PayFi is not a narrative concept, but more of a long-term challenge that integrates traditional web2 finance and web3 on-chain infrastructure and liquidity.
By Haotian
Recently, the PayFi concept introduced by the Solana Foundation has been well received in the market, with a series of popular projects including Huma and Credix.
Just yesterday, the veteran in the payment field, @veloprotocol, announced the tokenization of BlackRock's short-term government bond fund (BUIDL) and its integration into the stablecoin camp, further promoting the integration of traditional financial institution products and the web3 on-chain world. How should we view this? Next, let me share my observations.
In the traditional web2 application consumer scene, issues such as long accounts receivable waiting times and significant friction in cross-border SWIFT agent settlements have always existed. The fundamental problem lies in the complexity of issues involving government policy regulation frameworks, banking system process norms, cross-border payment infrastructure, and exchange rate time zone differences.
Objectively speaking, among the many factors affecting the efficiency of the global payment settlement network, the on-chain payment infrastructure that web3 can provide only accounts for a small part. The more critical question is whether a balance can be found within the complex network of relationships involving regulatory agency relationships, banking system compatibility, and payment service provider interest chains.
However, the reality is that projects with good web3 technology infrastructure are too disconnected from the complex political and business relationships of web2, while projects with strong web2 relationships are not so web3 Native. Velo Finance, on the other hand, has managed to balance both aspects quite well:
1) First, in terms of the enterprise background, Velo Finance is affiliated with Thailand's largest business group, the Charoen Pokphand Group. Since its establishment, it has provided support for landing payment scenarios for the Charoen Pokphand Group in multiple business lines such as finance, retail, supply chain, telecommunications, real estate, and media, with over 12,000 7-11 convenience stores and many other high-frequency payment application scenarios.
In Southeast Asia and the Asia-Pacific region, Velo has demonstrated a strong "aristocratic" atmosphere against the background of web2 political and business relationships. Recently, Velo reached a cooperation agreement with PTL Holding Co. Ltd to expand the financial market in Laos, further realizing its vision of a global payment settlement network. PTLH is a representative company in the industrial sector of Laos, with comprehensive layouts in the commodity industry, banking system, trade logistics, and more.
In addition, Velo has reached a global strategic cooperation with Visa, cooperated with SCB Thailand Siam Commercial Bank, a local bank in Thailand, and then developed cross-border business solutions with Asian digital banks, among others. It is evident that Velo has put a lot of effort into expanding the "tough bones" of traditional web2 political and business relationships.
In fact, the global cross-border payment transfer market share exceeds $1 trillion, and the market space in Southeast Asia alone exceeds $150 billion, with a large portion of Southeast Asians not even having bank accounts. In this context, trying to integrate blockchain-based cross-border payment technology into Southeast Asia is a challenging task without a project with strong industrial strength, rich payment landing scenarios, and strong political and business relationships to lead the way.
2) After laying a solid foundation in the complex political and business relationships of web2, Velo has also made significant exploratory efforts in the web3 cross-border payment infrastructure:
Velo's blockchain framework is built on the Stellar network, which is a well-established payment-oriented blockchain project. Users can conduct transactions on the Stellar network with extremely low transaction fees. Velo directly acquired interstellar, founded by the core development team of the Stellar chain, so Velo can be considered a cross-border payment solution "directly" nurtured by the Stellar team.
It has adopted the EVM-compatible Nova Chain to create a unified blockchain execution network; at the same time, it has built the Orbit mobile application to provide a simple "scan and pay" mode, aiming to lower the participation threshold for traditional market users to onboard the web3 environment. In addition, it has established a Universe super DEX, allowing users to connect third-party decentralized self-custody wallets to manage their assets, which is essential to ensure frictionless integration into the web3 native environment.
In addition to these, Velo has also laid out a Warp network that connects multiple-chain blockchain environments, supporting popular public chains such as Stellar, BNBChain, and Ethereum. Overall, although Velo's web3 infrastructure layer may not be stacked with advanced concepts such as "modularity" and "chain abstraction," it has all the practical functionalities needed and is grounded in reality.
- Velo has built a Federated Credit Exchange (FCX), more like a distributed DAO organization, to operate daily by pledging Velo tokens to obtain a 1:1 anchored digital credit system. Since its network includes traditional financial institutions such as SEBA Bank and Lightnet Group, this credit trading network, although based on the DeFi framework, strictly belongs to a CeDeFi network in a strict sense, serving partners in different environments of CeFi and DeFi.
3) Looking at Velo's product protocol development roadmap and its dual efforts in expanding web2 political and business resources, it is evident that Velo's approach to entering the global payment settlement network for cross-border payments is somewhat unique: it is neither very web3 Native nor very traditional and solidified in web2, and can be called a CeDeFi dual-resident project.
It is worth mentioning that Velo recently signed a strategic cooperation agreement with the Solana Foundation, with Solana serving as the blockchain settlement layer and Velo naturally becoming the "bridge" for financial technology interoperability between the on-chain and off-chain worlds, providing designated clearing services for digital gold trading in Laos.
It is evident that PayFi is not a narrative concept, but more of a long-term challenge that integrates traditional web2 finance and web3 on-chain infrastructure and liquidity.
How to better utilize web3 convenient technology facilities to serve traditional financial payment frameworks, and how to introduce blockchain liquidity entities without harming the interest network of traditional financial architectures, is full of obstacles.
Especially in the current purely on-chain world, in the context of serious infrastructural stacking, solutions dedicated to solving real-world application problems such as "using interest payments from lending platforms for consumption, enabling creators to monetize, and conducting real-time cross-border payments" are particularly valuable.
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