Animoca Brands Corporation Ltd and Open Campus have jointly committed US$10 million in liquidity to Pencil Finance, a decentralised finance (DeFi) protocol focused on student loans. The funds will serve as loan collateral to support the issuance of on-chain education financing, furthering the development of real-world asset (RWA) applications in education.
Co-incubated by Animoca and HackQuest, Pencil Finance operates on EDU Chain—a Layer 3 blockchain built on Arbitrum Orbit and optimised for education finance and applications. The platform connects global investors with verified student loan originators via tokenised loan bundles, aiming to make education funding more transparent, efficient and accessible.
"Blockchain is redefining how education is funded and developed. By bringing student loans on-chain, this initiative seeks to boost transparency, efficiency, and Web3 adoption for potentially hundreds of millions of students globally, while also increasing financial literacy. We believe this will have very significant implications for the US$3 trillion student loan market," Yat Siu, co-founder and executive chairman of Animoca Brands, said:
Need for financing mechanisms
The liquidity injection follows recent US policy changes that could leave millions of borrowers at risk of default, highlighting an urgent need for alternative financing mechanisms. Pencil Finance’s decentralised structure allows whitelisted users to supply capital to loan pools via either Senior or Junior Tranches, with corresponding risk and return profiles.
"Blockchain technology allows us to reimagine student lending from the ground up. By bringing loans on-chain, we deliver transparency, efficiency, and access at a global scale, helping students everywhere unlock new educational opportunities," Frank Li, co-founder of Pencil Finance, added.
Pencil Finance issued its first loan this week to HackQuest, which will use the funds to incentivise student developers engaging with EDU Chain.
How the Pencil Finance model works.
"This milestone demonstrates the real-world impact of blockchain in education. On-chain loans empower students and open new opportunities for investors, said Harry Zhang, co-founder and chief marketing officer of HackQuest.
EDU Chain is powered by the EDU token, which is listed on multiple global exchanges including Binance, KuCoin, and Gate.io. Open Campus, the foundation behind EDU Chain, operates as a decentralised autonomous organisation (DAO) with contributors including Animoca Brands, TinyTap, NewCampus, RiseIn, and HackQuest.