122
<h1>Crypto Lending Reborn: Startups Pioneer Unsecured Loans After 2022 Crash</h1>
<p><b>SAN FRANCISCO & LONDON –</b> In a stunning reversal of fortune, the crypto lending market is showing remarkable signs of life after the devastating collapses of 2022. Driven by innovative technologies and a shifting regulatory landscape, startups are once again offering loans, even venturing into the high-risk territory of *unsecured* lending. This is big news for the crypto space, and a signal that the industry isn't down for the count.</p>
<h2>From FTX Fallout to a New Lending Era</h2>
<p>The crypto winter of 2022, punctuated by the spectacular bankruptcy of FTX, sent shockwaves through the industry, decimating lending platforms like Celsius and Genesis. Many believed the unsecured crypto loan model was dead. However, companies like Divine Research are proving naysayers wrong. Since December, Divine Research has reportedly issued approximately 30,000 small, unsecured loans, demonstrating a surprising resilience in the demand for crypto credit.</p>
<h2>Iris Scans and the Future of Crypto Creditworthiness</h2>
<p>What’s different this time? A key factor is the adoption of advanced identity verification technologies. Divine Research is leveraging the iris scan system developed by World, a platform founded by OpenAI-Id’s Sam Altman, to securely and efficiently verify borrowers. This eliminates a major pain point from the previous lending cycle – the difficulty of accurately assessing risk in a decentralized environment. This isn’t just about technology; it’s about rebuilding trust, a crucial element for any financial system, especially one as volatile as crypto.</p>
<h2>Political Winds and Institutional Interest</h2>
<p>The revival isn’t solely driven by technological advancements. A more favorable political climate, particularly under the current US administration, is also playing a role. Increased institutional acceptance and the recent surge in prices of digital assets like Bitcoin are fueling renewed interest in crypto-based financial products. This shift in sentiment is opening doors for business models that were previously considered too risky.</p>
<h2>Micro-Loans for Emerging Markets</h2>
<p>Divine Research is specifically targeting underserved consumers in countries with unstable currencies, such as Argentina, offering loans of under $1,000 denominated in USDC, a stablecoin pegged to the US dollar. While interest rates range from 20-30%, and initial default rates are around 40%, the company believes its optimized risk structure will deliver positive returns. This focus on micro-lending in emerging markets highlights a potential for crypto to provide financial inclusion where traditional banking systems fall short.</p>
<h2>Beyond Divine: 3Jane, Wildcat, and the Return of Risk</h2>
<p>Divine Research isn’t alone. 3Jane, backed by Paradigm (a firm with past ties to FTX), is offering unsecured credit lines based on Ethereum holdings, assessing creditworthiness through verifiable assets and future cash flows. Wildcat Protocol is catering to institutional traders and market makers, providing under-collateralized loans on Ethereum, with approximately $170 million already deployed. These platforms represent a clear return to the riskier, higher-reward models that characterized the earlier days of DeFi lending.</p>
<h2>Traditional Finance Takes Note</h2>
<p>Even established financial institutions are cautiously dipping their toes back into the crypto lending space. Cantor Fitzgerald announced a Bitcoin-based financing platform in July, and JPMorgan is exploring lending against crypto assets held by its customers. However, the market for unsecured crypto loans remains a niche segment, carefully watched by regulators and investors alike.</p>
<p>The resurgence of crypto lending, despite the lessons learned from 2022, underscores the industry’s capacity for innovation and adaptation. Whether these new models can avoid the pitfalls of the past remains to be seen, but one thing is clear: the demand for crypto-based financial services is far from extinguished. Keep an eye on archyde.com for ongoing coverage of this rapidly evolving space, and for the latest insights on the intersection of finance, technology, and the future of money. For more breaking news and in-depth analysis, explore our <a href="https://www.archyde.com/">technology and finance sections</a>.</p>
