The financial world has seen monumental shifts since Bitcoin’s inception, which aimed to redefine traditional payment systems. Although Bitcoin’s potential was recognized, it fell short as a daily payment medium. Stablecoins now came in—an innovation that bridged the gap between fiat and blockchain, enabling real-world payment applications. Despite their growth and significant impact, challenges like poor user experience, high transaction costs, and compliance issues persist.

New solutions are being developed to overcome these limitations and enhance blockchain’s role in payments. Huma Finance stands at the forefront of this transformation, leveraging the concept of PayFi to address the liquidity gaps inherent in traditional financial systems. PayFi, or Payment Financing, promises to revolutionize how real-world assets (RWAs) are utilized in payment solutions, providing faster, more efficient, and accessible financial services.

What is Huma Finance?

Source: Huma Finance X

Huma Finance is the first decentralized payment financing network designed to revolutionize the PayFi sector and redefine the landscape of global payments. This innovative platform combines the robust security of blockchain technology with the efficiency of stablecoins, creating a unique ecosystem that enhances liquidity and accessibility. Huma Finance is more than just a financial tool; it’s a transformative solution that opens up new avenues for inclusivity and efficiency in the financial world.

The Mission and Vision of Huma Finance

Huma Finance’s mission is to leverage the power of blockchain technology and stablecoins to build a more inclusive, transparent, and efficient global financial ecosystem. By providing decentralized financial solutions, Huma seeks to empower individuals and businesses, giving them access to credit and liquidity that traditional financial systems often overlook.

Huma’s vision extends far beyond simple transactions; it aims to transform the very structure of financial services by seamlessly integrating both on-chain and off-chain solutions. This holistic approach ensures transparency and accessibility, creating a financial environment where more people can participate and thrive.

Huma Finance Team

• Erbil Karaman (@0xErbil): Co-Founder and CEO. Erbil leads Huma Finance with his extensive expertise in blockchain technology and financial innovation. His vision and leadership drive the company’s strategic economies
• Richard Liu: Co-Founder and Co-CEO. Richard shares the role of CEO, bringing his profound knowledge and experience in the fintech industry to co-guide Huma Finance’s growth and operations.
• Ji P.: Co-Founder. Ji contributes to Huma Finance with a strong background in financial technology, focusing on the development and execution of the company’s core strategies.
• Lei Du: Co-Founder. Lei’s role involves leveraging his expertise to support Huma Finance’s mission and expand its reach within the financial technology sector.

Technology Behind Huma Finance

At the heart of Huma Finance is its groundbreaking PayFi network, designed to transform global payments and financial services through blockchain technology. The PayFi network builds on blockchain’s inherent advantages—such as instant money transfer, programmable transactions, and decentralized infrastructure—while layering on top of additional features to create a comprehensive financial ecosystem.

Transaction Layer

At the base of this ecosystem is the transaction layer, where high throughput, low cost, and fast settlement are critical. Leading blockchain platforms like Solana and Stellar play a significant role in this area, providing the infrastructure for rapid, low-cost transactions. With tools like Solana Pay and the Stellar Disbursement Platform, Huma ensures that everyday financial activities such as payments, transfers, and settlements are both efficient and secure, setting a foundation for further innovation.

Currency Layer

The currency layer is where stablecoins, such as USDC and PYUSD, come into play. Stablecoins offer a digital currency that maintains price stability, making them ideal for broad distribution and integration into traditional financial systems. Huma leverages stablecoins to ensure compliance with financial regulations while offering liquidity across borders. Moreover, by utilizing yield-sharing stablecoins and regional stablecoin regimes, Huma enhances the financial inclusion and reach of its platform, enabling a seamless bridge between decentralized finance (DeFi) and traditional financial institutions.

Custody Layer

Security is paramount in managing digital assets, where the custody layer comes in. Institutional-grade custody providers like Fireblocks and Copper offer advanced solutions for securely managing assets within the PayFi network. These custodians ensure that financial institutions and other users of Huma’s services can confidently hold and transact with digital assets, knowing that robust security measures protect their funds.

Financing Layer

Huma Finance’s unique value lies in its financing layer, which integrates specialized payment financing protocols for short-duration financing solutions. Huma can optimize liquidity and risk management by incorporating credit rating solutions and leveraging decentralized oracles. This layer enables businesses and individuals to borrow against future income streams or other assets in a decentralized, transparent manner, revolutionizing how short-term financing can be accessed.

Compliance Layer

Given the increasing focus on regulation in the blockchain space, the compliance layer is critical to Huma’s operations. The platform incorporates leading compliance solutions from companies like Chainalysis and Elliptic to ensure adherence to regulatory requirements and to prevent illicit activity. At the same time, Huma also explores privacy-first platforms that balance regulatory compliance and user privacy, addressing key challenges in the blockchain financial ecosystem.

Application Layer

Finally, the application layer ties everything together, providing real-world use cases for Huma’s infrastructure. Applications like Arf for cross-border payments and Zeebu for telecom roaming payments utilize Huma’s financial rails to offer innovative solutions to industry-specific challenges. These applications highlight Huma’s versatility and demonstrate how the platform can be tailored to meet diverse financial needs across different sectors.

By layering these elements together, Huma Finance’s PayFi network creates a fully integrated, secure, and scalable solution for the future of decentralized finance.

How Huma Finance Works: From V1 to V2

Source: Huma Finance Docs

Huma V1

Huma Finance is revolutionizing the financial landscape by offering innovative income-backed lending solutions through its decentralized protocol. Starting with Huma V1, the platform introduced a unique way for businesses and individuals to borrow against their future income. It connects borrowers with global investors on-chain, offering access to revolving credit lines and receivable factoring. Huma V1 also integrated Decentralized Signal Processors and Evaluation Agents to streamline credit underwriting and risk management, allowing for more secure and efficient lending processes. When Huma V1 was launched at ETHDenver 2023, it was widely appreciated, with over 20 projects built on top of it.

Huma V2

Huma V2 takes this foundation further by enhancing the protocol to support more advanced financial structures, making it more suitable for institutional investors. In addition to the credit facilities from V1, Huma V2 introduces receivable-backed credit lines, allowing borrowers to access funds based on their outstanding invoices. Moreover, Huma V2 supports structured finance features such as tranches, first-loss coverage, and sophisticated yield calculations that cater to institutional needs.

Another key feature in V2 is the tokenization of real-world assets. Through SPV structures, receivables are tokenized and represented on-chain, ensuring transparency for investors who can monitor their lifecycle. Huma V2’s modular design allows for flexibility and adaptability, with critical abstractions like Tranche Policy, Yield Manager, and Calendar that can be customized for different use cases.

Both versions of Huma Finance provide a comprehensive infrastructure for income-backed lending, but with V2, the protocol is expanding its reach and sophistication, bringing real-world assets into DeFi and supporting a broader range of investors and financial instruments.

Pool Types

Revolving Credit Line

This type of credit allows borrowers to access funds up to a predetermined limit. They can borrow and repay repeatedly, provided they do not exceed the credit limit and make timely payments.

Receivable-backed Credit Line

In this arrangement, borrowers receive a credit line contingent on presenting an approved receivable for each transaction. An advance rate, less than the total receivable amount, is applied to determine the borrowing limit. The approved amount is then added to the borrower’s available credit.

Receivable Factoring Credit

By factoring a receivable, borrowers can receive an advance payment based on a percentage of their invoice amount. This provides immediate cash flow based on the value of the receivable.

Use Cases Of Huma Finance

Huma Finance’s PayFi network unlocks numerous use cases, demonstrating its potential to revolutionize financial services:

Cross-border Payment Financing

Huma Finance simplifies international transactions by offering cross-border payment financing. Traditional cross-border payments often involve multiple intermediaries, leading to delays and high fees. Huma Finance leverages blockchain technology to streamline this process, ensuring faster and more secure transfers. This service is particularly beneficial for businesses that operate globally, as it reduces the time and cost of sending and receiving payments across borders. Additionally, Huma Finance provides transparency in transactions, allowing users to track their payments in real-time, which enhances trust and reliability.

Digital-Asset Backed Credit Cards

Huma Finance offers credit cards backed by digital assets such as cryptocurrencies. These credit cards allow users to use their digital assets as collateral, enabling them to access credit without having to sell their holdings. This is especially advantageous for crypto investors who want to maintain their investment positions while still having access to liquidity. The credit limit on these cards is determined based on the value of the digital assets pledged as collateral. Users can enjoy the flexibility of using their credit cards for everyday purchases or larger expenses, all while benefiting from the potential appreciation of their digital assets. Additionally, this approach can help users build credit history and improve their financial standing.

Instant Settlements for RWAs (Coming Soon)

Huma Finance is developing a feature for instant settlements of Real-World Assets (RWAs). This upcoming service aims to streamline the process of settling transactions involving physical assets, such as real estate or commodities. By enabling instant settlements, Huma Finance will reduce the time and administrative burden typically associated with these transactions, making it easier for users to trade and manage their assets efficiently.

DePIN Financing (Coming Soon)

Decentralized Physical Infrastructure Networks (DePIN) financing is another innovative service that Huma Finance plans to introduce. This feature will support financing decentralized infrastructure projects, such as renewable energy installations or community-based internet networks. By providing financial support for these projects, Huma Finance aims to promote the growth and development of decentralized infrastructure, fostering innovation and sustainability.

Trade Finance (Coming Soon)

Huma Finance is also working on offering trade finance solutions to support businesses engaged in international trade. This service will provide the financial backing to facilitate trade transactions, ensuring businesses can manage their import and export operations smoothly. By offering trade finance, Huma Finance will help businesses mitigate risks, improve cash flow, and enhance their overall trade efficiency.

Huma Finance Products

Huma Finance provides a diverse suite of products, each designed to address specific financial challenges by leveraging blockchain technology and decentralized finance (DeFi) infrastructure:

PayFi Network

The core offering of Huma Finance, the PayFi Network, is a decentralized payment financing solution. It enables businesses and individuals to access liquidity by leveraging future income or receivables, providing a much-needed alternative to traditional credit systems. By using blockchain and stablecoins, the PayFi Network enhances transparency and efficiency in payment processing and settlement, empowering users with quick access to funds without relying on conventional banks.

Arf Integration

Arf is a crucial component of Huma’s cross-border liquidity solution. It enables real-time, cost-efficient liquidity provisioning for international payments. With Arf, financial institutions and payment service providers can settle cross-border transactions instantly by accessing global liquidity pools. This helps eliminate the need for pre-funding accounts, reducing operational costs and accelerating the speed of international settlements.

Raincard

Raincard is Huma’s corporate card solution, tailored for Web3 and blockchain-native businesses. Unlike traditional corporate cards, Raincard is backed by digital assets, enabling Web3 teams to use their crypto holdings as collateral to access corporate credit. This allows blockchain companies to maintain liquidity without converting assets to fiat, providing a flexible financial tool that integrates seamlessly with the decentralized finance ecosystem.

BSOS and Zeebu

These products cater to specialized industries—trade finance and telecom payments, respectively. BSOS offers blockchain-enabled trade finance solutions, optimizing supply chain financing by automating processes like invoice factoring and receivable financing. Meanwhile, Zeebu facilitates telecom roaming payments, streamlining the complex transactions that occur between global telecom operators. By using Huma’s infrastructure, both solutions bring transparency and efficiency to traditionally opaque and slow-moving sectors.

Instant RWA (Real-World Asset) Solutions

Huma’s instant RWA solutions focus on tokenizing real-world assets, allowing for quick and transparent settlements. By bringing real-world assets on-chain, Huma enables users to unlock liquidity from physical assets while maintaining full transparency in ownership and transaction history. This product supports a range of asset classes, from real estate to receivables, offering an innovative way for businesses and individuals to manage and monetize their physical assets in the digital economy.

Through these products, Huma Finance is revolutionizing financial access and liquidity, pushing the boundaries of what decentralized finance can achieve in both traditional and blockchain-powered markets.

Huma Finance Fundraising

Source: Huma Finance X

Recently, Huma Finance successfully raised $38 million in a funding round led by Distributed Global, with participation from prominent investors such as Hashkey Capital, the Stellar Development Foundation, and TIBAS Ventures. This substantial investment is directed towards scaling Huma’s PayFi network, a decentralized payment financing solution, to integrate with major blockchain ecosystems like Stellar and Solana. By expanding into these platforms,

Huma aims to strengthen its presence in the global financial landscape, offering enhanced liquidity and efficiency in cross-border transactions. The new funding will also fuel the development of additional features for its product suite, including tokenized real-world assets and structured finance solutions, further bridging the gap between traditional finance and decentralized finance. Huma’s focus on driving financial inclusion and providing innovative solutions positions it as a key player in the evolving DeFi and blockchain space, as it continues to push the boundaries of decentralized payment financing and asset tokenization.

Conclusion

Huma Finance is at the cutting edge of transforming payment financing through its innovative PayFi network. By bridging the gap between traditional financial systems and blockchain technology, Huma sets the stage for a new era of efficient, accessible, and scalable financial solutions.

As the PayFi movement gains momentum, Huma is poised to lead the charge, reshaping global finance and offering unprecedented opportunities for businesses and individuals.