Pencil Finance, a decentralized lending protocol on the education-focused EDU Chain, said it completed what it describes as the first fully on-chain student-lending cycle, deploying $1 million in loans through education-financing firm ErudiFi. Animoca Brands, Open Campus and NewCampus funded the bundle in July 2025, and the capital was later serviced through repayments and returned to funders with yield, according to Decrypt’s coverage of the announcement.
An On-Chain Private-Credit Bundle
ErudiFi issued the loans, and Pencil Finance packaged them as an on-chain private-credit investment, letting funders supply capital and monitor repayments through blockchain records. The protocol operates on EDU Chain, an Ethereum-based network built using Arbitrum Orbit, and is co-incubated by Animoca Brands and the developer community HackQuest. Every step of the cycle — deployment, servicing and repayment — was recorded on-chain, the company said. “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,” Animoca Brands wrote on X, describing each step as recorded transparently on the blockchain.
Where the Loans Went
ErudiFi deployed most of the bundle through student loans and tuition financing across Southeast Asia, including Indonesia and the Philippines. The company said the capital supported loans for more than 6,600 students at 118 institutions over 12 months, with about 1,050 receiving funding directly. Investors were split into a senior tranche offering fixed returns and repayment priority, and a junior tranche offering variable returns while absorbing first losses from defaults. The company did not disclose borrower costs, default rates or investor returns alongside the milestone.
Making Invisible Borrowers Auditable
Across ErudiFi’s portfolio, half of borrowers are women, 93% come from lower-income households and 52% are using formal credit for the first time, the company says. “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. “Putting the lending cycle on-chain changes that.” The first-cycle claim could not be independently verified, but it extends a broader push to bring real-world lending into on-chain DeFi markets that already handle stablecoin borrowing.
