Divine Research issues unbacked crypto loans using Sam Altman’s World ID

San Francisco-based lender Divine Research has issued around 30,000 unbacked short-term crypto loans since December, using OpenAI CEO Sam Altman’s iris-scanning platform World ID to verify borrowers.

Divine offers loans under $1,000 in the USDC (USDC) stablecoin, mainly to overseas borrowers underserved by traditional finance. It uses World ID to ensure users cannot open multiple accounts after defaulting.

“We’re loaning to average folks like high-school teachers, fruit vendors . . . basically anyone with access to the internet can get access to our funds,” Divine founder Diego Estevez told the Financial Times. “This is microfinance on steroids.”

Interest rates range from 20% to 30%, with a reported first-loan default rate of around 40%. “High interest rates compensate for these losses,” Estevez said, adding that free World tokens issued to borrowers can be “partially” reclaimed.

Everyday investors can earn by funding high-risk crypto loans

Estevez said Divine’s lenders are everyday individuals seeking solid returns. “Anyone can provide liquidity. We’ve engineered the system such that after accounting for default rates and the [interest] rates on offer, providers will always make a profit.”

Divine is part of a growing group of high-risk crypto lenders capitalizing on renewed market momentum and political tailwinds, including support from former US President Donald Trump.

Another startup, 3Jane, recently raised $5.2 million from Paradigm and offers uncollateralized credit lines on Ethereum. Unlike Divine, 3Jane requires “verifiable proofs” of assets or income, but still no collateral.

3Jane plans to introduce AI agents that follow lending rules automatically, aiming to lower rates while enforcing repayment. Defaulted loans on its platform are sold to US debt collectors.

Other players like Wildcat cater to market makers and trading firms, offering undercollateralized loans with customizable terms. According to Wildcat adviser Evgeny Gaevoy, “In the event of a default, lenders co-ordinate directly among themselves to seek recourse.”

Crypto lending gains traction

Lending remains a small slice of the crypto market but attracts growing attention as institutional players reenter the space. Last week, reports revealed that JPMorgan Chase is looking into crypto-backed loans, planning to lend directly against crypto assets like Bitcoin (BTC) and Ether (ETH).

However, the shadow of 2022 looms large, when major crypto lenders like Celsius and Genesis collapsed. Celsius’s CEO Alex Mashinsky was sentenced to 12 years for fraud, and Genesis settled a $2 billion lawsuit.