Divine Research Uses USDC for Unbacked Loans Verified by World ID, Targeting Underserved Borrowers

• Divine Research leverages World ID iris scans to prevent multiple loan accounts and defaults.

• Loans under $1,000 USDC focus on overseas users excluded from traditional finance.

• Founder Diego Estevez describes this as “microfinance on steroids,” with lenders earning profits despite a 40% default rate.

Divine Research issues 30,000 unbacked USDC loans using World ID verification, offering microfinance to underserved borrowers with high returns. Discover how crypto lending evolves.

Divine Research’s Innovative Use of World ID for Unbacked USDC Loans

San Francisco-based Divine Research has pioneered issuing approximately 30,000 short-term, unbacked loans in USDC since December. The platform uses World ID, an iris-scanning identity verification system created by OpenAI CEO Sam Altman, to ensure borrowers cannot open multiple accounts after defaulting. This approach targets underserved overseas users, providing loans typically under $1,000 to individuals excluded from traditional banking.

How Does Divine Research Manage Risk and Defaults?

Divine applies interest rates between 20% and 30% to offset a reported first-loan default rate near 40%. Founder Diego Estevez explains that high interest compensates for losses while free World tokens given to borrowers can be partially reclaimed. This risk management strategy enables the platform to sustain lending to average users such as teachers and fruit vendors, effectively delivering “microfinance on steroids.”

JPMorgan considering Bitcoin-backed loans. Source: GC Cooke

How Everyday Investors Benefit from Funding High-Risk Crypto Loans

Divine’s lenders are everyday individuals seeking reliable returns in a high-risk market. The system is engineered so that after accounting for defaults and interest rates, liquidity providers consistently profit. This model is part of a broader trend where startups like 3Jane and Wildcat offer uncollateralized or undercollateralized crypto loans, leveraging AI and decentralized coordination to manage risk and repayments.

What Are Other Emerging Trends in Crypto Lending?

Startups such as 3Jane have raised millions to provide uncollateralized credit lines on Ethereum, requiring verifiable proofs of income but no collateral. They plan to deploy AI agents to automate lending rules and reduce rates. Meanwhile, Wildcat focuses on market makers and trading firms with customizable loan terms and coordinated default recourse among lenders. These innovations signal growing sophistication in crypto lending markets.

Why Crypto Lending Is Gaining Institutional Attention

Although still a small segment of the crypto market, lending is attracting renewed interest from institutional players. JPMorgan Chase is reportedly exploring loans backed directly by crypto assets like Bitcoin and Ether. This institutional reentry follows the 2022 collapse of major lenders Celsius and Genesis, events that underscored the risks and regulatory scrutiny in crypto lending.

What Lessons Have Past Crypto Lending Failures Taught?

The downfall of Celsius and Genesis highlighted the importance of transparency and risk management. Celsius’s CEO was sentenced for fraud, and Genesis settled a $2 billion lawsuit. These cases emphasize the need for robust verification systems like World ID and clear lending protocols to restore trust and stability in the sector.

Frequently Asked Questions

What makes Divine Research’s loans unique in the crypto space?

Divine Research offers unbacked USDC loans verified by World ID, focusing on underserved global borrowers with microfinance-style lending and high interest to offset defaults.

How does World ID improve borrower verification?

World ID uses iris-scanning technology to ensure borrowers cannot create multiple accounts, enhancing security and reducing fraud on Divine Research’s platform.

Can everyday investors profit from funding these loans?

Yes, Divine Research’s system is designed so that after accounting for default rates and interest, lenders consistently earn profits by providing liquidity.

Key Takeaways

• Innovative Verification: Divine Research uses World ID iris scans to prevent multiple accounts and reduce fraud.
• Target Market: Focuses on underserved borrowers worldwide with microloans under $1,000 USDC.
• Risk and Reward: High interest rates offset 40% default rates, enabling lenders to profit.

Conclusion

Divine Research’s use of World ID for unbacked USDC loans represents a significant step in crypto microfinance, targeting underserved users with innovative verification and risk management. As institutional interest in crypto lending grows, platforms like Divine demonstrate how technology and high-risk strategies can coexist to expand financial inclusion and offer new investment opportunities.