Divine Research Issues 30,000 Unbacked Crypto Loans Using World ID

Divine Research has launched a new crypto lending program that provides unbacked loans in USDC to thousands of borrowers across the globe. The program leverages biometric identity verification through World ID, a system developed by Sam Altman‘s team, to ensure each borrower is a unique and verified individual.

Since the initiative quietly began in December 2024, over 30,000 short-term loans have been issued, mostly to people in developing countries. These loans typically range under $1,000 and are aimed at individuals who lack access to traditional banking services, such as small business owners, informal workers, and underserved communities. The key innovation is that no collateral is required to borrow.

What makes the model work, at least in theory, is World ID. It uses iris scans to establish a “proof of personhood” and prevent loan applicants from gaming the system by creating multiple identities. Once someone defaults, they're blocked from taking out another loan under a different ID, helping to reduce abuse and fraud.

However, the model comes with significant risk. Initial data shows a first-loan default rate of around 40%. To compensate for these losses, Divine charges high interest rates typically between 20% and 30% and offers some incentive tokens to encourage repayments. The company claims that even with the high default rate, returns remain positive for individual lenders because successful repayments and interest margins offset the losses.

Divine Research positions its platform as a way for average crypto holders to act as micro-lenders. Users can supply liquidity to the lending pool and, in return, receive interest payments from borrowers. The appeal lies in potentially high yields in an otherwise volatile crypto market. However, critics argue that lending without collateral, especially to economically vulnerable populations, may result in unsustainable financial pressure and raise ethical questions about fair lending practices.

The strategy marks a significant shift in crypto lending, away from traditional overcollateralized loans often seen with major platforms. Instead of relying on locked assets like Bitcoin or Ethereum, Divine's model hinges entirely on identity verification. This creates a unique opportunity and exposes the platform to high credit risk.

Meanwhile, other startups are exploring similar territory, trying to find a balance between inclusivity and financial security. Some use AI to monitor repayment behavior or partner with third-party collection agencies. But Divine's heavy reliance on World ID makes it stand out, especially given growing global scrutiny around biometric data collection and digital identity systems.

As more users flock to DeFi and institutional interest in crypto lending grows, Divine's high-risk, high-reward approach could become either a cautionary tale or a blueprint for a new kind of financial inclusion. The success or failure of this program may ultimately depend on whether the model can scale responsibly and whether borrowers will repay loans once access to credit becomes more widespread.

For now, Divine Research is betting that identity, not assets, can power the next wave of crypto finance.