There has long been a divide in the global financial market: traditional finance focuses on the real economy but is inefficient and has high barriers; crypto finance is efficient and transparent but struggles to connect with real income scenarios. Huma Finance's PayFi network was created to break this 'binary divide.' By using real income streams as credit anchors and combining on-chain settlements with smart contract technology, PayFi has built a new financial ecosystem that serves the real economy.
Traditional finance relies on physical collateral to approve loans. The processes are lengthy and costly, with intermediaries leading to high service fees. Cross-border workers, small businesses, and young professionals often cannot obtain financial support due to a lack of collateral. On the other hand, crypto finance, centered on digital assets, offers decentralized and instantaneous settlement advantages, but its highly volatile assets are disconnected from real cash flows, making it difficult to meet daily operational or personal emergency needs.
Huma Finance has achieved the integration of traditional finance and crypto finance through three design principles.
1. Anchor Reconstruction: Real Income Streams Become the Basis of Credit
PayFi shifts the basis of loans from digital assets or fixed collateral to future predictable income, including salaries, part-time income, royalties, rents, as well as business orders, accounts receivable, and cross-border trade payments. Smart contracts analyze the stability, predictability, and credibility of income, automatically determining loan limits and binding repayments to income streams, achieving 'borrowing against future income to repay with future earnings.'
2. Technological Adaptation: On-Chain Advantages Solve Efficiency Issues
Smart contracts replace manual reviews, significantly reducing intermediary steps, completing settlements within seconds, and greatly lowering transaction fees. For instance, the cost of cross-border remittances has decreased from the traditional 5%-10% to 0.1%-0.5%, while corporate invoice financing rates have dropped from 3%-5% to 1%-2%. All data is transparently recorded on-chain, addressing information asymmetry.
3. Ecological Connection: Building a Payment-Financing-Repayment Closed Loop
Users accumulate credit as they receive income, and financing funds can be paid directly, with automatic repayments flowing back to a liquidity pool, forming a self-circulating ecosystem. This allows individuals and businesses to complete the entire process of income receipt, credit accumulation, loan application, fund usage, and repayment on the Huma platform without switching between multiple platforms or tools.
PayFi has already been implemented in cross-border trade, cross-border labor, and small business scenarios. Turkish exporters have reduced their invoice financing collection period from 60 days to instant; Bangladeshi workers receive funds through Huma instantly and can access emergency funds early; small restaurants in Thailand can obtain unsecured loans based on cash flow to prepare for holidays and expansion.
This model not only changes the accessibility of individual financing but also promotes the distribution of financial resources from centralization to inclusion. The automation of smart contracts reduces marginal costs, enabling small loans to be profitable, allowing anyone with internet access and stable income globally to obtain financial services. Huma's PayFi network is leading a financial integration revolution, deeply combining the real anchors of traditional finance with the technological advantages of on-chain systems, ushering in a new era of fair, efficient, and close-to-real-demand finance.