San Francisco-based lender Divine Research offers short-term unsecured crypto loans using the World ID platform to verify borrowers.
Divine Research's Lending Model
The company has issued around 30,000 short-term crypto loans since December, primarily to foreign borrowers underserved by traditional finance. Loans are provided in the USDC stablecoin, and borrowers must undergo verification through the World ID platform to prevent the opening of multiple accounts after defaulting.
Interesting Facts About Lending
Founder Diego Estevez stated that Divine aims to provide loans to average individuals such as high school teachers and small vendors. Interest rates on loans range from 20% to 30%, with a reported first-loan default rate of around 40%, compensated for by high-interest rates. Estevez commented, "We’re lending to everyday people. This process is basically microfinance on steroids."
Trends in Crypto Lending
Although lending remains a small slice of the crypto market, it attracts attention as institutional players reenter the space. Notably, JPMorgan Chase is exploring the possibility of lending against crypto assets like Bitcoin and Ether. However, the shadow of 2022 looms large after major players like Celsius and Genesis faced significant challenges.
Divine Research exemplifies an innovative approach to lending in the crypto industry, yet the market remains risky following past successes and failures.
