PayFi is the reconstruction of traditional payments in the Web3 world through blockchain.

Written by: Will Awang

At the end of 2024 to the beginning of 2025, the new term "PayFi" quietly emerged in the context of the crypto community.

Initially, it was seen as a "narrative packaging" from the Solana community—Crypto payments layered with liquidity and interest rate models, seemingly just a rebranded DeFi. However, as a group of builders with long-term experience in payments joined the discussion, this seemingly old concept gradually took on a more realistic and infrastructure-oriented meaning.

PayFi is no longer "a story of issuing tokens for the sake of issuing tokens," but rather the reconstruction of traditional payments in the Web3 world through blockchain.

This open mic invited practitioners and thinkers from the front lines of PayFi, including:

• Will (@Will_7th): Web3 lawyer, involved in multiple payment projects, focusing on stablecoins, payments, tokenization, and RWA.

• Kay (@portal_kay): Web3 product manager, previously worked on GameFi and BTC ecosystem projects; recognizes the application value of stablecoin payments and looks forward to creating practical products.

• Claudio (@Clllau_dio): Co-founder of KODO, formerly worked in international payments at ByteDance, focusing on the fintech industry, dedicated to building an enterprise-level digital cross-border payment platform for the next decade.

• Sky (@skyhan_eth): Co-founder of ROZO, deeply engaged in the crypto-native acquiring field, previously worked at American Express responsible for interfacing with card issuers, and began building easy-to-use, low-friction acquiring products after experiencing a poor Bitcoin payment experience in Tokyo in 2019.

These four seasoned crypto payment practitioners and researchers engaged in nearly three hours of in-depth discussion around four major themes: "What is PayFi?", "The layout of the giants," "The future of Crypto payments," and "The cooperation model of payment alliances."

1. What is PayFi?

A New Species of On-Chain Payments in the Eyes of Four Frontline Builders

"PayFi is not a financial term that rehashes old concepts; it represents a form of payment + finance that is native to the chain." In the opening discussion of this open mic, several industry builders expressed similar views—PayFi may be the closest innovation in financial infrastructure that is "implementable" in the Web3 world.

Sky: The On-Chain Credit Revolution from Supply Chain Finance

Sky was the first to speak, reflecting on the origins of the PayFi concept while simultaneously deconstructing it from both technical and contextual perspectives.

"Although the concept of PayFi was proposed by Solana's Lily in recent years, its prototype has actually existed for a long time." She pointed out that the earliest form of PayFi can be traced back to traditional supply chain finance: payment first, settlement later, which is essentially a financial structure of time and credit.

She categorized payment scenarios into two main types: consumer payments (to Consumer) and enterprise payments (Business to Professional). Currently, the more active projects in the market are mainly focused on the B-side, such as supply chain finance platforms that provide funding and settlement pools to businesses. However, Sky believes that the real potential lies in the C-side.

"Credit cards are the most successful C-side PayFi example; they existed before the internet and are the greatest financial innovation since World War II." Sky lamented that there has yet to be a truly 'crypto credit card' product on-chain, but this actually indicates a huge opportunity. As long as a similar credit system can be reconstructed on-chain, users can experience consumption before payment without needing a bank account or government ID, and establish a Crypto-native merchant network, which is the model that truly has the chance to challenge Visa.

Claudio: Making "Financial Services" Pluggable Open Components

"When many people mention PayFi, their first reaction is payment channels." Claudio went straight to the point, "But if PayFi is just a different settlement method, then at best it can only be called Web3 payment, not PayFi."

In his view, the most important innovation of PayFi lies in "making the roles, capabilities, and profit logic in the traditional financial service chain more efficient through the global liquidity of blockchain." It transforms into modular components that can be combined and plugged in.

Claudio used his real business as an example: his team has long served traditional enterprises, especially Chinese companies going overseas. The biggest problem they encounter in cross-border transactions is not the payment interface, but rather low capital turnover efficiency, high financing thresholds, and significant funding pressure. Traditional financial institutions offer limited support to small and medium-sized enterprises, while the openness of blockchain and stablecoins can provide interest-bearing funding pools in a more flexible manner, breaking the deadlock between funding and repayment.

Kay: "PayFi" from the Retail Investor's Perspective is Actually "Web3 Payment"

Unlike Sky and Claudio's technical perspectives, Kay provided another definition of PayFi from the "retail investor's perspective."

"In the industry's eyes, Fi stands for Finance, but in the eyes of retail investors, it is actually the 'label' of Web3." Kay pointed out that this semantic difference has led to a kind of "misunderstanding-based popularity"—as long as a project uses blockchain technology and is related to payments, it can be called "PayFi" in the eyes of users.

She made an analogy: "Just like GameFi and SocialFi, Fi has become a categorical labeling method, no longer specifically referring to 'finance'." This has also led to PayFi often becoming vague in the community: it could be a payment tool, a funding pool, or even a product that issues tokens under the guise of payment.

Kay also noted that many teams in the Web3 payment field are doing real B-side business, but due to long product chains and unappealing narratives, they rarely spark widespread discussion in the community. Instead, some projects that are closer to "hype and speculation" have gained a lot of attention.

"So I particularly hope that the topic of PayFi can connect more 'truly implementable' teams with 'users who genuinely care about payments.'" She said, "If everyone cannot reach a consensus, then PayFi may become the next term that is misrepresented."

Will: PayFi is the Blockchain "Financial Lego" that Deconstructs Alipay

"Many people want to find tokens to speculate on, so they focus on PayFi. But most real PayFi projects cannot issue tokens." Will said cheerfully, yet he hit on a pain point in the industry.

He further pointed out that those PayFi projects packaged under the hype of Solana often have underlying structures of on-chain funding pools + interest rate models, speculating on "the time value of money," which is essentially a financial business but cloaked in a payment facade. This kind of "concept packaging," while not pure, has also driven the explosion of the PayFi ecosystem.

However, in Will's view, the true value of PayFi lies not in speculation, but in "deconstruction."

"If Alipay is a closed large platform, then PayFi is about breaking down each financial service module of Alipay into Lego blocks and opening them up. Any developer can build their own blockchain Alipay."

He believes that the most explosive scenarios for PayFi are those users without traditional bank accounts but with stable internet connections—such as residents of small countries in Asia, Africa, and Latin America, Web3 natives, and AI agents.

"These people do not need banks; they only need a wallet. As long as they can receive money, spend money, borrow money, and repay money, PayFi is their bank." Will emphasized that the C-side is the ultimate goal of PayFi and the logic of valuation. "As long as project teams can grasp users' financial behaviors, they have credit and can provide corresponding financial services such as lending, payments, and wealth management. This story is too appealing; not pursuing it would be a disservice to oneself."

This is the real PayFi in the eyes of the four builders: not a speculative term, but a system-level transformation that decouples from traditional finance and reconstructs on-chain. Each person sees a different facet, but they all point to the same future—a world where no banks are needed, yet everyone can "have a bank."

2. When Internet Giants Start to "Invade" PayFi, Are Entrepreneurs Being Surrounded or "Carried"?

When names like Stripe, Visa, OKX, and Coinbase appear in headlines related to PayFi, many entrepreneurs' first reaction is—immense pressure.

"Every time I see a new move from CeFi (traditional finance), I feel like my survival cycle has shortened a bit." Claudio said with a wry smile. But then he quickly shifted his tone: "But their frequent actions precisely indicate that they are also in a panic."

This discussion about "giants entering the market, entrepreneurs finding a way out" became the most intense and genuine part of the open mic.

Stripe, Visa, Coinbase: What Are They Competing For?

Sky pointed out directly that Stripe and Visa's "open card issuance" actions directly impact the intermediary model. "A friend overseas who does U cards shut down his U card product the day after the news broke." This statement left the audience stunned.

Originally, products like U cards, which are "intermediary" products, provided users with a consumption outlet for cryptocurrencies by interfacing with card issuers like Visa and Mastercard. But when Visa and Stripe directly open card issuance permissions, the value chain of these intermediaries is instantly severed.

At the same time, the rise of stablecoins is quietly undermining the role of traditional banks. "Now stablecoins are banks; they just store money on-chain." Sky stated bluntly. Visa and Mastercard control the merchant network, which is their last stronghold. However, whether this will be bypassed in the future has already become an obvious trend.

Kay added a C-side perspective: "OKX's recent OKX Pay, which claims to be C-side payment, actually looks like a social product in its first version, with P2P transfers and group chats; it doesn't resemble what payment should be." He sharply pointed out that payment is essentially a consumption behavior, inseparable from real scenarios. Simply relying on transfers between wallets cannot support a C-side payment ecosystem.

On the contrary, Kay was impressed by the X402 protocol launched by Coinbase. "It is designed for the micro-payment needs of AI agents, creating a set of on-chain small payment protocols that are elegant, simple, and practical." Kay commented. This B2B, machine-level calling scenario precisely hits the core advantage of on-chain payments—extremely low-friction cross-border small payments.

How Can Entrepreneurs Compete with Giants in a "Differentiated" Manner?

"If you can't beat them, join them." Claudio said half-jokingly. But he quickly added, "What we, as infrastructure startups, can do is to achieve results in our own niche as quickly as possible. Whether we are acquired in the future or collaborate to build together, establishing a foothold is the only way out."

He used Stripe as an example: Stripe is incredibly powerful in the global payment market, but it has never been a "lone warrior" company; instead, it has gradually built a global network by continuously integrating regional payment solutions. "No local payment company in any country can defeat Stripe, but Stripe also relies on local partners," Claudio said.

Sky believes that the real opportunity for startups lies in areas that "the giants are unwilling or unskilled to tackle." "Visa and Stripe excel at connecting merchants and consumers, but they are reluctant to deal with on-chain funding, credit, and interest rate models. These are the areas where entrepreneurs can focus and break through." She specifically mentioned the concept of "on-chain credit cards." "Current U cards are merely prepaid cards, not true credit cards. If we can use on-chain credit data to grant users credit, even if the limit is not high, it would be a highly disruptive product."

Giants are the "capital moat," while PayFi aims to create a "liquidity moat."

Will provided his judgment from a more fundamental perspective.

"Giants like Visa, Mastercard, and Stripe essentially rely on network effects built on capital," he said. "But if PayFi can truly operate, its moat will not be capital, but liquidity."

He explained that on-chain funding pools, lending, and financing are all about "the liquidity of money." As long as an efficient and transparent liquidity network can be built on-chain, users, merchants, and developers will naturally gravitate towards it, rather than passively relying on Visa's "brand credit."

"The giants will continue to focus on KYC-based card issuance and off-chain consumption records, but on-chain is a new arena," Will asserted. "PayFi should not compete for the same territory as them but should encroach on their core value from this new track of 'on-chain liquidity.'"

Sky added, "In the past few years, what we've found most challenging in payments is not securing users, but rather addressing the 'last mile' of liquidity. PayFi simplifies and clarifies the flow of funds, which is what the giants truly fear."

This round of discussion about "giants' layout in PayFi" ultimately reached a consensus:

• Giants will continue to strengthen their moats in "entry-level" capabilities such as merchant networks, card issuance, and payment channels.

• The opportunities for entrepreneurs and the PayFi ecosystem lie in the reconstruction of underlying liquidity, the depersonalization of credit, and the emergence of new scenarios such as machine economy and micropayments.

The giants focus on the "surface" of payments, while PayFi seeks the "substance" of payments. Claudio's final remark was thought-provoking: "We are not competing with the giants; we are seizing a market they cannot see or are temporarily pretending not to see."

3. Will Crypto Payments Really Achieve "Mass Adoption"?

The Illusion and Reality of Mass Adoption

"Mass Adoption" is a vision that almost all crypto practitioners love to talk about. But what truly counts as adoption? Is it the buzz of crypto enthusiasts tweeting? Is it the waves of FOMO surrounding Memecoins? Or is it the day you buy coffee on the street using USDC?

During this open mic, several guests engaged in a rare "pragmatic" discussion about "Mass Adoption of Crypto Payments."

Claudio: Don't Mythologize Stablecoins; They Are Just an "Upgraded Version" of Cross-Border Payments

"I believe in Mass Adoption, but it depends on how you define it," Claudio's viewpoint remained pragmatic as always.

In his view, the advantages of stablecoins in corporate cross-border payments are undeniable:

• Cost reduction, speed increase, transparency.

• Cross-border clearing and settlement are much more efficient than the banking systems of fifty or sixty years ago.

"But this does not mean that stablecoins will indiscriminately replace local payments." He emphasized that in countries like China, India, and Singapore, local payment systems are already mature and efficient. "Countries like Mexico have no motivation to use stablecoins; local payments are entirely sufficient."

He judged that stablecoins would only have structural opportunities in countries with extremely weak financial infrastructure. Even so, choosing blockchain is not guaranteed. "Centralized solutions like the digital yuan may not be worse than blockchain." Claudio concluded, "Stablecoins will be part of the payment system, but they will never be the only endpoint. The future will definitely be a coexistence of multiple currencies and forms."

Sky: Quantitatively Assess Volume, Qualitatively Assess Penetration; Don't Be Deceived by the "False Adoption" in the Crypto Space

"Mass Adoption of Crypto Payments requires both quantitative and qualitative assessments." Sky proposed a set of "hard indicators":

• Quantitatively, it must reach a stablecoin market value of at least one trillion dollars, close to the volume of USD M0, to be considered true adoption, while the current stablecoin volume is at the hundred billion dollar level.

• Qualitatively, it involves the real penetration in a certain region. "For example, in a place like Argentina, if you ask ten people on the street, at least two or three should be using stablecoins for it to be called adoption."

The key to driving adoption lies in two major pain points:

• Friction in payment methods. In markets dominated by credit cards, such as the US and South America, small payment fees can exceed 10%, which is a significant pain point.

• The reality of currency devaluation. In high-inflation countries like Argentina and Turkey, the real demand for cash and stablecoins far exceeds discussions on "payment innovation."

"You don't need to educate users; life will force them to use it," Sky stated.

However, she also reminded that the openness of policies (such as the currency competition after Milei's rise in Argentina) and the Web3 integration costs for merchants are the final push for mass adoption.

Kay: Top-Down and Bottom-Up; There Are Two Paths to Mass Adoption

Kay approached the topic of mass adoption from the perspective of "path theory."

He summarized it into two models:

• Top-down: Government-driven, upgrading within the system.

• Bottom-up: Users vote with their feet, adopting spontaneously from the grassroots.

Taking Singapore as an example, the government launched an identity + payment system called "SingPass," which also utilizes blockchain technology.

Although it is functionally strong, Kay pointed out that this model heavily relies on the local identity system, leaving tourists and foreign users without access.

"This top-down model can lead to rapid adoption, but its benefits will not be shared with users." Kay believes that systems lacking intrinsic incentives and flywheel effects are destined to be "tools of the government." In contrast, bottom-up adoption in countries like Argentina and Turkey is more vibrant. With fiat currency devaluation and credit bankruptcy, users will seek stablecoins as a value anchor. He shared a real case of a restaurant employee in Turkey who "exchanges their salary for dollars or USDT immediately after receiving it."

"Mass adoption of crypto payments will ultimately be a combination of these two paths," Kay concluded, "but the path that can continuously snowball and truly benefit users is the bottom-up route."

Will: The Moat of Crypto Payments Is Bringing "Off-Chain Data" On-Chain

Will proposed his formula for mass adoption from the perspective of "data accumulation."

"The true value of crypto payments is turning off-chain payment behaviors into on-chain credit records." He believes that traditional payment giants possess payment data and credit assessment capabilities, while the opportunity for crypto payments lies in rebuilding data and credit through blockchain.

He cited an example where his team designed an incentive mechanism:

• As long as users generate transaction behaviors through on-chain payments, they can earn points.

• These points can be exchanged for tokens in the future, forming a "use + earn" flywheel.

• Whether merchants, individuals, or project parties, all can gain substantial returns from promoting adoption.

"In the past, the biggest problem with B2B projects was that early users received no returns; everyone was just using a tool. But if part of the profits is distributed to early users, the C-side will no longer be tool users but ecosystem builders," Will said.

Regarding user incentives, Sky shared a real case from a network nation community:

• The community has fewer than 200 people, and they publish a consumption leaderboard weekly.

• Users actively pull merchants to integrate crypto payments to "climb the leaderboard."

• This self-driven "use + earn" motivation makes adoption a natural outcome.

"Giants like Visa and Stripe never share their profits with users," Will said with a smile. "If Web3 can successfully implement this use + earn model, then mass adoption of crypto payments will truly be meaningful."

This discussion about mass adoption led to a clear conclusion:

• It will not happen automatically. It requires the dual catalysis of payment pain points and currency demand.

• It does not rely on a single technology. Stablecoins, on-chain data, and incentive mechanisms are all necessary pieces of the puzzle.

• It is a combination of business models and ecological flywheels.

Mass adoption of crypto payments is both a replacement of the old system by new technology and a re-empowerment of ordinary people over wealth and credit.

Claudio's remark became the highlight of the discussion: "Mass adoption is not about crypto changing the world; it's about the world already having problems that crypto can solve."

4. Payment Alliances: How to Break the Giants' "Moat"? A Self-Rescue and Co-Building Approach to Decentralization

"The payment industry is essentially a 'coalition-type track.'"

In the final round of topics at the open mic, Sky did not use the usual entrepreneurial narrative to discuss "payment alliances," but rather defined this "collective battle" as a cooperative game of life and death.

She gave an example: "Even if Visa abandons credit cards and fiat currency settlements, it remains Visa. The brand is its longest-lasting barrier." How can the new generation of Web3 payment projects build their own moats in a reality where "technology can be copied at any time, and ecosystems can be seized instantly"?

The answer is simply: alliance.

Sky: Brand is the Ultimate Barrier; Alliances Are the Only Path for Small Teams to Become "Big Names"

"Technology and tracks will change, but what brands accumulate is trust." Sky emphasized that the significance of payment alliances lies not in the old cliché of "resource integration," but in how to form a recognition in users' minds that "Crypto payments = these brands."

She shared ROZO's experience in the network nation community:

• A small physical community (fewer than 200 people).

• Weekly publication of on-chain consumption leaderboards, where top users actively "pull merchants" to integrate crypto payments.

• A real "use + earn" flywheel formed between merchants and users.

"This is not about creating hype; it's about cultivating payment habits," Sky said. The role of the alliance is to replicate this "real adoption in small scenarios" in more places, allowing users, merchants, and project parties to benefit from ecological growth.

"Only by working together to 'make this happen' can individual brands have the opportunity to become 'Visa-level' in terms of mental recognition," Sky summarized.

Claudio: Alliances Are Not Just for Warmth; They Are a Real Need in the B-End Market

Claudio provided the underlying logic of alliances from a more practical B-end perspective.

"The payment industry has never been a solo business." He cited that Stripe's global strength relies on continuous cooperation and aggregation with local payment solutions in various regions. "No payment company can possess strong local capabilities in every corner of the world," he said.

He candidly stated that his team is not skilled in operations, marketing, or branding, and that PayFi's multi-headed market nature naturally requires everyone to unite in voice and co-build the brand.

Claudio also mentioned that since this year, B2B projects in the crypto space have begun to actively build communities and shape brands. "Projects like Huma and BlackHorse, which originally had no need for B2C, are also starting to strengthen their ecological influence through branding."

This "B+C dual-wheel drive" is especially important in the payment track.

"An alliance is a 'brand co-creation entity.' When users trust the alliance, enterprise clients will naturally trust you," Claudio said.

Will: Use Web3's Incentive Mechanism to Turn C-End Users into "Business Partners"

"What we want to create is not a simple alliance, but a 'decentralized alliance' with a Web3 incentive mechanism." Will's statement gave the alliance's core a more crypto flavor.

He shared a token economic model that the team is working on:

• Engaging in on-chain payment behaviors will earn alliance points.

• Points can be exchanged for tokens and rights in the future.

• Whether they are payment channels, merchants, developers, or early users, all are contributors to this "on-chain payment growth" and should benefit from it.

"Traditional payment giants keep all the profits within the platform. But crypto payments can distribute the value of growth to every participant through token economics," Will believes. This not only incentivizes C-end users but also addresses the "incentive gap" problem during the early adoption of B-end projects.

He emphasized, "The PayFi project is not about issuing tokens for the sake of issuing tokens, but about forming a 'Net Positive' usage loop where users, merchants, and project parties can all receive real returns."

Kay: The Core of the Alliance Is to Reduce "Trust Costs"

Kay pointed out the most essential value of payment alliances from the perspective of user perception: "In fact, an alliance is a form of 'trust agency.'"

For ordinary users, crypto payments have never been a technical issue but rather a question of "Can I trust this payment method?"

• Trust in security.

• Trust in liquidity.

• Trust that I won't be "ripped off" after use.

The role of the alliance is to build a trust bridge among users, merchants, and project parties, where risks are shared and benefits are shared.

"Rather than fighting individually, it's better to unite under a common banner," Kay said. "Branding is the most valuable resource, and an alliance is the fastest brand amplifier." She also mentioned that alliances are not just about the interaction of technology and branding but also about lowering the entry barriers for merchants and users as a "foundation infrastructure."

"If a merchant wants to independently integrate crypto payments, the learning costs, compliance risks, and user education will deter them. But if it's a standardized solution provided by the alliance, the merchant only needs to trust this 'alliance brand' to integrate at a low cost," Kay said.

Summary: Alliances Are the "Common People's Weapon" Against the Visa Model in Web3 Payments

This round of discussion about "payment alliances" ultimately returned to a simple logic:

• The core barriers of Visa and Stripe are "network effects + brand trust."

• PayFi projects struggle to compete alone.

• Alliances are a decentralized way to rebuild "network effects + brand trust" as a common people's weapon.

• With sufficient technology, the competition lies in "who can make users trust you first."

5. Conclusion

The significance of PayFi is not merely a rebranded DeFi but rather that it allows "spending users" to stand on the income side for the first time. In the past, the profits of payment networks belonged solely to giants like Visa and Stripe, but on-chain, every payment and usage scenario by users is part of the network's value and should share in the growth dividends. What PayFi aims to do is turn payments into a co-building game where "the more you use, the more you earn," making C-end users not just consumers but beneficiaries of the ecosystem.

In PayFi, spending is no longer just an expense but a way to piece together one's own small part of the Visa puzzle, building a "financial Lego" that everyone can own.

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