Huma Finance is a decentralized finance (DeFi) protocol that focuses on offering loans backed by future income. Unlike other traditional DeFi protocols (such as Aave or Compound, which mainly use cryptocurrencies as collateral), Huma allows the use of future income streams, invoices, or recurring payments as collateral.
How does it work?
Income verification:
Users (for example, freelancers, small businesses, or even gig economy workers) can demonstrate future income they expect to receive.
Loan application:
Based on that income, they can apply for loans in stablecoins or other cryptocurrencies.
Dynamic collateral:
The protocol monitors the income streams and adjusts the loan position. If income decreases, repayment may be requested or collateral may be increased.
Automatic liquidation:
When future income is received, part of it is automatically allocated to repay the loan.
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