Traditional DeFi has accumulated a large user base over the past few years, but its core limitations have become increasingly apparent: low capital efficiency. To borrow $100, users may need to collateralize $150 worth of crypto assets; moreover, during price fluctuations, the risk of liquidation is extremely high. This model restricts further expansion of DeFi.
The PayFi model of @Huma Finance 🟣 precisely addresses this pain point. By using future cash flows as collateral, users can obtain instant liquidity without holding a large amount of crypto assets. For businesses, invoices and orders can be converted into funds; for individuals, salaries and remittances can be accessed in advance. This greatly expands the boundaries of blockchain finance.
It can be said that PayFi is not replacing DeFi, but rather complementing its shortcomings. It brings a new growth curve to the industry and gives DeFi the opportunity to truly reach the real economy.
