Pencil Finance Completes $1 Million On-Chain Student Loan Cycle
Pencil Finance, a project incubated by Animoca Brands, announced it has successfully completed a $1 million student loan cycle entirely on the blockchain. The process encompassed raising investor capital, tracking loan repayments, and ultimately returning funds to investors with accrued yield.
The loans were originated by education financing firm ErudiFi. Pencil Finance, a decentralized lending protocol, then tokenized these loans into an on-chain private credit investment. This allowed funders to provide capital and monitor the repayment process through transparent blockchain records.
Pencil Finance has described this as the first fully on-chain student lending cycle, a claim that could not be independently verified. The investment bundle was funded in July 2025 by Animoca Brands, Open Campus, and NewCampus.
“The protocol deployed loans in the aggregate amount of US$1 million to borrowers, serviced through repayments, and returned the capital to the bundle’s funders with yield, with every step recorded transparently on blockchain,” Animoca Brands stated on the social media platform X.
The protocol operates on EDU Chain, an Ethereum-based network designed for education and built using Arbitrum Orbit technology. Pencil Finance was co-incubated by Animoca Brands and the developer community HackQuest.
ErudiFi utilized the majority of the capital for student loans and tuition financing across Southeast Asia, with a significant focus on Indonesia and the Philippines. According to ErudiFi, the funds supported loans for over 6,600 students across 118 educational institutions over a 12-month period. Approximately 1,050 of these students received funding directly facilitated by Pencil Finance.
Investors in the initiative were structured into two tranches. A senior tranche offered fixed returns and priority for repayment, while a junior tranche provided variable returns and was designed to absorb initial losses in the event of defaults.
ErudiFi reports that across its entire loan 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,” said Frank Li, co-founder of Pencil Finance, in a statement. “Putting the lending cycle on-chain changes that: every repayment is recorded and auditable by anyone, in real time. This bundle built a public track record that makes the next bundle easier to fund.”
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