Pencil Finance, a real-world asset protocol focused on education financing, said on September 3 that it had completed a $1 million student loan cycle entirely on-chain, covering capital deployment, borrower repayments and the return of funds with yield. The company described the transaction as the first student loan financing cycle of its kind to be completed fully through blockchain infrastructure.
The initiative supported loans for more than 6,600 students across 118 schools and universities in Southeast Asia, including the Philippines and Indonesia. Pencil Finance said approximately 1,050 students received direct funding through capital from the loan bundle.
Co-incubated by Animoca Brands and HackQuest, Pencil Finance operates on EDU Chain, a blockchain network developed for education-related applications. Animoca Brands, Open Campus and NewCampus funded the loan bundle in July 2025.
On-chain structure links global capital with local education lenders
The financing was divided into a senior tranche offering fixed returns and a junior tranche carrying variable returns and first-loss risk. Most of the capital was deployed through ErudiFi, an education financing provider that offers student loans and tuition funding in Southeast Asia.
According to Pencil Finance, each stage of the financing cycle was recorded on-chain, allowing participating funders to monitor the deployment and repayment of capital. The completed cycle provides an early test of whether blockchain-based financing can connect global investors with education lenders and borrowers underserved by conventional financial institutions.
Across ErudiFi’s portfolio, 93% of borrowers come from lower-income households, while 52% are accessing formal credit for the first time. Women account for half of the borrowers.
An independent study by impact measurement firm 60 Decibels found that nine in 10 surveyed ErudiFi borrowers reported an improvement in their quality of life. More than 90% said the financing improved their ability to pursue an education, while 97% reported that they could not easily find a suitable alternative.
Repayment data could help lenders establish verifiable records
Pencil Finance argues that placing loan performance on-chain can give funders greater visibility into repayments and help local education lenders build auditable records. This could make it easier for lenders in emerging markets to attract capital despite having limited visibility in conventional global credit markets.
“Behind the completion of this first-ever on-chain student lending cycle are thousands of students who were able to continue their education thanks to access to alternative funding arranged via Pencil Finance,” said Yat Siu, co-founder and executive chairman of Animoca Brands.
Siu said the on-chain structure reduced intermediary layers while allowing investors to track the initiative’s performance. He described the transaction as an example of how decentralized finance could expand access to education funding.
Shan Han, portfolio manager and head of ecosystem at Animoca Brands and a spokesperson for Open Campus, said financing gaps continue to prevent millions of students in emerging markets from pursuing education. “This bundle showed that on-chain capital can reach them and repay backers in full,” Han said.
Frank Li, co-founder of Pencil Finance, said many education lenders in emerging markets struggle to attract international funding because investors cannot readily verify their performance.
“Putting the lending cycle on-chain changes that: every repayment is recorded and auditable by anyone, in real time,” Li said. “This bundle built a public track record that makes the next bundle easier to fund.”
The completed repayment cycle offers evidence that blockchain infrastructure can support education lending beyond initial tokenization or capital raising. Its broader significance will depend on whether subsequent loan bundles can maintain repayment performance, protect borrower interests and expand funding at a sustainable cost.
