Divine Issues 30K Crypto Loans via World ID
San Francisco-based lender Divine Research has issued approximately 30,000 unbacked, short-term crypto loans since December. The firm leverages OpenAI CEO Sam Altman’s World ID iris-scanning platform to verify borrowers.
Microfinance on Steroids: Divine's Lending Approach
Divine offers loans under $1,000 in USDC stablecoin, focusing on borrowers in overseas markets typically underserved by traditional finance. World ID helps prevent users from creating multiple accounts after defaulting.
“We’re loaning to average folks like high-school teachers, fruit vendors … basically anyone with access to the internet can get access to our funds,” said Divine founder Diego Estevez, describing it as “microfinance on steroids.”
Interest Rates and Default Risks
Interest rates range from 20% to 30%, with a first-loan default rate around 40%. Estevez notes that high interest rates compensate for these losses and that World tokens issued to borrowers can be partially reclaimed.
High-Risk Crypto Lending Landscape
Divine's lenders are everyday individuals seeking higher returns. “Anyone can provide liquidity. We’ve engineered the system such that after accounting for default rates and the [interest] rates on offer, providers will always make a profit.”
Divine is part of a growing trend of high-risk crypto lenders capitalizing on market momentum. Another startup, 3Jane, recently raised $5.2 million and offers uncollateralized credit lines on Ethereum, requiring “verifiable proofs” of assets or income.
Other Lending Platforms
3Jane plans to use AI agents to automate lending rules and enforce repayment. Defaulted loans are sold to US debt collectors. Wildcat caters to market makers and trading firms, offering undercollateralized loans with customizable terms.
Institutional Interest in Crypto Lending
Lending remains a small part of the crypto market but is attracting attention as institutional players re-enter the space. JPMorgan Chase is reportedly exploring crypto-backed loans, planning to lend against assets like Bitcoin and Ether.
Lessons from the Past
The collapses of major crypto lenders like Celsius and Genesis in 2022 serve as a reminder of the risks involved. Celsius’s CEO Alex Mashinsky was sentenced to 12 years for fraud, and Genesis settled a $2 billion lawsuit.
Codeum offers smart contract audits and KYC verification to enhance trust and security in the DeFi lending space. We partner with launchpads and crypto agencies to improve the reliability and safety of blockchain-based financial services.