[Interview] How does Huma Finance address the issue of “cross-border payment hassles” with high remittance fees and a 3-day waiting period?

Huma Finance – The First PayFi Network Protocol

PayFi, also known as payment finance, is a term that has sparked extensive discussions in the cryptocurrency community in the second half of 2024, being considered one of the key solutions to the current pain points in financial services.

Huma Finance, the most representative project, is the first PayFi network protocol and belongs to the financing layer of the entire PayFi framework. Huma Finance’s on-chain financing protocol allows enterprises to receive immediate support from stablecoin liquidity pools, solving their immediate turnover issues.

“Our goal is to achieve real-time settlement and efficient fund mobilization, while addressing the inefficiencies of traditional cross-border payments,” said Richard Liu, co-founder of Huma Finance.

PayFi Stack: Financing Layer

This layer includes protocols and infrastructures for risk management, credit rating, underwriting, and RWAs. Huma focuses on short-duration financing, essential for payments. @CredoraPlatform deepens liquidity with credit rating solutions, while… pic.twitter.com/Y3Rx7DFTSC— Huma Finance (@humafinance) August 23, 2024

How does PayFi solve the pain points of cross-border payments?

It is easy to understand why enterprises borrow money from liquidity pools, but what does it have to do with cross-border payments? Richard explains that traditional cross-border payments are associated with high costs and lengthy processing times. For example, a remittance from Taiwan to South Africa often requires multiple intermediary banks and may take 3 to 4 days or even longer to complete. Additionally, this payment method is accompanied by high transaction fees, which is a significant burden for many small businesses.

The solution provided by Huma Finance changes this situation. Richard uses the example of a cross-border payment liquidity pool, where funds from liquidity providers are kept in a stable system. Enterprises can access stablecoins from the pool for remittances when needed, and due to the nature of cryptocurrencies, real-time transactions can be achieved.

As a result, enterprises that frequently make cross-border payments no longer need to lock large sums of money in a specific country or region. They can simply flexibly access funds from Huma Finance’s liquidity pool.

So, how is Huma Finance related to ordinary retail investors?

Richard states that regular users can become liquidity providers in the fund pool. Besides earning stablecoin returns, partners may provide additional incentives to liquidity providers in certain situations. Therefore, ordinary users can participate from an investment perspective.

Traditional finance is both an opportunity and a challenge

According to official data from Huma Finance, the protocol has currently provided a total of $1.42 billion in funding support to enterprises, with $1.39 billion in repayments received and no credit defaults to date.

However, despite the immense potential of Huma Finance, the company still faces numerous challenges. Richard admits that Huma Finance must compete fiercely with traditional financial institutions and other blockchain projects. Traditional banks and financial institutions have already dominated the field of cross-border payments, possessing robust infrastructure and customer resources, as well as advantages in compliance and security.

Additionally, market acceptance is also a challenge. Although blockchain technology has gradually entered the public’s view, many businesses and users still have doubts and uncertainties about new technologies. Particularly in the financial industry, the application of cryptocurrencies and blockchain is in its early stages, and many users do not fully trust these new payment systems.

However, Richard emphasizes that the future goal is to further enhance the financing layer capabilities of Huma Finance, improving the platform’s fund supply capacity and liquidity. “Huma Finance has already achieved a certain scale in the PayFi field, and our blockchain infrastructure is strong enough to support further business expansion,” says Richard confidently.