Huma Finance is one of the pioneering projects in applying blockchain technology to provide flexible lending solutions based on future income. With over $46 million raised through two funding rounds and nearly $1 billion disbursed, Huma is emerging as a bright spot in the field of decentralized finance (DeFi) applied to real life.
1. What is Huma Finance?
Huma Finance is a decentralized lending protocol that allows individuals and businesses to borrow based on future income. Instead of requiring collateral like traditional models, Huma connects borrowers with investors on the blockchain, using flexible credit models like:
Revolving credit limit
Credit limit secured by receivables
Factoring services
This protocol is built with the aim of bringing real finance into DeFi, by tokenizing receivables, integrating a risk management system, and strict legal compliance.
2. Outstanding features of Huma Finance
● Structured finance
Huma allows the creation of financial products with in-depth structures, including:
Diverse loan limits
Daily yield calculation
Loss insurance for investors
● Asset tokenization
Through legal models such as SPV (Special Purpose Vehicle), Huma tokenizes real receivables into on-chain assets. This allows investors to track and trade real-world assets transparently and efficiently.
● High transparency
The protocol details the lifecycle of receivables on-chain, allowing investors to track loan performance in real time, from issuance to recovery.
3. Outstanding differentiating points
✅ Instant liquidity
Huma provides quick lending solutions, allowing borrowers to access funds almost instantly through automated protocols.
✅ Modern risk management mechanism
Smart contracts play the role of monitoring and enforcing risk management policies, ensuring the protection of capital for lenders.
✅ Legal compliance
Huma collaborates with licensed partners, conducts AML (anti-money laundering) checks, KYC (identity verification), and thorough investor screening before providing funding.
✅ Customized to needs
Huma's modules can be flexibly configured to create products suitable for different types of borrowers – from freelancers to SMEs.
4. Huma Finance's operating model
Huma operates based on four core components:
1. Huma Pools
It is a set of smart contracts that manage fees, loan limits, payment conditions, etc. These Pools can be configured according to needs such as revolving credit, loans secured by invoices, etc.
2. Underwriting Agents
Tasked with assessing and approving borrowers, recording information in contracts, and executing loan management actions.
3. Tokenization of receivables
The borrower's receivables are represented as NFTs, allowing performance tracking and transfer between lending parties.
4. Huma DApp and SDK
Providing an interface that allows borrowers, lenders, and participants to interact conveniently with the protocol: depositing capital, withdrawing funds, tracking loans, etc.
5. Huma Finance's main products
● Revolving Credit Line
Borrowers are granted a fixed credit limit and can borrow and repay multiple times as long as they do not exceed the limit.
● Credit secured by receivables
Borrowers provide unpaid invoices to receive a loan limit corresponding to a percentage of the receivable's value.
● Factoring
Businesses sell receivables to Huma to receive an advance payment. Huma then takes responsibility for collecting from the end customers.
6. Actual operational situation
Total value of loans disbursed: $953.57 million
Total value repaid: $939.16 million
Current default rate: 0%
These impressive numbers demonstrate effective risk management capabilities and a well-screened quality of borrowers.
7. Summary
Huma Finance is not just a DeFi project; it is a bridge between traditional finance and blockchain. By creating an ecosystem for lending based on future income that is transparent, compliant, and flexible, Huma is laying the foundation for a new generation of financial protocols – where real assets are tokenized and operated entirely on-chain.