Divine Secures $6.6 Million Seed Funding for Undercollateralized DeFi Lending Protocol

Executive Summary

Divine secured $6.6 million in seed funding led by Paradigm, with participation from Nascent, to scale its Credit protocol, an undercollateralized lending platform that has facilitated over 175,000 loans to 100,000 unique borrowers, indicating growing adoption in DeFi lending.

The Event in Detail

Divine, a developer in the decentralized finance (DeFi) sector, successfully closed a $6.6 million seed funding round. This round was led by Paradigm, a prominent venture capital firm in the crypto space, with additional investment from Nascent. The capital infusion is specifically earmarked to accelerate the growth and expansion of Divine's Credit protocol.

Launched in December 2024, the Credit protocol specializes in providing undercollateralized loans, a departure from traditional overcollateralized DeFi lending models. The protocol assesses repayment capacity by analyzing borrower behavior, a strategy enabled by its integration with World MiniApps. These MiniApps distribute Credit services to a user base of 15 million human-verified individuals, leveraging World ID for proof-of-human verification. Since its inception, Credit has processed more than 175,000 loans for over 100,000 unique borrowers. These loans are denominated in stablecoins, settled on World Chain, and are primarily utilized for everyday expenses in emerging economies, notably Argentina, Nigeria, and Colombia.

Market Implications

This funding round and the demonstrated traction of Divine's Credit protocol signal a significant validation for undercollateralized DeFi lending models. The success in issuing a high volume of loans, particularly in emerging markets, suggests a viable pathway for financial inclusion that leverages blockchain technology. The integration with World's proof-of-human system addresses a critical challenge in undercollateralized lending by providing a mechanism for accountability, as articulated by the creator of the Credit Mini App, who noted the ability to remove defaulting users without them easily re-entering the system with a new account. This capability enhances lender confidence in a market segment historically prone to higher risk.

The expansion of Credit could drive increased capital flow towards similar real-world asset (RWA) and DeFi credit protocols. It underscores the growing utility of stablecoins as a medium of exchange and lending in regions experiencing economic volatility, offering a stable alternative for transactions and credit. Furthermore, the reliance on Layer 1 (L1) solutions like World Chain highlights their expanding role in supporting scalable and accessible financial services in these key geographic areas.

Broader Context

Divine's strategy directly addresses the need for accessible credit in underserved populations, distinguishing itself from traditional DeFi protocols that often require significant overcollateralization. Unlike protocols such as Exactly Protocol, which focuses on fixed and variable interest rate markets with an emphasis on collateralized assets and sophisticated liquidation mechanisms, Divine prioritizes undercollateralized lending through behavioral assessment and a robust identity layer. This approach aims to unlock liquidity and financial services for individuals who may lack sufficient collateral for conventional loans.

The deployment via World MiniApps and the integration of World ID represent a critical innovation in mitigating risk for undercollateralized lending. This model offers a novel solution to the creditworthiness dilemma by linking lending directly to verified human identity, thereby fostering accountability in a decentralized environment. The focus on microloans for everyday expenses in countries like Argentina, Nigeria, and Colombia aligns with a broader trend of leveraging blockchain and stablecoins to provide financial infrastructure in regions where traditional banking services may be limited or inefficient. This development contributes to the narrative of Web3 technologies fostering greater financial inclusion and utility on a global scale.