Divine Research Launches Biometric Crypto Lending Model with 40% Default Rate 20-30% Interest to Offset Losses

Divine Research, a San Francisco-based fintech firm, has launched a novel cryptocurrency lending model that eliminates the need for collateral by leveraging biometric verification through World ID, a platform developed by Sam Altman’s Worldcoin. The initiative, active since December 2024, has issued over 30,000 microloans in USDC stablecoin, predominantly under $1,000, targeting populations in regions with limited access to traditional banking systems. Borrowers, including educators, vendors, and gig workers, undergo iris scanning to authenticate their identities, reducing fraud risks and bypassing conventional credit checks. Despite a 40% default rate on first-time loans, the platform employs Worldcoin tokens to offset losses and incentivize liquidity providers, creating a decentralized peer-to-peer lending framework that operates without institutional intermediaries [1].

The model’s reliance on biometric identity verification and high-interest rates (20-30%) aims to mitigate default risks while expanding financial access to underserved communities. Founder Diego Estevez asserts that the platform’s profitability hinges on structuring interest rates to account for default probabilities, ensuring liquidity providers remain profitable even with high default rates. “We’ve engineered the system such that after accounting for default rates and the interest rates on offer, providers will always make a profit,” Estevez stated, emphasizing the platform’s focus on small-scale loans and decentralized risk distribution [2].

The initiative aligns with emerging trends in uncollateralized crypto lending, where startups like Ethereum-based 3Jane use AI-driven underwriting, and platforms like Wildcat offer flexible terms for institutional borrowers. However, Divine Research’s approach is distinguished by its integration of biometric authentication and token-based incentives to address credit gaps. Traditional institutions, including JPMorgan, have also begun exploring crypto-backed alternatives, signaling growing institutional interest in the sector. Regulatory challenges, however, remain, particularly in jurisdictions like Brazil, where proposed measures could mandate fintechs to report transaction values, potentially complicating operations for platforms in legal gray areas [3].

The 40% default rate has drawn comparisons to failed crypto lenders such as Celsius and Genesis, which collapsed due to poor risk management. Critics argue that high default rates could undermine long-term sustainability, despite Divine Research’s claims of a more resilient framework. The platform’s success hinges on balancing affordability for borrowers with returns for liquidity providers, while regulatory clarity and robust risk frameworks will be critical to avoiding past crypto market pitfalls.

Sources:

[1] [Divine Research Launches 30,000 Unbacked USDC Loans](https://www.ainvest.com/news/divine-research-launches-30-000-unbacked-usdc-loans-world-id-40-default-rate-20-30-interest-underserved-borrowers-2507/)

[2] [No Bank, No Problem: 30,000 Crypto Loans Issued with Just an Eye Scan](https://coindoo.com/no-bank-no-problem-30000-crypto-loans-issued-with-just-an-eye-scan/)

[3] [Brazil to Consider Requiring FinTechs to Report Transaction Values](https://www.pymnts.com/news/regulation/2025/brazil-to-consider-requiring-fintechs-to-report-transaction-values/)