Community users who follow the Solana ecosystem should be familiar with the concept of PayFi. This is basically a concept that Lily Liu, chairman of the Solana Foundation, must talk about at every industry conference this year.
At the recent Solana Breakpoint conference, PayFi is still the highlight of the Solana ecosystem, and multiple Solana ecosystem PayFi concept projects announced their latest developments and participation opportunities.
PayFi's simple understanding is to use blockchain technology to innovate the payment system to achieve a more efficient and low-cost transaction experience.
At its core, PayFi emphasizes the time value of money. In layman's terms, money today is more valuable than money in the future because money today can be invested, consumed, or saved immediately and has the potential to generate more income in the future. Since money in the future needs to wait for a period of time before it can be used, some opportunity costs will be lost and there will be inflation risks and other uncertainties, so its value will decrease accordingly. What PayFi wants to do is help users maximize the time value of money.
It may still be difficult to understand PayFi's future value purely from its definition and vision. From some project developments at the Solana Breakpoint conference, we can learn that some PayFi projects are mainly launched in scenarios such as cross-border payments, creator monetization, commercial lending, and subscription payments. However, the participation threshold for most PayFi concept projects is still high, requires KYC, and faces compliance issues.
Sanctum: Creator Monetization and Cross-Border Payments
Solana’s liquid staking protocol Sanctum has launched two new PayFi products, “Creator Coins” and “Cloud Card.”
According to the official Twitter, “Creator Coins” is an innovative digital currency solution that allows organizations and individuals to build, develop and monetize their communities without permission.
From the decline of Mirror to the soft rug of Friend Tech, creator tokens have almost proven to be unsustainable. What are the characteristics of Sanctum’s “Creator Coins”?
First of all, the creator token using the “Creator Coins” scheme is also an LST token based on SOL.
From the introduction in the "Creator Coins" login form provided by Sanctum, we can know that with only 1 SOL, creators can create "Creator Coins" belonging to their own community. Each token is supported by Sanctum's unified liquidity layer, and each creator token maintains a 1:1 exchange rate with SOL.
In addition, creators can earn approximately $1 for each Creator Token held by their backers.
“Creator Coins” will change some traditional membership subscription models, allowing users to enjoy benefits without subscribing. Creators can use their community’s creator tokens to provide a variety of benefits to community users.
According to @umang_veerma, the builder of Haven, the provider behind the Creator Coin loyalty program, creators can provide three types of benefits to community users:
- Partnering with Solana Mobile and offering discounts to the largest holders of its LST (Creator Token) during Shopify checkout;
- Some entertainment content creators can provide exclusive TG group access permissions to their LST community members;
- Art creators can airdrop their works to LST and other holders.
The creators mentioned in "Creator Coins" are not limited to people who create value through entertainment or social media, such as artists and Internet celebrities, but also include scientists, teachers, entrepreneurs, inventors and other professionals in various fields.
The first use cases of “Creator Coins” focus on the medical and health field. For example, it helped flojo, the world's first refreshing drink developed by neuroscientists, launch flojoSOL. flojoSOL can help the flojo team build a loyal community and sell its own refreshing drinks directly, eliminating the need for intermediate channels.
Another use case of “Creator Coins” is healthSOL, provided in partnership with community member @bengshark, which provides free blood tests and medicines to people with medical needs around the world for early detection of diseases.
healthSOL has a certain public welfare significance. Community users can expand the global clinic network and save lives around the world by holding healthSOL.
Sanctum said that the “Creator Coins” program will be launched within a few weeks, and registration channels are currently open.
Sanctum has launched another PayFi product, the SOL cloud card "Cloud Card" launched in cooperation with BasedApp and Jupiter. This card will support users to use SOL and stablecoins in more than 100 countries/regions. Sanctum mentioned that the experience of using "Cloud Card" will be different from that of ordinary cloud cards from beginning to end, but did not announce specific details of the differences.
Sanctum will launch the card in the fourth quarter of this year, and early registration is currently available on the waitlist. In addition, Sanctum’s “Creator Coins” will also be used in “Cloud Card”.
DePlan: Change the traditional subscription billing model and support payment based on actual usage
Judging from DePlan's official introduction, the purpose of launching DePlan 2.0 on Solana is to solve the pain points of the traditional subscription system. It supports payment based on usage intensity, as well as use now and pay later.
Under the traditional subscription system, consumers are forced to pay monthly and annual fees in order to watch or use subscription content. However, in many cases, users rarely use or even do not use these membership rights after subscribing.
Now users can avoid these unnecessary payments if they use DePlan's payment plan.
When a user creates an account on DePlan, a Solana wallet is automatically generated to record transactions. Every time a user interacts with some paid subscription products, interaction data is left behind.
DePlan can record the user's usage intensity, provide users with a corresponding proportion of payment plans, and set the payment time at the end of each month. At the end of the month, users can see a comprehensive subscription bill, and funds will be automatically distributed to consumed products through smart contracts.
If some of your subscription content is not used at all, you will not be charged.
Huma Finance: Cross-border payments and commercial lending
From Huma Finance’s recent speeches and public interviews at Solana Breakpoint, it can be learned that Huma Finance, which focuses on PayFi, was first launched on Polygon, but recently announced that it plans to launch on Solana and Stellar around October.
Huma allows companies and individuals to access global investors on the chain, borrow against future income as collateral, and provides the function of accounts receivable offtake.
Huma’s PayFi network is currently focused on multi-trillion dollar commercial payments, trade finance and remittance scenarios. In April this year, Huma acquired liquidity and settlement platform Arf in a merger to increase the adoption of tokenized assets. Currently Arf is also the core application of Huma.
Arf provides short-term lending to financial institutions around the world. Arf currently has a bad debt rate of 0, and its institutional lending can generate an annualized return of 20%, while the cost of obtaining funds is approximately 12% to 13%. Therefore, Arf provides investors with a low-risk return of more than ten percent, which is approximately 7% higher than the return of U.S. Treasury bonds. At the same time, Arf itself can maintain a gross profit of 8% to 10%.
In terms of cross-border transfers, Arf solves the problem of advance payments through blockchain and stablecoins.
For example, traditional payment channels such as Swift are expensive and time-consuming, while Arf uses stablecoins to enable fast transfers from point A to point B, greatly reducing the pressure to advance funds. Arf has been connected to Circle’s USDC to optimize the transfer process.
At present, Arf has processed nearly 2 billion US dollars in on-chain transactions, and the actual loan size is about 20 million US dollars. Arf hopes to increase its lending to $80 million to $100 million this year and $200 million to $250 million next year.
According to the roadmap announced by Huma Finance founder Richard Liu, Huma Finance will also launch some new products such as "T+0 settlement system" in the next few quarters. T+0 settlement service hopes to achieve same-day settlement, but many places can currently only achieve "T+1 settlement", that is, next day settlement.
Huma Finance will also expand the decentralization plan of DePIN finance and platform.
Kast: cross-border stablecoin payment
Kast is a payment card that supports cross-border consumption of stable coins, covering more than 100 countries/regions. Users can download the Kast app on Google Pay and Apple Store.
At the Solana Breakpoint conference, Kast launched four levels of payment cards exclusive to the Solana ecosystem, namely Solana Card (Free), Solana Illuma (10 sol), Solana Gold (50 sol), and Solana Solid (250 sol). Each level corresponding to different costs and benefits.
In general, using the Solana card on Kast, users can enjoy 0 commission, SOL annual fee income from staking, consumption rebates, and KAST points.
For example, the lowest level free virtual card has the benefit of earning 3-5% KAST points for all purchases in 2024; the APY of SOL pledge can be increased by 3.5-7%.
The highest level Solana pure gold card is available in limited quantities, with only 100 places available. Users need to pay 250 SOL to purchase. But the benefits you can enjoy are that you can earn 12-18% on all purchases in 2024, and the APY of staking SOL can increase by 14% to 21%, etc.
Fuse wallet: cross-border stablecoin payment
Fuse wallet, the smart wallet of Solana ecosystem, announced the launch of Fuse Pay in cooperation with Bridge. Fuse Pay integrates the Visa virtual card, and users can make stablecoin payments and consumption through Fuse Pay.
Fuse Pay leverages Squads Protocol's smart accounts to ensure users' credit cards are fully self-secured. Fuse Pay will be available to users in the United States and will be launched in more countries and regions later this year.
