The decentralized finance (DeFi) sector could be on the verge of a transformative growth cycle, and according to Animoca Brands chairman Yat Siu, the trigger might come not from trading innovations or tokenomics - but from the integration of student loans into blockchain-based systems.
Speaking at Consensus 2025 in Toronto, Siu argued that the $3 trillion global student loan market represents an untapped use case for DeFi that could dramatically expand the sector’s total value locked (TVL). Even modest adoption - bringing just 10% of that debt onchain - would more than quadruple DeFi’s current TVL, Siu claimed.
This projection isn’t merely a theoretical scenario. Siu linked the idea to broader economic trends, changing patterns of youth finance, and emerging infrastructure projects that aim to position Web3 as a critical tool for financial access - especially in education.
Siu’s central claim was that student loans are uniquely suited to onchain financial infrastructure. Unlike speculative assets or complex derivatives, education financing is a tangible, widely understood concept tied to future earnings. That gives it a level of public and institutional legitimacy that many existing DeFi use cases lack.
“The next big wave in Web3 is education,” Siu said onstage. He added that bringing education-related financial services onchain could onboard new users in ways crypto has struggled to do so far - particularly among unbanked youth and first-time borrowers.
He also emphasized that students, many of whom are “financially invisible” under traditional credit models, could benefit from programmable, low-cost crypto-native lending systems. These platforms would enable access to funding while introducing users to blockchain concepts like wallets, smart contracts, and digital identity at an early stage.
Financial Infrastructure for Digital-Native Students
At the heart of Siu’s thesis is a belief that education, especially financing it, can serve as a Trojan horse for crypto adoption. He pointed to Web2 analogs like PayPal and Venmo, which initially grew by solving narrow pain points (such as peer-to-peer transfers) before becoming foundational pieces of consumer finance.
Likewise, onchain student loans could become a gateway into broader Web3 engagement, embedding crypto into everyday financial experiences. Siu referred to students as the “first unbanked,” suggesting that access to educational capital - especially in emerging markets - could be an early exposure point for crypto-based services.
Animoca is already making moves in this space through its investment in Pencil Finance, a crypto-native lending platform targeting the student loan segment. Pencil Finance recently launched a $10 million blockchain-backed loan initiative to serve students in the Philippines and Indonesia, with plans to expand into the U.S. market.
The startup’s model uses stablecoins and smart contracts to manage loan origination, repayment, and tracking - reducing administrative overhead and improving transparency for borrowers and lenders alike.
DeFi’s Untapped Real-World Utility
Siu’s comments also come amid a broader push within the crypto industry to move beyond speculative trading and toward real-world utility. The idea of “positive-sum” use cases - applications that solve concrete problems rather than zero-sum games of wealth transfer—has become increasingly relevant as regulators scrutinize DeFi’s role in the financial system.
Bringing student debt onchain fits neatly within this framework. Unlike many DeFi applications, which can seem abstract or financially risky to outsiders, student loans are widely accepted as necessary tools for economic mobility. Integrating them into blockchain systems could therefore normalize crypto participation while giving borrowers better terms and more autonomy.
Pencil Finance and similar platforms could potentially tokenize student debt, turning it into composable financial primitives that can be packaged, sold, or staked in broader DeFi ecosystems. This could create new income streams for investors while giving students flexible repayment options and faster loan approvals.
Risks, Regulation, and Reputational Implications
Still, the path to onchain education finance isn’t without hurdles. Integrating student loans into crypto systems raises regulatory questions - especially in the U.S., where education lending is heavily politicized and subject to federal oversight.
Any onchain system dealing with loans would likely need to comply with consumer protection laws, disclosure standards, and credit reporting regulations. There’s also the question of data privacy, particularly if decentralized identity systems are used to track borrower credentials and performance.
In addition, the speculative nature of many DeFi platforms may raise concerns about volatility or predatory lending. If improperly designed, blockchain-based loan systems could exacerbate financial instability for already-vulnerable student populations.
Siu acknowledged these risks indirectly by emphasizing regulatory compliance as part of Pencil Finance’s rollout strategy. However, the industry still faces major challenges in translating DeFi-native tools into regulated, mainstream financial products - especially ones that involve cross-border capital flows and long-term repayment terms.
Education as the Core of Web3 Utility
Beyond loans, Siu suggested that education itself is a natural use case for Web3 technologies. He referenced the rise of platforms like YouTube and TikTok, which, despite being dismissed as entertainment channels, have become informal learning hubs for millions.
Siu argued that Web3 can take this further by integrating financial infrastructure directly into educational communities. Token-based incentive systems, reputation scores, and credentialing could form the basis of decentralized learning networks—where knowledge creation is tied to value generation.
Under such models, students wouldn’t just be recipients of education financing, but active participants in decentralized ecosystems where reputation, contributions, and learning milestones can translate into financial access or governance power.
This vision overlaps with concepts in decentralized identity (DID) and soulbound tokens, which aim to create non-transferable digital credentials linked to individual blockchain addresses. Such tools could allow students to build portable, verified reputational assets that support loan underwriting, job placement, and network inclusion across platforms.
Web3 Education and the Onboarding Problem
The conversation around student loans also ties into a broader issue facing the crypto space: onboarding the next wave of users. While the number of blockchain wallets continues to grow, the actual number of users actively engaging with DeFi protocols remains limited.
Education is often cited as the bottleneck. The complexity of DeFi tools, the steep learning curve around self-custody, and the jargon-heavy interfaces deter many newcomers from participating - even if they are otherwise interested in the ethos of decentralization.
Student loan programs that embed DeFi exposure into essential life experiences, like accessing higher education, could bridge this gap. For instance, a student who takes a loan through a crypto-native platform would be required to interact with digital wallets, smart contracts, and onchain repayment systems - essentially undergoing financial onboarding by necessity.
Such experiences could cultivate a generation of crypto-native users whose relationship to Web3 is grounded not in speculation but in utility.
Global Markets and the Future of Onchain Credit
While the U.S. student debt market garners headlines - currently valued at over $1.7 trillion - the real growth opportunity may lie in emerging markets, where traditional credit infrastructure is weak or non-existent.
Regions like Southeast Asia, Sub-Saharan Africa, and Latin America are home to millions of underbanked students who lack access to low-cost education financing. Blockchain platforms can bypass legacy banking systems to provide capital more efficiently - especially in regions where mobile-first payment systems and crypto adoption are already widespread.
Siu’s comments about Pencil Finance’s operations in the Philippines and Indonesia point toward this strategy. If successful, such platforms could demonstrate how onchain capital markets can serve populations overlooked by legacy finance, starting with students.
This vision aligns with the broader Real-World Asset (RWA) movement, which seeks to tokenize off-chain economic activity - like loans, invoices, and property - bringing it into decentralized systems with increased transparency and composability.
From DeFi Speculation to Human Capital Finance
As the crypto sector matures and wrestles with its real-world relevance, proposals like Yat Siu’s highlight a critical turning point: the need to tie blockchain systems to essential, everyday financial needs.
Bringing student loans onchain doesn’t just promise to boost DeFi’s TVL - it could redefine what DeFi is for. Rather than being a playground for yield farming or speculative trading, the next iteration of DeFi might serve as the financial backbone of emerging economies, learning networks, and human capital development.
In that vision, education becomes more than a sector - it becomes a foundational layer of Web3 finance, where learning, lending, and identity converge into a decentralized, inclusive, and programmable future.