Why has Huma Finance become the new favorite and leading project of PayFi?
Author: Haotian
How do you view the news of @humafinance's $38 million financing? It has to be said that in the increasingly depressed market and lack of new narrative hotspots, Huma's brand new concept of PayFi is truly eye-catching.
So, 1) Why can PayFi become the new focus of discussion? 2) Analyze the underlying business logic of Huma's Lending+RWA+PayFi. 3) How is the future extension space of the PayFi track? Next, let me talk about my views:
1) PayFi is a new narrative concept put forward by the Solana Foundation, essentially an innovative attempt to apply web3 technology (programmable currency and token economics) to the real economy, aiming to expand pure on-chain financial innovation (DeFi) to a broader economic system.
On the one hand, it further implements the financial transformation of RWA physical assets, exploring derivative plays such as "zero net cost shopping," "accounts receivable financing," "cross-border payment settlement," "creator economy," and "supply chain finance";
On the other hand, in the current pure on-chain DeFi, the interest-bearing yield has fallen into an embarrassing situation of excessive leverage. Initiatives such as AVS security consensus commoditization and DA capability commoditization can align with the real-world commercial economy of web2, bringing richer sources of yield to the on-chain world.
In addition, with the successive approval of BTC and ETH spot ETFs, pure on-chain DeFi is facing significant regulatory compliance pressure, and the pure on-chain economy is criticized for not being able to implement infra > application. A new mixed economic model like PayFi, which not only integrates web3 innovative economic models but also has regulatory adaptability in the traditional web2 financial world, will undoubtedly become the narrative focus of new business models and value creation methods.
2) Based on this narrative background, let's analyze why Huma Finance has become the new favorite and leading project of PayFi. Let me summarize in general terms first:
Huma is a team from Silicon Valley with rich experience in the web2 fintech field. Initially positioned as a decentralized lending platform, its business model includes Income-Based Loans and revolving credit limits, falling under the integrated business category of Lending+RWA.
After acquiring the payment application Arf Financial and starting business upgrades, based on Arf's compliance qualifications and the rich product and business lines provided to licensed financial institutions for cross-border payments in multiple countries, it is natural that PayFi has become Huma's ultimate financial service goal and vision.
After all, as a web3+web2 comprehensive financial service platform, Huma Finance's product and business logic are also relatively complex. Let me illustrate three highlights:
- Continuously optimized product business lines: HumaV1 mainly provides common credit products such as revolving credit loans and accounts receivable factoring, while HumaV2 adds accounts receivable guarantee credit limits to attract institutional investors. Accounts receivable represent the future cash flow income of enterprises generated from the sale of goods or provision of services. For example: payment waiting periods for automotive parts suppliers, large construction contractors, publishing industry, SaaS software service providers, etc.
Accounts receivable services are sufficient to meet the needs of small and micro-enterprises, while accounts receivable guarantee credit limits provide more flexible fund application scenarios, allowing funds to be withdrawn at any time within the credit limit and can be reused, also flexibly set based on the enterprise's own operating conditions and future income stability.
Seemingly small financial product upgrades have become more scalable, risk-controlled, and stable products for institutional investors. This can help Huma capture a larger market share and a more diverse user base.
- PayFi Stack modular architecture: This is an open, modular technical architecture created by Huma Finance based on the business characteristics of PayFi, including: transaction layer (Solana, Stellar), currency layer (USDC, PYUSD), custody layer (Fireblocks, Cobo), compliance layer (Chainalysis, Elliptic), financing layer (Huma), application layer (Arf, Raincard).
This is a complex but systematic PayFi applicable stack service, involving a high TPS public chain transaction execution layer and a complex compliance layer with multiple restrictions, and a mature and rich business product line financing agreement layer, which solves most of the barriers for enterprises to enter the PayFi market in one go.
Its existence and the development of Ethereum layer2's OP Stack and Solana's promotion of SOON logic are similar, equivalent to establishing a common framework and standard for the PayFi industry, which can activate technological innovation and business model evolution in the PayFi track.
- Stable real-world APY returns: Unlike most pure DeFi projects that rely on stacking token economic models to maintain basic yield returns, the Huma protocol moves the huge demand for financial products in the off-chain world to the on-chain world, breaking the deadlock of pure DeFi returns. For example: Huma/Arf yield pools provide dynamic returns of 10%-20% to different levels of investors (Senior or Junior), plus platform gains can achieve an APY of over 20%.
By providing real-time liquidity solutions for the cross-border payment industry through its subsidiary Arf platform, Huma has tapped into the $40 trillion global cross-border payment market, and by providing high turnover (over 50 times annually) liquidity support to licensed institutions, it can generate stable annualized returns, which is far beyond the comparison of pure token incentive models.
Previously, when the RWA narrative was hot, Ondo Finance could obtain stable returns with T-Bills (short-term debt instruments of the US government), but with the Fed's interest rate cuts, this return rate will be difficult to maintain, while Huma's logic of transforming real-world financial financing demand is likely to be more sustainable.
In conclusion
If there is a new narrative highlight in the market recently, PayFi definitely occupies a place. In addition to its timely emergence, which can add stable yield possibilities to pure on-chain DeFi, the key is that its extension space is indeed very rich.
Not limited to cross-border payments, it includes many expandable and imaginatively large application scenarios such as trade finance, supply chain finance, small and micro-enterprise credit, consumer credit, international tuition payments, and more.
However, the PayFi track is still in its early stages of development, and its product line expansion, regulatory uncertainties, and other aspects all require a period of exploration and accumulation, making it a new narrative direction worth focusing on.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
