Viewpoint: What is Huma Finance, which has raised 38 million yuan and focuses on the Payfi concept?

What do you think of the news that @humafinance raised $38 million? It has to be said that in the context of the increasingly sluggish market and the lack of new narrative hotspots, Huma's new PayFi concept is really eye-catching. So, 1) Why can PayFi become the focus of new topics? 2) Analyze the underlying business logic of Huma's Lending+RWA+PayFi. 3) What is the subsequent extension space of the PayFi track? Next, let me talk about my opinion: 1) PayFi is a new narrative concept proposed by Solana Foundation. In essence, it is an innovative attempt to apply web3 technology (programmable currency and token economics) to the real economy, aiming to expand pure on-chain financial innovation (DeFi) to a wider economic system. On the one hand, further implement the financial transformation of RWA physical assets, and explore derivative gameplay such as "zero net cost shopping", "accounts receivable financing", "cross-border payment settlement", "creator economy", and "supply chain finance"; On the other hand, in the current pure on-chain DeFi, interest-bearing Yield is trapped in the embarrassing dilemma of stacking leverage. For example, the commercialization of AVS security consensus and DA capabilities can connect with the web2 real business economy and bring more abundant Yield sources to the on-chain world. In addition, after the BTC and ETH spot ETFs were passed one after another, pure on-chain DeFi faced greater regulatory compliance pressure, and the pure on-chain economy was criticized for not being able to implement infra > application. PayFi, a new hybrid economic model that integrates the web3 innovative economic model and has regulatory adaptability in the web2 traditional financial world, as a bridge between web3 and the traditional web2 real economy, will undoubtedly become the narrative focus of new business models and value creation methods. 2) Based on this narrative background, let's analyze why Huma Finance has become a new PayFi upstart and leading project? Let me summarize it in general: Huma was created by a team from Silicon Valley with rich experience in the field of web2 financial technology. It was originally positioned as a decentralized lending platform. Its business model is income-based loans and revolving credit lines, etc., which belongs to the integrated business scope of Lending+RWA. Later, it acquired the payment application Arf Financial to start business upgrades. Based on Arf's compliance qualifications and the rich products and business lines provided to licensed financial institutions for cross-border payments in multiple countries, it is natural that PayFi became Huma's ultimate financial service goal and vision. After all, it is a web3+web2 comprehensive financial service platform, so the product and business logic of Huma Finance is also relatively complex. I will cite three highlights to explain: 1. Continuously optimized product business lines: HumaV1 mainly provides common credit products including revolving credit loans and accounts receivable factoring, while HumaV2 adds accounts receivable guarantee credit lines to attract institutional investors. Accounts receivable are customer bonds generated by the sale of goods or provision of services during the operation of an enterprise, representing the company's future cash flow income. For example: the payment waiting period for automotive parts suppliers, large construction contractors, publishing industry, SaaS software service providers, etc.; Accounts receivable services are sufficient to meet the needs of small and micro enterprises, while accounts receivable guarantee credit lines provide more flexible funding application scenarios. Funds can be withdrawn at any time within the credit line, and they can be recycled. They will also be flexibly set according to the company's own operating conditions and future income stability. The seemingly small financial product upgrade has become a more scalable, risk-controlled, and more stable product for institutional investors. It can help Huma occupy a larger market share and a diverse user base. 2. PayFi Stack modular architecture: This is an open, modular technical architecture built by Huma Finance based on the business characteristics of PayFi, including: transaction layer (Solana, Stellar), currency layer (USDC, PYUSD), custody layer (Fireblocks, Cobo), compliance layer (Chainalysis, Elliptic), financing layer (Huma), application layer (Arf, Raincard). This is a complex but systematic PayFi applicability stack service, involving a high TPS public chain transaction execution layer, a complex compliance layer with many restrictions, and a financing agreement layer with mature and rich business product lines. It solves the threshold problem of most companies entering the PayFi market in one stop. Its existence is similar to the logic of Ethereum layer2 developing OP Stack and Solana promoting SOON. It is equivalent to formulating a common framework and standards for the PayFi industry, which can activate the technological innovation and business model evolution of the PayFi track. 3. Stable real-world APY income: Unlike most pure DeFi projects that rely on the token economic model to stack nesting dolls to maintain basic yield income, the Huma protocol has moved the huge demand for financial products in the off-chain world to the chain, becoming a new breakthrough to break the deadlock of pure DeFi income. For example: Huma/Arf income pool can give investors of different levels (Senior or Junior) a dynamic income of 10%-20%, plus the platform gain will reach more than 20% APY. Huma provides real-time liquidity solutions for the cross-border payment industry through its Arf platform, connecting to the global cross-border payment market worth $4 trillion. By providing high-turnover (annual turnover of 50+ times) liquidity support to licensed institutions, it can generate stable annualized returns, which is by no means comparable to the pure token incentive model. Previously, when the RWA narrative was popular, Ondo Finance could obtain a stable yield with T-Bill (US government short-term debt instrument), but with the Fed's interest rate cuts, this yield will be difficult to maintain, and Huma's logic of transforming real financial financing needs will surely be more durable as long as it runs through. The above If there are any new narrative highlights in the market recently, PayFi must have a place. In addition to its timely birth, it can add the possibility of stable returns to pure on-chain DeFi. The most important thing is that its scalability is too rich. Not limited to cross-border payments, including trade financing, supply chain finance, small and micro enterprise credit, consumer credit, international tuition payment, and many other scalable and imaginative application scenarios. However, the PayFi track is still in its early stages of development. Its product line expansion and regulatory uncertainty require a period of exploration and precipitation. It is a new narrative direction worthy of special attention. Note: If you find the article useful, please support it with "one-click triple click". Friends who recognize my continuous input of dry goods can visit my Twitter homepage and click on the Substack column to subscribe (currently free). More in-depth and professional investment research and analysis content, especially content that is not suitable for public sharing on Twitter, will be seen there.