Big investors are getting involved, even though many people still remember the crypto loan crashes from 2022.
Crypto microloans are experiencing a dramatic resurgence, fueled by a broader revival in digital asset markets closely tied to US President Donald Trump’s pro-crypto stance.
Three years after a devastating market crash triggered a wave of bankruptcies across the crypto lending sector, a new crop of startups is aggressively re-entering the space. They possess unsecured, tech-driven lending models — and no collateral required. These ventures are riding a wave of investor optimism reignited by Trump’s pro-crypto agenda and the sharp rebound in the broader crypto market.
At the forefront is Divine Research, a San Francisco-based firm that has issued more than 30,000 uncollateralized microloans since December.
Working alongside OpenAI CEO Sam Altman’s eye-scanning crypto identity project, Worldcoin, Divine says it’s helping individuals excluded from traditional finance access short-term loans under $1,000, denominated in Circle’s USDC stablecoin.
Divine’s model hinges on Worldcoin’s biometric verification. Once a borrower scans their iris, the system ensures they can’t re-enter the platform under a new identity if they default.
Despite default rates of 40% on first-time loans, Estevez claims high interest rates of 20-30% and partially reclaimable tokens balance the risk. He also said individual depositors fund the loans, incentivized by promises of consistent yields.
Crypto credit startups embrace programmable trust and AI
Divine isn’t alone. 3Jane, a crypto credit startup backed by Paradigm (an early FTX investor), recently raised $5.2 million in seed funding. It offers unsecured USDC credit lines via Ethereum smart contracts, though it requires “verifiable proofs” of financial standing — such as bank statements or crypto holdings — rather than collateral.
The firm sells defaulted loans to US debt collectors and is working on AI-powered agents that obey debt covenants automatically, potentially allowing lower interest rates.
Meanwhile, Wildcat, another rising protocol, caters to market makers and crypto trading firms by offering customized, undercollateralized credit facilities. Over $170 million has already been lent through its Ethereum-based platform. Like competitors Clearpool and TrueFi, Wildcat allows borrowers to define terms like maturity and loan caps, while lenders self-organize in case of default.
“We’re seeing a shift toward programmable trust,” said Evgeny Gaevoy, Wildcat adviser and Wintermute CEO. “In the absence of collateral, reputation and transparency become everything.”
Wall Street, AI, and biometrics fuel high-stakes reboot of crypto lending
The crypto lending revival comes as Bitcoin prices hit new highs and traditional finance warms to digital assets. Cantor Fitzgerald recently launched a $2 billion “Bitcoin Financing Business”, and JPMorgan is reportedly exploring crypto-backed loans.
Even Coinbase is experimenting with AI agents embedded with crypto wallets, developed in collaboration with Altman’s OpenAI, that could one day autonomously manage loans and repayments.
Still, memories of the 2022 crypto lending crash — marked by the collapses of Celsius and Genesis — loom large. Celsius’s CEO, Alex Mashinsky, is serving 12 years for fraud, while Genesis agreed to a $2 billion settlement in a lawsuit over defrauding 230,000 investors.
Despite those risks, startups like Divine are betting that biometrics, blockchain, and AI can reboot crypto credit models for a new era where loans aren’t backed by assets, but by identity, algorithmic enforcement, and yield-seeking investors.
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