TVBee's Ten Questions and Answers, bringing you insights into Huma's differentiated narrative.
1. What is Huma?
Answer: It is a lending platform, or a discount platform. Of course, it is on-chain, a Web3 lending or discount platform.
2. As a lending platform, does Huma offer credit loans or secured loans?
Answer:
Strictly speaking, Huma offers a type of loan secured by credit products, which is a secured loan product with credit attributes.
3. As a lending platform, what are the differences and similarities between Huma and other Web3 lending platforms like AAVE and Compound?
Answer:
The differences between Huma and Web3 lending platforms are:
First, the collateral is different. AAVE and Compound use on-chain assets as collateral, while Huma's collateral consists of off-chain accounts receivable tokenized on-chain.
Second, the lenders are different. The lenders on Web3 lending platforms are Web3 users, while Huma's lenders are primarily Web2 entities, mainly the recipients of cross-chain payments.
Third, the purpose of the loans is different. Users borrow from platforms like AAVE and Compound to participate in the Web3 ecosystem, while Huma borrowers seek to obtain part of the funds from accounts receivable in advance to alleviate their capital pressure in production and operations. Web3 lending demand is influenced by the cycles of the crypto industry, while Huma's lending demand is not affected by these cycles.
Fourth, the sources of loan funds are not completely equivalent. Web3 lending platforms mainly source funds from Web3 ecosystem users, including individuals and institutions, and also through on-chain minting, i.e., issuing new stablecoin shares on-chain. However, Huma's lending platform sources funds from both Web3 and Web2 deposits.
Fifth, the sources of income are different. The income of Web3 lending platforms is largely limited by the crypto market (most view it as a zero-sum game market), while Huma's income comes from the Web2 market.
The commonality between Huma and Web3 lending platforms is that the flow of funds is on-chain.
4. As a lending platform, what are the differences and similarities between Huma and traditional P2P platforms?
Answer:
The differences between Huma and traditional P2P platforms are:
First, the basis for loans and risk levels are different. Traditional P2P platforms mainly offer credit loans, where borrowers may have relatively complete KYC information, but there is no relatively effective collection method if the borrower defaults. Huma offers secured loans where the collateral is accounts receivable. Although these accounts receivable also carry certain credit attributes and credit risks, they are based on cross-chain e-commerce, finance, etc., and their credit risks are much lower than those of traditional P2P platform credit products.
Second, the credit of borrowers differs. Borrowers on traditional P2P platforms are often individuals with relatively low credit levels (high-credit individuals would use more regulated financing channels like banks). Huma's borrowers and the debtors of accounts receivable mostly come from cross-chain e-commerce, cross-border finance, and have relatively good credit.
Third, the purpose of loans is different. The purposes of loans on traditional P2P platforms vary and may include speculation, or even borrowing to repay other loans. However, Huma's loans are needed for production and operations.
The commonality between Huma and traditional P2P platforms is that both have a certain degree of credit risk. Although Huma borrowers collateralize accounts receivable, these receivables themselves are credit loans.
5. What are the main risks of the Huma platform?
Answer:
The risks of the Huma platform mainly arise from:
First, technological risks, primarily from on-chain issues, such as potential risks due to contract vulnerabilities.
Second, credit risks, which are relatively easy to understand, namely the credit risks of the accounts receivable used as collateral.
Third, operational risks. It should be noted that the holders of accounts receivable may not necessarily come to Huma for loans due to funding needs. They may believe that a particular account receivable has collection risks and difficulties, thus pledging it to Huma for a loan, transferring the risk of the receivable to the Huma platform. In this case, Huma needs to audit the accounts receivable, which poses operational risks.
Fourth, legal and regulatory risks, which are currently uncertain. Because the auditing mechanism for accounts receivable at Huma is not well understood, it is uncertain whether there will be issues related to money laundering, illegal payments (such as payments to countries or entities sanctioned by the U.S.), etc.
6. How does Huma respond to on-chain technical risks?
Answer:
Huma's code security audit was mainly conducted by Halborn, which identified 2 low-risk issues that have been resolved, as well as 2 informational risks.
Additionally, in July 2024, Huma launched a $50,000 bug bounty program on the cantina platform.
7. How does Huma respond to off-chain risks?
Answer:
For credit risk, Huma employs a layered mechanism for the capital pool, a decentralized capital pool mechanism, and a first-loss insurance mechanism.
The capital pool is divided into senior and junior layers. Low-risk loans are drawn from the senior layer capital pool, providing a relatively lower yield for participants. High-risk loans are drawn from the junior layer capital pool, offering higher yields to participants as risk compensation.
Moreover, whether high-risk or low-risk loans, they do not share the same capital pool. The senior and junior layers each include several independent capital pools. If a particular account receivable cannot be recovered, it can prevent localized credit risk from expanding to the entire platform. (For example, GMX V1 had all trading pairs sharing a capital pool, but in V2, it switched to independent capital pools for each exchange. In March, Hyperliquid was affected by an attack on JellyJelly's single token, impacting a large amount of HLP. Therefore, the decentralization of capital pools is very necessary.)
In addition, Huma's documentation mentions first-loss insurance. When account receivables cannot be recovered, first-loss insurance is used to partially or fully compensate depositors for their losses. The documentation mentions three forms of first-loss insurance: first, additional collateral from the borrower; second, future insurance consideration to provide compensation; and third, reserve funds provided by pool owners and evaluation agents. Essentially, it is either additional guarantees from the borrower to cover all or part of the compensation, compensation from a third-party insurance company or evaluation agent, or a reserve mechanism for compensation when establishing the pool.
As for operational risk, Huma's audit and management mechanisms for application receivables have not been specifically disclosed. Legal and regulatory risks currently do not have particularly specific measures.
8. Why is Huma referred to as a discount platform?
Answer:
Because Huma's borrowers use invoices, pay stubs, and other future receivable documents to secure loans on Huma. When the documents mature and payments are received, they are paid directly to the Huma platform, rather than back to the borrower. This is essentially a discounting behavior. Huma is indeed an on-chain discount platform.
9. On which blockchains does Huma operate?
Answer:
Huma primarily operates on Solana (audited by Halborn),
and is also deployed on Ethereum-compatible chains (EVM chains) (audited by Spearbit),
as well as Stellar Soroban (audited by Certora).
10. As a startup, how is Huma's execution capability?
Answer:
The Huma team is composed of elites from major Web2 companies like Google, Facebook, Gaotongwen, McKinsey, and Web3 institutions like Binance and Stellar, making its execution capability reliable.
Additionally, the merger with Arf and collaborations with institutions like Stellar ($XLM) and Circle ($USDC) are also beneficial for Huma's success.
Of course, the seed round financing of $8.3 million and Series A financing of $38 million provide financial support for Huma's success.