Divine Research Issues 30000 Iris-Verified Uncollateralized Crypto Loans

Divine Research, a San Francisco-based startup, has issued 30,000 uncollateralized crypto loans—primarily under $1,000 in USDC—to borrowers in underserved regions since late 2024. The platform uses biometric verification via World ID, an iris-scanning technology developed by OpenAI’s Sam Altman, to authenticate borrowers as unique individuals, reducing fraud and repeat defaults [1]. By bypassing traditional banking systems, Divine targets gig workers, vendors, and teachers excluded from conventional credit channels. Founder Diego Estevez noted that interest rates of 20% to 30% offset a 40% default rate on first-time loans, while reclaimable Worldcoin tokens help borrowers mitigate repayment shortfalls. Unlike traditional lenders, Divine’s capital is sourced from everyday users seeking high-yield opportunities, creating a peer-to-peer model that balances risk absorption with returns for lenders.

The uncollateralized crypto lending sector is expanding beyond Divine. Ethereum-based startup 3Jane, backed by Paradigm, is developing AI systems to automate lending decisions and streamline debt collection for defaults. Institutional-focused platforms like Wildcat are also exploring undercollateralized loans with flexible terms, relying on collaborative recourse mechanisms among lenders in case of nonpayment. These innovations reflect a shift toward algorithmic risk assessment and decentralized governance in lending. Meanwhile, traditional financial institutions are showing interest in crypto-backed alternatives. JPMorgan is reportedly preparing to offer loans backed by assets like Bitcoin and Ether, signaling growing institutional confidence in digital assets as collateral.

The sector, however, remains shadowed by past failures. The 2022 collapses of Celsius and Genesis—and associated criminal convictions—highlight regulatory and operational vulnerabilities. Divine and similar platforms aim to address these risks by integrating decentralized finance (DeFi) with digital identity tools, creating hybrid models that prioritize accountability. The broader trend leverages blockchain and biometric technologies to democratize financial services, replacing traditional credit scores with on-chain data and biometric verification. Yet scalability and regulatory scrutiny remain critical hurdles. Estevez’s model, while promising, relies on user trust in both the platform’s technology and the broader crypto ecosystem.

As the industry evolves, sustainability questions persist. Can decentralized lending models withstand macroeconomic shocks, or will they face liquidity crises akin to earlier crypto lenders? The answer likely hinges on balancing innovation with robust risk management. Divine’s approach, alongside competitors like 3Jane and Wildcat, underscores fintech’s potential to redefine access to credit in underserved markets. However, long-term success will depend on addressing systemic challenges, including regulatory compliance and user education, while maintaining technological integrity.

Source: [1] [No Bank, No Problem: 30000 Crypto Loans Issued with Just an Eye Scan] [https://coindoo.com/no-bank-no-problem-30000-crypto-loans-issued-with-just-an-eye-scan/]