A new generation of crypto lenders is pushing the boundaries of risk with innovative digital asset loans, three years after a devastating market crash led to widespread insolvencies in the sector.
San Francisco-based Divine Research has reportedly extended around 30,000 uncollateralized short-term loans since December, leveraging OpenAI CEO Sam Altman’s iris-scanning crypto group, World, to verify borrowers’ identities. The firm offers microloans of less than $1,000 in Circle’s USDC stablecoin, targeting underserved consumers—often outside the US—who lack access to traditional financial services.
Divine’s founder Diego Estevez described the operation as “microfinance on steroids,” emphasizing the accessibility of loans to “average folks like high-school teachers, fruit vendors… basically anyone with access to the internet.” Borrowers face fixed interest rates ranging from 20 to 30 percent, while the iris-scanning technology prevents defaulting borrowers from reapplying.
The crypto lending market suffered a major crisis in 2022 when falling asset prices triggered cascading defaults, culminating in the collapse of the FTX exchange. The resulting “crypto winter” lasted nearly two years, but a renewed embrace of digital assets, notably by former US President Donald Trump, has reignited investor enthusiasm. Bitcoin has surged to record highs, and financial institutions such as JPMorgan are exploring crypto lending opportunities.
Among Divine’s competitors is 3Jane, a crypto startup that recently secured $5.2 million in seed funding from venture group Paradigm, an early investor in FTX. 3Jane extends uncollateralized USDC credit lines on the Ethereum blockchain, requiring borrowers to provide “verifiable proofs” of assets or future income but no collateral. Defaulted loans are sold to US collections agencies.
3Jane is also developing AI-driven lending platforms featuring autonomous agents designed to enforce debt covenants programmatically, potentially enabling loans at lower interest rates. In March, Coinbase announced a partnership with Altman’s OpenAI to develop AI agents with commercial and monetary capabilities integrated with crypto wallets.
Another notable platform, Wildcat, caters to market makers and crypto trading firms seeking customizable, fixed-rate, undercollateralized credit facilities on Ethereum. With $170 million lent so far, Wildcat allows approved borrowers to set terms such as interest rates and loan maturities. In case of default, lenders coordinate to seek recovery.
Divine reports default rates around 40 percent for first loans, with high interest rates and token incentives offsetting losses. Many borrowers had little prior crypto experience; the program was piloted in Argentina, where inflation has pressured consumers. Loans are funded by deposits from individuals seeking attractive yields, with the system designed to ensure provider profitability after accounting for defaults.
The 2022 crypto crash exposed the vulnerabilities of lender-funded markets when major players like Celsius and Genesis defaulted, causing investor losses and legal consequences. Celsius CEO Alex Mashinsky received a 12-year prison sentence for fraud and market manipulation, while Genesis settled a $2 billion lawsuit without admitting wrongdoing.
While unsecured loans remain a niche in the broader crypto lending ecosystem dominated by firms such as Coinbase, Tether, and Galaxy, traditional Wall Street banks are increasingly entering the space with collateralized loans. Cantor Fitzgerald recently launched a $2 billion Bitcoin financing initiative, and JPMorgan is reportedly considering crypto-backed lending.
