Divine Research has launched a new initiative focused on issuing unbacked USDC loans aimed at borrowers who face challenges accessing traditional financing.
Description of Divine Research's Initiative
Since December 2024, Divine Research has issued 30,000 unbacked USDC loans using Sam Altman's World ID technology for borrower verification. Based in San Francisco, the initiative targets unsecured loans, typically under $1,000.
Target Borrower Audience
Borrowers, such as teachers and fruit vendors, who were previously excluded from traditional financial services, can now access loans. Divine Research founder Diego Estevez stated, "We’re lending to average folks like high-school teachers and fruit vendors... basically, anyone with internet access can get our funds. This is microfinance on steroids."
Risks and Regulatory Questions
Despite high interest rates ranging from 20% to 30%, lenders can achieve annualized returns, although default rates are high. The adoption of World ID technology raises concerns regarding privacy and verification standards, as the biometric system prevents reapplications after defaults. Historically, unbacked loans in the crypto sector have led to significant risks.
Divine Research's initiative highlights the potential for microfinance in the decentralized technology era, opening new avenues for borrowers who previously lacked access to financial services.
