A Comprehensive Understanding of the Current PayFi Ecosystem

Writer: Prime.one

Article Reference: Huma Finance PayfFi Ecosystem Map

I. The Emergence of the PayFi Idea

In April 2024, Lily Liu, the chair of the Solana Basis, first launched the idea of “PayFi” at the Hong Kong Web3 Carnival. This new time period, whereas novel, exactly addresses a key ache level in blockchain finance:

After DeFi and RWA (Actual World Belongings), the on-chain world remains to be lacking a core part to actually notice “daily-use monetary instruments”—Fee Financing.

The essence of PayFi lies not in fee itself, however in the deep integration of fee and monetary capabilities: reconstructing underlying monetary logic reminiscent of credit score, money move, and clearing and settlement via on-chain expertise, packaging stablecoins, contracts, identification, compliance, custody, and fee methods into an environment friendly, programmable monetary community.

This narrative not solely addresses the lack of utility situations in DeFi but in addition connects the “move of funds” that has the most real demand in the actual world.

II. The Six-Layer PayFi Ecosystem Construction Proposed by Huma Finance: Reconstructing the On-Chain Monetary Engine

Huma Finance’s lately launched “PayFi Ecosystem Map” signifies that the PayFi Stack consists of six core modules, forming an entire on-chain monetary working system from underlying protocols to utility situations:

1) Financing Layer: Turning Revenue Streams into Belongings

• Core Initiatives: Huma, Pyth, Chainlink, Credora, S&P International

• Perform Highlights:

• Huma makes use of future money flows as collateral to create an on-chain “Huabei”

• Credora builds an on-chain credit standing system

• Chainlink supplies asset authenticity verification

• Pyth and S&P set up a worth bridge between on-chain and conventional markets

2) Compliance Layer: The “Monetary Firewall” on Chain

• Core Initiatives: Chainalysis, TRMLabs, Polyflow

• Perform Highlights:

• TRMLabs and Chainalysis present on-chain danger management and anti-money laundering companies

• Rising tasks like Polyflow discover the new paradigm of “compliance as code”

3) Custody Layer: Balancing Fund Safety and Flexibility

• Core Initiatives: Fireblocks, Ledger, Phantom, Cobo, Squads

• Perform Highlights:

• Fireblocks and Ledger present institutional-grade custody options

• Phantom and Squads concentrate on user-side non-custodial pockets experiences

4) Forex Layer: Stablecoins as the Axis of the Fee Ecosystem

• Stablecoin Issuers: PayPal, Circle, Agora, Tether, Mountain, RD

• Stablecoin Infrastructure Initiatives: Bridge, Paxos, Portal, Perena

5) Transaction Layer: Excessive-Efficiency Chains Supporting Actual-Time Funds

• Core Infrastructure: Excessive-throughput chains like Solana and Stellar

• Software Eventualities: Micropayments, large-scale cross-border real-time settlements, and so on.

6) Software Layer: From Fee Playing cards to DePIN Blossoming in A number of Areas

Lined subfields and consultant tasks embrace:

• Cross-Border Funds: Arf, Felix, Mural, Opera Mini, XOOM, Bitso, Cash.ph

• Crypto Fee Playing cards: Rain, RedotPay, Reap, Visa, Kulipa, DCS

• DePIN Networks: Arkreen, DeCharge, DePHY, Roam

• Fee Infrastructure: Request Community, Coinflow Labs, Helio, Stripe, Mansa

• Commerce Financing: Jia, Trad.fi, ZOTH, Isle Finance, On.fund, BSOS

• Overseas Trade FX: SureFX, Shifts Markets

• Over-the-Counter OTC: Yellow Card, BANXA, Fonbnk, Hashkey, and so on.

III. PayFi is Not Simply “On-Chain Funds”; Its Potential Goes Far Past

1) The Liquidity Engine for RWA

RWA brings belongings on-chain, whereas PayFi makes these belongings “come alive.”
For instance, bill belongings primarily based on accounts receivable may be instantly pledged for loans, engaged in secondary buying and selling, or arrange for streaming funds inside the PayFi system, considerably accelerating the move of funds.

2) The Accelerator for On-Chain Credit score Programs

PayFi tasks typically mix on-chain identification and fee habits knowledge to determine credit score scoring fashions. In the future, an organization’s fee cycles, wage flows, and buyer repayments can all function credit score knowledge inputs, offering custom-made financing companies.

3) The Key Entry Level for Monetary Embedding in All the things

From ride-hailing and meals supply to logistics nodes, PayFi can notice embedded monetary companies of “fee as credit score,” changing into the underlying monetary infrastructure in ecosystems like DePIN and AI Brokers.

IV. Future Outlook: Will PayFi Grow to be the Subsequent “Common Narrative”?

In comparison with the excessive obstacles of DeFi and the institutional nature of RWA, PayFi affords actually user-oriented utility situations:

• Wage loans and payroll playing cards

• Cross-border settlements and API funds

• Fee incentives in DePIN networks

• Lengthy-tail monetary wants of micro-entrepreneurs and growing nations

Furthermore, PayFi naturally aligns with the present compliance pattern:
It establishes a verifiable and risk-controllable fee monetary system via on-chain strategies, permitting regulators to obviously see the move of funds, credit score evolution, and compliance knowledge, offering a pathway for “compliant on-chain finance.”

It may be stated that PayFi is steadily transferring in direction of a brand new central narrative that mixes Stablecoin + RWA + Compliance.

V. Conclusion: From PayFi, Observing the Actual Path of On-Chain Economic system

We’re in a structural course of of “decentralized reorganization,” and PayFi is one of the most basic and important items on this reorganization:

• It marks the evolution of on-chain finance from “capital markets” to “daily-use finance”;

• It’s a key turning level for Web3 to maneuver from “speculating on tokens” to “real-life situations”;

• It’s the layer of monetary basis that shouldn’t be missed in constructing on-chain economies.

Mastering PayFi is to grasp the core path of the Web3 monetary ecosystem in the subsequent decade.