Pencil Finance Issues First-ever On-chain Capital For Student Loans

Pencil Finance, the student loan real-world-asset (RWA) protocol on EDU Chain that is co-incubated by Animoca Brands and HackQuest, today announced the successful issuance of student loan capital raised entirely on-chain via the Pencil Finance platform. This milestone marks the first time that capital for student loans has originated on-chain, and demonstrates how decentralized finance solutions can expand access to education.

Pencil Finance is a platform that enables student loans to be deployed and loan repayments to be managed transparently on-chain. Through Pencil Finance’s student loan RWA protocol, eligible users can provide liquidity to loan pools, choosing to deploy their capital for fixed or variable returns. 

Animoca Brands, Open Campus, and NewCampus provided the capital for Pencil Finance’s inaugural US$1 million on-chain loan bundle. Of that total, US$750,000 was allocated to the Senior Tranche offering a fixed 15% annual percentage yield (APY), and US$250,000 was allocated to the Junior Tranche offering a variable APY with first-loss risk. 

Education financing provider ErudiFi received loan capital raised from Pencil Finance’s first on-chain loan bundle, enabling it to issue student loans and tuition funding to university and online students across key markets, including the Philippines and Indonesia, through transparent, blockchain-enabled financing. Edtech Founder Fellowship Transcend Network received loan capital to support founders in its 12 week program who are building education businesses across 60+ countries. 

Yat Siu, co-founder and executive chairman of Animoca Brands, said: “Today marks a historic turning point for both blockchain and education. Pencil Finance has introduced a new real-world asset class where eligible users can earn yield that is generated from educational 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.” 

Frank Li, co-founder of Pencil Finance, said: “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.” 

Cameron Wang, co-founder and COO of HackQuest, said: “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.” 

How Pencil Finance works 

Pencil Finance operates a student loan RWA protocol that allows eligible users to provide capital for student loan bundles, allowing participants to generate yields from education loan repayments. To accommodate different risk profiles, Pencil Finance employs a dual-tranche model. Eligible users can choose between Pencil Finance’s Senior Tranche for fixed returns or its Junior Tranche for variable returns with first-loss risk. This structure enables Pencil Finance to deploy loans and manage repayments transparently on-chain.

Funds from Pencil Finance’s on-chain loan bundle are issued to loan providers, such as ErudiFi, who convert the funds into local currency to be used for student loans. Loan providers pay tuition fees directly to universities on behalf of students, who then repay their student loans to the loan providers in affordable monthly installments. As students repay their student loans, the loan providers repay the principal and pay interest to the participants who provided liquidity on the Pencil Finance platform, where the loan capital originated. This repayment structure is intended to make education more accessible while generating returns for participants who provide capital for student loans via Pencil Finance.