Crypto Lender Divine Issues 30,000 Loans Using Iris-Scanning World ID

Divine Research uses iris scans instead of ID cards to give short-term crypto loans to underserved borrowers.

Borrowers get USDC loans under $1000 and pay high interest to balance the risk of loan defaults.

Retail investors fund Divine loans and earn profit even after losses from borrowers who do not repay.

San Francisco-based Divine Research has issued 30,000 short-term crypto loans since December. The lender identifies borrowers using World ID, an iris-scanning platform created by Worldcoin. This system verifies identity through biometric scans rather than traditional documents.

Loans Target Underserved Borrowers in Emerging Markets

The firm’s loans are mainly under $1,000 and are paid in USDC, a dollar-pegged stablecoin issued by Circle. Divine targets underserved populations in developing countries who face barriers to accessing credit through conventional banks. Borrowers only need internet access and an eye scan to qualify.

World ID, backed by OpenAI CEO Sam Altman’s crypto initiative, prevents repeat borrowing after default. The platform ensures each individual holds a unique ID and cannot create duplicate accounts to evade repayment.

High Interest Compensates for Elevated Default Risk

Divine’s founder disclosed that the average interest rate ranges from 20% to 30%. The platform reported that about 40% of first-time borrowers default on their loans. To offset losses, the lender uses these high rates and partly reclaims Worldcoin tokens distributed during loan disbursement.

Divine categorized its offering as a form of digital microfinance. The firm claimed that individuals like teachers and small-scale vendors make up the core user base. These groups traditionally face difficulties accessing formal credit.

Retail Lenders Drive Liquidity in the High-Risk Model

The liquidity pool supporting Divine’s loans is funded by retail investors. These individuals supply capital to the protocol in exchange for high-yield returns. Divine assures these lenders a profit by designing the system to account for default risks in its interest calculations.

Unlike institutional platforms, Divine welcomes small-scale funders. It offers them exposure to returns from short-term uncollateralized crypto lending. The structure relies on smart contract automation to manage repayment and disbursement.

Growing Competition in Risk-Based Crypto Lending Space

Divine is among several startups pushing the boundaries of uncollateralized crypto loans. 3Jane, another company, just secured $5.2 million and employs verifiable proof of income or assets rather than biometric ID. Still, it does not require collateral.

Other players, such as Wildcat, serve institutional market makers and trading firms. These lenders coordinate themselves when defaults occur, providing flexibility in loans. In the meantime, established institutions such as JPMorgan are experimenting with Bitcoin-collateral loans, and this indicates increased institutional adoption.

Crypto lending is a relatively minor yet vibrant sector, powered both by the emergence of the new verification model and increasing interest in decentralized finance tools.