/[Reference 2] https://www.investopedia.com/terms/0/blockchain-technology.asp[Reference 3] https://finance.yahoo.com/news/biden-administration-considering-privatizing-student-loans-420626086.html[Reference 4] https://mnsession.leg.state.mn.us/2023/bills/hfl1683/digest[Reference 5] https://www.educationdive.com/news/student-loan-impacts/642098/
- Pencil Finance has secured a $10 million investment from Open Campus and Animoca Brands, marking the start of blockchain-based student loans with the inaugural on-chain disbursement.
- Working on EDU Chain, a Layer 3 blockchain, Pencil Finance is poised to redefine student loans by connecting global investors with verified student loan originators, using technology to ensure efficient and transparent loan management.
- Yat Siu, executive chairman of Animoca Brands, views this initiative as having the potential to significantly impact the global $3 trillion student loan market by increasing transparency, efficiency, and Web3 adoption for hundreds of millions of students worldwide.
- Harry Zhang, co-founder of HackQuest, believes that the first on-chain student loan issued by Pencil Finance showcases the tangible benefits of blockchain in education, offering students new opportunities and empowering investors.
