San Francisco-based Divine Research has issued around 30,000 unbacked short-term crypto loans since December, using Sam Altman's iris-scanning World ID platform to verify borrowers. The company offers loans under $1,000 in USDC stablecoin, mainly targeting overseas borrowers underserved by traditional finance. According to founder Diego Estevez, they are loaning to average folks like high-school teachers and fruit vendors, basically anyone with access to the internet can get access to their funds.
The crypto lending sector is experiencing a revival after the 2022 collapse that saw major lenders like Celsius and Genesis implode. Divine charges interest rates of 20% to 30%, while reporting a first-loan default rate of around 40%. The company's liquidity is provided by individual depositors attracted by high yields, with Estevez claiming they have engineered the system such that after accounting for default rates and the interest rates on offer, providers will always make a profit. Other players include startup 3Jane, which recently raised $5.2 million from Paradigm and offers uncollateralised credit lines on Ethereum, while Wildcat protocol claims to have facilitated around $170 million in lending to date.
Unsecured loans currently represent a small portion of the multibillion-dollar crypto lending market but are gaining attention amid renewed investor enthusiasm. Divine's model stands apart through its use of biometric verification and focus on small-scale global borrowers, targeting countries like Argentina where inflation makes access to stable dollar credit particularly attractive. Last week, reports revealed that JPMorgan Chase is looking into crypto-backed loans, planning to lend directly against crypto assets like Bitcoin.
Sources:
Sri Lanka Guardian
