Pencil Finance completes first fully onchain student loan cycle, financing 6,600 students in Southeast Asia

Pencil Finance has completed its first fully onchain student loan financing cycle, deploying $1 million to fund roughly 6,600 students across 118 schools and universities in Southeast Asia.

The student loan real-world asset (RWA) protocol announced that the cycle was its first fully onchain student loan financing cycle, with the lending process recorded transparently on a blockchain. Pencil Finance deployed the $1 million in capital, while repayments from borrowers ultimately returned principal and yield to the capital providers behind the loan bundle.

The transaction is significant because it connects blockchain-based capital markets with a conventional financing need: paying for education. Rather than using blockchain merely to trade digital assets, Pencil Finance is attempting to use it as infrastructure for originating, tracking and servicing real-world student debt.

The financing reached students connected to 118 schools and universities in Southeast Asia. Around 1,050 students received direct funding, while the broader financing supported approximately 6,600 students through education financing providers.

Pencil said the borrowers were specifically drawn from groups that have historically been underserved by traditional lenders. Women represented 50% of borrowers, while 93% came from lower-income households.

Animoca, Open Campus and NewCampus backed the $1M bundle

The Onchain Lending cycle traces back to a $1 million loan bundle funded in July 2025 by Animoca Brands, Open Campus and NewCampus.

The capital was divided into two risk profiles. The senior tranche offered fixed returns, while the junior tranche carried variable returns and first-loss exposure. That structure was designed to give capital providers different ways to participate depending on their appetite for risk.

Pencil Finance’s earlier announcement said the inaugural $1 million bundle allocated $750,000 to the senior tranche, which carried a fixed 15% annual percentage yield, while $250,000 went into the junior tranche with variable returns and first-loss risk.

Most of the loan capital was deployed through ErudiFi, an education financing provider serving students in markets including the Philippines and Indonesia. The financing model allows loan providers to convert the blockchain-originated capital into local currency and use it to cover education costs.

Students then repay their loans through the loan providers, which in turn return principal and interest to the capital providers.

Yat Siu, co-founder and executive chairman of Animoca Brands, described the initiative as a major development for both blockchain and education finance, saying the model creates a new real-world asset class in which investors can earn yield generated by educational loan repayments.

Why the model matters for education finance

The latest milestone gives Onchain Lending a practical use case at a time when the tokenization of real-world assets is attracting increasing attention from financial institutions and blockchain companies.

Pencil Finance’s model essentially turns student loan portfolios into investable assets. Instead of keeping the financing process entirely within traditional financial infrastructure, the protocol uses blockchain-based records to make the movement of capital and repayments more transparent.

That does not eliminate the underlying risks of student lending. Borrower repayment remains central to the economics of the model, while different tranches expose capital providers to different levels of risk. The blockchain provides the infrastructure for recording and coordinating the financing, but it does not remove credit risk.

Frank Li, co-founder of Pencil Finance, said the completed cycle demonstrates that blockchain can support practical financing in emerging markets, rather than serving solely as a technology for digital asset speculation.

The company’s broader ambitions are substantial. Pencil Finance describes its platform as a marketplace connecting investors with verified student loan originators through tokenized loan bundles. Its platform allows eligible participants to select senior or junior tranches based on their preferred risk and return profile.

Tokenized assets are finding new roles in lending

The Onchain Lending experiment also arrives as tokenized RWAs are being applied to increasingly unconventional forms of credit.

In Brazil, for example, the country’s B3 stock exchange recorded a 100,000 Brazilian real loan backed by 10 tokenized dairy cows in July 2026. The transaction used technology from agricultural technology company Cowmed to digitally identify and monitor the animals.

Each cow was represented digitally, while smart collars supplied information that could help establish the animals’ identity and condition. The approach demonstrates how physical assets can potentially become usable collateral through a combination of tokenization, monitoring technology and financial infrastructure.

For Onchain Lending, the broader trend is important. Student loans and livestock may appear unrelated, but both demonstrate the same emerging principle: financial claims and physical assets can be represented digitally and connected to capital markets.

The Pencil Finance transaction therefore represents more than a $1 million lending cycle. It offers a test of whether blockchain infrastructure can make traditionally fragmented credit markets more transparent and accessible.

If the model can scale while maintaining responsible underwriting, repayment performance and investor protections, Onchain Lending could become an increasingly important bridge between decentralized finance and the multitrillion-dollar real-world credit economy.

The immediate milestone is modest in dollar terms compared with global lending markets. But the experiment puts thousands of students and a traditionally underserved borrower segment inside a financing structure that can be tracked onchain from capital deployment through repayment—an approach that could shape the next phase of blockchain-based financial infrastructure.