DeFi App Launches Blockchain-Powered Lending for Tuition Fees of Filipino Students
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Initiating education lending as a new use case for tokenized real-world assets (RWAs), decentralized finance (DeFi) startup Pencil Finance launched a $1 million on-chain fund in decentralized financing to support tuition needs in emerging markets such as the Philippines and Indonesia.
Crypto Student Loans
According to Pencil Finance, the initiative is built on the Arbitrum-based EDU Chain and channels investor capital through smart contracts to fund tuition via regional education partner ErudiFi.
Technically, the capital is structured into a $750,000 senior tranche with a fixed 15% annual return and a $250,000 junior tranche with variable yields and first-loss exposure.
Funds are deployed to ErudiFi, which has operated in the Philippines and Indonesia for eight years as an education financing provider, converting crypto into local currency and disbursing it directly to partner schools on behalf of student borrowers.
ErudiFi then manages repayments from students, typically over payment plans of three to 12 months, and returns the funds, along with interest, through the Pencil Finance platform. This repayment model is designed to offer manageable terms while generating yield for investors, according to the DeFi startup.
Though investor capital and transaction data are handled on-chain, Pencil Finance acknowledged that student vetting remains centralized. Over time, the DeFi startup plans to shift governance to a decentralized autonomous organization governed by $PEN token holders.
“This milestone is more than just a technical achievement—it’s proof that blockchain can drive meaningful social impact. For the first time, students across emerging markets can benefit from transparent, efficient funding powered by on-chain finance. We’re proud to help open doors for the next generation of talent.”
Frank Li, Co-Founder, Pencil Finance
In the Philippines, microfinance institutions typically charge effective annual interest rates of around 60% to 90% for private microloans, according to the Asian Development Bank, while informal lenders are said to charge of more than 100% annually.
Meanwhile, Pencil Finance noted that ErudiFi’s typical rate of 1.9% per month translates to an effective annual rate of around 25%, significantly higher than U.S. federal undergraduate loan rates, which are set at a fixed 6.53% for the 2024–2025 academic year.
In a media release, Cameron Wang, co-founder and COO of HackQuest, emphasized that issuing student loans with on-chain capital marks a groundbreaking shift, adding that the initiative is the starting point of a broader effort to tokenize education financing and expand access globally.
“Using on-chain capital to issue student loans is history in the making. We are witnessing blockchain technology providing practical, life-changing solutions for students and families. This is just the beginning of our journey to tokenize the student loans market and increase access to education.”
Cameron Wang, Co-Founder and Chief Operating Officer, HackQuest
EDU Chain is co-incubated by Hong Kong-based game software and venture capital company Animoca Brands and multichain web3 developer and founder platform HackQuest.
What is Pencil Finance?
Pencil Finance is a decentralized lending protocol that brings student loans on-chain, connecting global crypto investors with trusted loan providers in emerging markets like the Philippines and Indonesia.
Built on EDU Chain, a Layer-3 blockchain under Arbitrum Orbit, it tokenizes student loan bundles into RWAs, allowing transparent deployment and repayment tracking via smart contracts.
Backed by a $10 million liquidity contribution from Open Campus and Animoca Brands, the platform allows whitelisted users to invest in either a Senior Tranche (fixed returns) or Junior Tranche (variable returns with first-loss risk).
For Pencil Finance, the DeFi startup aims to make education financing more transparent, accessible, and efficient, especially in underserved regions.
Yat Siu, the co-founder and executive chairman of Animoca Brands, described the launch of Pencil Finance as a major milestone for both blockchain technology and the education sector, highlighting how it creates a new asset class that allows participants to earn returns from student loan repayments.
“By issuing student loans with funds that originated on-chain for the first time, Pencil Finance demonstrates how decentralized technology can directly empower learners and transform access to education worldwide. This is an example of how blockchain can make a real, positive difference in people’s lives.”
Yat Siu, Co-Founder and Executive Chairman, Animoca Brands
This article is published on BitPinas: DeFi App Launches Blockchain-Powered Lending for Tuition Fees of Filipino Students
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