Learn about the current PayFi ecosystem in one article

Author: Top.one

Article reference: Huma Finance PayfFi Ecosystem Map

First, the concept of PayFi was born

In April 2024, Lily Liu, Chairman of the Solana Foundation, first proposed the concept of "PayFi" at the Web3 Carnival in Hong Kong. Although this new term is new, it accurately hits a key pain point of blockchain finance:

After DeFi and RWA (real world assets), the on-chain world is still one core component away from truly realizing "daily financial instruments" - payment financing.

The core of PayFi is not the payment itself, but the deep integration of payment and financial functions: through on-chain technology, the underlying financial logic such as credit, cash flow, and settlement is reconstructed, and stablecoins, contracts, identity, compliance, custody, and payment systems are packaged into an efficient and programmable financial network.

This narrative not only makes up for the lack of DeFi application scenarios, but also opens up the "capital circulation path" that is most in demand in the real world.

2. The six-layer PayFi ecological structure proposed by Huma Finance: reconstructing the on-chain financial engine

According to the PayFi Ecological Map recently released by Huma Finance, the PayFi Stack consists of six core modules, from the underlying protocol to the application scenarios, constituting a complete on-chain financial operating system:

1) Financing Layer: Turn income streams into assets

• Core projects: Huma, Pyth, Chainlink, Credora, S&P Global

• Feature Highlights:

  • Huma uses future cash flow as collateral to create an on-chain "Huabei"

  • Credora builds an on-chain credit rating system

  • Chainlink provides verification of asset authenticity

  • Pyth and S&P build on-chain price bridges with traditional marketplaces

2) Compliance Layer: The "financial firewall" on the chain

• Core projects: Chainalysis, TRMLabs, Polyflow

• Feature Highlights:

  • TRMLabs and Chainalysis provide on-chain risk control and anti-money laundering services

  • Emerging projects such as Polyflow explore a new paradigm of "compliance as code".

3) Custody Layer: Balance the security and flexibility of funds

• Core projects: Fireblocks, Ledger, Phantom, Cobo, Squads

• Feature Highlights:

  • Fireblocks, Ledger offer institutional-grade custody solutions

  • Phantom and Squads focus on the user-side custodial wallet experience

4) Currency Layer: Stablecoins are the main axis of the payment ecosystem

• Stablecoin issuers: PayPal, Circle, Agora, Tether, Mountain, RD

• Stablecoin infrastructure projects: Bridge, Paxos, Portal, Perena

5) Transaction Layer: High-performance chain supports real-time payment

• Core infrastructure: Solana, Stellar and other high-throughput chains

• Application scenarios: micropayment, cross-border large-value real-time settlement, etc

6) Application Layer: From payment cards to DePIN

Sub-areas and representative projects include:

• Cross-border payments: Arf, Felix, Mural, Opera Mini, XOOM, Bitso, Coins.ph

• Crypto payment cards: Rain, RedotPay, Reap, Visa, Kulipa, DCS

• DePIN networks: Arkreen, DeCharge, DePHY, Roam

• Payment infrastructure: Request Network, Coinflow Labs, Helio, Stripe, Mansa

• Trade Finance: Jia, Trad.fi, ZOTH, Isle Finance, On.fund, BSOS

• Foreign Exchange FX: SureFX, Shifts Markets

• OTC OTC: Yellow Card, BANXA, Fonbnk, Hashkey, etc

3. PayFi is not an "on-chain payment", its potential is much more than that

1) RWA's liquidity engine

RWA enables assets to be on-chain, and PayFi brings these assets to life.
For example, invoice assets issued based on accounts receivable can be directly pledged in the PayFi system, such as borrowing, secondary transactions, or streaming payments, which significantly accelerates the flow of funds.

2) Accelerator of the on-chain credit system

PayFi projects generally combine on-chain identity and payment behavior data to build credit scoring models. In the future, an enterprise's payment cycle, salary flow, customer collection, etc., can be used as credit data input to provide customized financing services.

3) Finance is embedded in the key entrance to everything

From taxi-hailing, food delivery to logistics nodes, PayFi can realize embedded financial services of "payment as credit", and become the underlying financial facility in ecosystems such as DePIN and AI Agent.

4. Future outlook: Will PayFi become the next "national narrative"?

Compared with the high threshold of DeFi and the institutional attributes of RWA, PayFi has a truly applicable scenario for ordinary users:

• Payroll loan and payroll card

• Cross-border settlements and API payments

• Payment incentives in the DePIN network

• The long-tail financial needs of small and micro entrepreneurs and developing countries

In addition, PayFi is also a natural fit for today's compliance trends:
It establishes an auditable and risk-controlled payment financial system through on-chain, so that regulators can see the direction of funds, credit evolution and compliance data, and provide a landing path for "compliant on-chain finance".

It can be said that PayFi is gradually moving towards a new hub of composite narrative combining Stablecoin + RWA + Compliance.

5. Conclusion: From PayFi, look at the real landing path of the on-chain economy

We are in the midst of a structural "decentralized reorganization", and PayFi is one of the most fundamental and critical pieces of the puzzle:

• It marks the evolution of on-chain finance from "capital market" to "daily finance";

• It is a key inflection point for Web3 from "coin speculation" to "real-life scenarios";

• It is the financial foundation that should not be ignored in the construction of an on-chain economy.

Mastering PayFi is to understand the core direction of the Web3 financial ecosystem in the next decade.