Decentralized lending protocol Pencil Finance has announced the completion of a $1 million student-loan funding and repayment cycle conducted entirely on-chain. The initiative packaged education financing into an on-chain private-credit investment, allowing funders to supply capital and monitor repayments through blockchain records.
The project was co-incubated by Animoca Brands and HackQuest, with funding provided in July 2025 by Animoca Brands, Open Campus, and NewCampus. The protocol operates on EDU Chain, an education-focused Ethereum-based network built using Arbitrum Orbit.
Education-financing company ErudiFi issued the underlying loans, deploying most of the $1 million bundle across Southeast Asia, including Indonesia and the Philippines. According to the companies, the capital supported loans for more than 6,600 students across 118 institutions over a 12-month period, with approximately 1,050 students receiving funding directly attributable to Pencil Finance.
The investment structure divided investors into two tiers: a senior tranche offering fixed returns and repayment priority, and a junior tranche offering variable returns while absorbing the first losses from default. ErudiFi reported that across its portfolio, half of the borrowers are women, 93% originate from lower-income households, and 52% are accessing formal credit for the first time.
“Education lenders in emerging markets are creditworthy but invisible. Global capital can't verify their performance, so it never reaches them,” Frank Li, co-founder of Pencil Finance, said in a statement. “Putting the lending cycle on-chain changes that: every repayment is recorded and auditable by anyone, in real time.”
Pencil Finance did not disclose specific interest rates, investor yields, default rates, or exact blockchain transaction records.
