In the world of decentralized finance (DeFi), we are used to a certain model: to get a loan, you must provide collateral, usually in the form of cryptocurrency assets. This creates a vicious cycle — you already need to have significant crypto assets to borrow more. But what if there was another way? A way that would be accessible to millions of people who do not have a large crypto portfolio, but have something far more valuable — stable, predictable income.
This idea is the basis of Huma — a protocol that changes the game. Huma offers a simple yet revolutionary approach: instead of pledging crypto assets, borrowers can use their future income as collateral. This can be salary, regular bill payments, royalties, or any other predictable cash flow.
How does it work?
Imagine you are a freelancer, and you have stable monthly incomes, but you need quick access to cash for unexpected expenses. Under the traditional DeFi model, you would have to pledge $1000 worth of Ether to borrow $500. With Huma, you can tokenize your future income.
The process works like this:
Income tokenization: You connect your account to the protocol (for example, through secure APIs), and Huma analyzes your financial flow.
Creating a pool: Based on your projected future income, you create a pool where investors can lend you money.
Collateral is your income: Future income to your account serves as collateral for this loan. The loan is automatically repaid when the funds arrive.
Advantages of Huma
This approach has several key advantages that can transform the financial landscape:
Accessibility: Huma opens DeFi to millions of people who do not own significant crypto assets. This makes lending much more inclusive.
Capital efficiency: Instead of locking up valuable assets, you use what you will receive in the future anyway. This allows for more efficient use of capital.
Creating new opportunities: This allows for the creation of new financial products, such as loans for small businesses based on future income from contracts, or loans for freelancers based on their expected payments.
Lower liquidation risks: Since income serves as collateral, the risk of sharp liquidation due to crypto market volatility is minimized.
The future of lending
The idea behind Huma goes beyond simple lending. It is a concept that shifts the focus from owning assets to the stability and reliability of your income. This could lay the foundation for a new generation of financial products that are less risky, more accessible, and better integrated with real economic life.
With Huma, we see the birth of a new era in finance — where your financial future becomes your most valuable asset. This is not just another DeFi protocol. It is a transformational idea that promises to change the very way we think about lending and capital.
