Divine Research Offers Uncollateralized Cryptocurrency Loans via World ID
- Divine Research launches uncollateralized crypto loans using biometric verification.
- Aims to provide financial access to underserved communities globally.
- 30,000 loans issued with a high default rate of 40%.
Divine Research, a fintech in San Francisco, enables uncollateralized crypto loans using World ID, offering USDC loans to overseas borrowers since December 2024.
This initiative aims to provide financial access to underserved populations, using biometrics to reduce fraud, with significant market interest in its decentralized approach.
San Francisco’s Divine Research is offering uncollateralized cryptocurrency loans, using World ID’s biometric identity solution. Since December 2024, around 30,000 loans have been issued, predominantly targeting overseas markets underserved by traditional finance.
The initiative, led by founder Diego Estevez, enables liquidity provision through everyday investors. With loans issued in USDC, the model leverages World ID’s biometric identity verifications to mitigate identity fraud and Sybil attacks.
Despite a 40% default rate on first-time loans, the platform aims to reach educators, vendors, and gig workers worldwide. With interest rates as high as 20-30%, the loans tackle financial exclusion in underserved regions.
Through token-based incentives using Worldcoin, Divine Research attempts to manage defaults, providing partial collateralization. This approach signifies a shift in decentralized lending by avoiding traditional over-collateralization.
Estevez claims profitability can be maintained despite defaults by accounting for risks in rates offered to liquidity providers. This decentralization marks a significant evolution in peer-to-peer crypto lending, potentially broadening access to global financial services.
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. – Diego Estevez, Founder, Divine Research
By forgoing conventional collateral requirements, Divine stimulates financial inclusivity. However, the sustainability of high interest and default rates remains uncertain amidst evolving market dynamics.
