Pencil Finance Completes On-Chain Student Loan Funding Cycle
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Written by
Simonas Brazionis - Updated 2026-09-08 19:25:18
Pencil Finance, an incubated project of Animoca Brands, has announced the completion of a $1 million student loan funding and repayment cycle entirely on-chain. This initiative involved raising investor capital, recording repayments, and distributing funds with yield through blockchain technology.
On-Chain Lending Protocol Details
The decentralized lending protocol facilitated the packaging of loans issued by the education financing company ErudiFi into an on-chain private-credit investment. This allowed investors to provide capital and monitor repayment activities via blockchain records. The company described this as the first fully on-chain student lending cycle, though this claim has not been independently verified.
The bundle received funding in July 2023 from Animoca Brands, Open Campus, and NewCampus. Animoca Brands stated that the protocol deployed $1 million in loans to borrowers, managed repayments, and returned capital with yield to funders, with all steps transparently recorded on the blockchain. The protocol operates on EDU Chain, an education-focused Ethereum-based network built using Arbitrum Orbit. Pencil Finance was co-incubated by Animoca Brands and HackQuest.
Impact and Investor Structure
ErudiFi primarily deployed the bundle for student loans and tuition financing in Southeast Asia, including Indonesia and the Philippines. The capital supported loans for over 6,600 students across 118 institutions over a 12-month period, with approximately 1,050 students directly receiving funding attributable to Pencil Finance.
Investors were categorized into a senior tranche, offering fixed returns and repayment priority, and a junior tranche, providing variable returns while absorbing initial losses from defaults. Pencil Finance co-founder Frank Li indicated that placing the lending cycle on-chain enables real-time, auditable recording of repayments, establishing a public track record that could facilitate future funding. The company did not disclose specific interest rates, investor yields, default rates, or detailed blockchain transaction records.
