Over the years, DeFi has been expected to completely change traditional finance thanks to its open, permissionless, and global accessibility. However, while tens of billions of dollars are locked in protocols (TVL), most lending activities in DeFi still rely on a model of over-collateralization with volatile digital assets.

This means that to borrow $5,000, a user may need to lock up to $10,000 worth of ETH – a model that is challenging to serve billions of individuals and businesses that do not own much crypto assets but have income cash flow, contracts, or real-world assets.

Huma Finance was created to address that gap – building an on-chain credit infrastructure where lending is based on verified financial activities off-chain rather than relying solely on digital assets.

Huma Finance's mission and vision

Huma aims to create a large-scale decentralized credit system for real-world assets (RWA). Instead of collateralizing with ETH or BTC, borrowers can use invoices, future receivables, salaries, or periodic cash flows to secure loans.

This opens up opportunities for many groups:

  • Small and medium enterprises in emerging markets.

  • Freelancers working in the gig economy (Uber, Grab, Upwork...) in developed countries.

  • Startups relying on recurring revenue from service subscriptions.

As a result, on-chain liquidity serves not only the crypto-native community but also touches the global economic life.

Innovation mechanism: Data-driven assessment model

Unlike traditional banks that rely on centralized credit rating organizations, Huma uses:

  • Oracle blockchain: a bridge to bring real data on-chain.

  • Integration of Web2 data: from Stripe, PayPal, ERP...

  • Decentralized identity system (DID): verifying identity and financial history.

  • Zero-knowledge proofs: verifying income data without disclosing sensitive information.

As a result, lenders can assess risks transparently, securely, and in a decentralized manner.

Real-world examples

A small logistics company in Kenya signs a delivery contract with a large supermarket for 6 months, paid monthly. If they borrow from a bank, they often face difficulties due to lack of collateral. With Huma, the company can tokenize receivables and put them into a lending pool.

  • Global lenders can view verified contract data.

  • Debt repayment cash flow is automatically directed through a smart contract before reaching the business account, minimizing default risk.

Specialized lending pool ecosystem

Huma organizes lending pools by asset/cash flow type, for example:

  • Payroll advances.

  • Trade finance.

  • Subscription service revenue.

  • Payments from the gig economy (Uber, Grab, Deliveroo...).

Investors can diversify risk by participating in multiple pools.

The role of HUMA token

HUMA token has multiple functions:

  1. Governance: voting on upgrades, integrating new assets, adjusting fees.

  2. Staking for underwriters/risk assessors: credit evaluators must lock HUMA as 'skin-in-the-game'. If a bad loan is approved, tokens may be slashed → creating an incentive for transparent and accurate work.

Competitive advantage

Compared to other RWA projects like Goldfinch, Maple Finance, or TrueFi, Huma focuses heavily on real income and cash flow instead of just targeting large organizational loans. This helps:

  • Expand for small retail borrowers.

  • Easy to apply in emerging markets, where the credit system is weak.

  • Creates network effects when more people participate.

Challenges and approaches

  • Execution risk (default risk): Huma designs a 'direct deduction' payment flow to limit defaults.

  • Legal risk: Tokenizing debts may fall under securities regulations in many countries. Huma plans to expand in areas with clear RWA legal frameworks or collaborate with fintech to ensure compliance.

Development roadmap

In the future, Huma Finance will:

  • Expand more types of pools.

  • Connect more with international payment platforms.

  • Launch a secondary market for tokenized loans → increase liquidity.

  • Application of AI in risk modeling to adjust interest rates in real time.

Conclusion

Huma Finance is not just another DeFi protocol. If proven that the income and real asset-based lending model can scale, Huma will become a significant bridge between traditional finance and the decentralized world, bringing global capital to millions of individuals and businesses that have never accessed DeFi before.

♡𝐥𝐢𝐤𝐞💬 ➤ @Huma Finance 🟣 #HumaFinance $HUMA