# Pencil Finance

> Bringing $3 Trillion Student Loans On-Chain

Pencil Finance is a decentralized lending protocol that tokenizes student loan portfolios. It lets investors buy tranche tokens for fractional exposure and lets loan originators access on-chain capital.

Pencil Finance is a decentralized lending protocol that brings real world student loan financing on-chain. It connects verified loan originators with investors seeking fixed income exposure to an asset class outside typical crypto collateral. The protocol issues tranche tokens representing fractional shares of tokenized loan bundles, giving investors structured, risk adjusted access to education debt as an investable asset.

The platform addresses the difficulty loan originators face in accessing diversified capital pools by letting them convert loan portfolios into digital tokens with defined terms and redemption schedules. Investors browse available bundles, choose between Senior or Junior tranches based on risk appetite, and track repayments and returns through an on-chain dashboard. This structure separates risk across tranches while keeping cash flows transparent and verifiable.

Beyond the core lending flow, Pencil Finance supports a native token used for staking, governance, and liquidity, along with underwriting pools intended to cushion investor losses. Its offering is used by accredited and institutional investors seeking yield tied to education financing, and by lending companies seeking to expand their investor base beyond traditional channels.

- Type: Protocol
- Sector: DeFi
- Status: Active
- Founded: 2025-01-01
- Profile: https://thegrid.id/profiles/pencil_finance

## Products

- [Pencil Finance](https://thegrid.id/profiles/pencil_finance): Pencil Finance is an RWA tokenization platform that converts student loan portfolios into on-chain investable bundles. Lending partners tokenize loan pools into Senior and Junior tranches, represented by a fungible yield token and a non-fungible token respectively, which investors purchase to gain exposure by risk profile. The platform tracks repayments through a waterfall structure that pays senior holders first, with a genesis badge NFT and governance token as additional utility features within the same app and wallet-connected account. (RWA Tokenisation Platform, Live, Main Product)

## Assets

- [GROW Token (GROW)](https://thegrid.id/profiles/pencil_finance): GROW is the ERC-20 token representing the Senior Tranche of Pencil Finance's student loan RWA protocol. It is minted when USDC is deposited into the senior pool and burned upon withdrawal or redemption, giving holders fixed, principal-protected returns prioritized in the protocol's repayment waterfall. Its value accrues through net asset value growth tied to underlying loan repayments rather than price speculation. (Utility)
- [EDUFI NFT (EDUFI)](https://thegrid.id/profiles/pencil_finance): EDUFI is an ERC-721 non-fungible token representing an investor's participation in the Junior Tranche of Pencil Finance's student loan bundles. Holders assume first-loss risk in exchange for variable, potentially higher returns tied to bundle performance, with each NFT recording loan-specific repayment terms. It is transferable on secondary markets, giving otherwise illiquid junior-tranche positions tradability. (NFT)
- [Pencil Genesis Badge](https://thegrid.id/profiles/pencil_finance): The Pencil Genesis Badge is an NFT minted through Pencil Finance's platform to holders who connect an OCID account. It functions as an early-participant credential within the student loan RWA protocol rather than a tranche investment instrument. Minting is tied to wallet connection rather than capital deployment, distinguishing it from the GROW and EDUFI tranche tokens. (NFT)
- [PEN Token (PEN)](https://thegrid.id/profiles/pencil_finance): PEN is the planned governance token of Pencil Finance, intended to power a DAO contract referenced in the protocol's smart contract architecture as pending. It would let holders vote on protocol parameters, bundle approval criteria, and treasury decisions once the governance module is deployed. The token remains undeployed, with its contract and address not yet published. (Governance)

## Links

- [Main](https://www.pencilfinance.io)
- [Documentation](https://pencil-finance.gitbook.io)
- [Twitter / X](https://x.com/pencilfinance_)
- [GitHub](https://github.com/zvy22606/pencil-finance-contract-solana)
- [Telegram](https://t.me/pencilfinanceprotocol)
- [LinkedIn](https://linkedin.com/company/pencil-finance)

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