A Comprehensive Understanding of the Current PayFi Ecosystem

Author: Top.one

Article Reference: Huma Finance PayfFi Ecosystem Map

I. The Emergence of the PayFi Concept

In April 2024, Lily Liu, the chair of the Solana Foundation, first introduced the concept of "PayFi" at the Hong Kong Web3 Carnival. This new term, while novel, precisely addresses a key pain point in blockchain finance:

After DeFi and RWA (Real World Assets), the on-chain world is still missing a core component to truly realize "daily-use financial tools"—Payment Financing.

The essence of PayFi lies not in payment itself, but in the deep integration of payment and financial functions: reconstructing underlying financial logic such as credit, cash flow, and clearing and settlement through on-chain technology, packaging stablecoins, contracts, identity, compliance, custody, and payment systems into an efficient, programmable financial network.

This narrative not only addresses the lack of application scenarios in DeFi but also connects the "flow of funds" that has the most genuine demand in the real world.

II. The Six-Layer PayFi Ecosystem Structure Proposed by Huma Finance: Reconstructing the On-Chain Financial Engine

Huma Finance's recently released "PayFi Ecosystem Map" indicates that the PayFi Stack consists of six core modules, forming a complete on-chain financial operating system from underlying protocols to application scenarios:

1) Financing Layer: Turning Income Streams into Assets

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

• Function Highlights:

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

• Credora builds an on-chain credit rating system

• Chainlink provides asset authenticity verification

• Pyth and S&P establish a price bridge between on-chain and traditional markets

2) Compliance Layer: The "Financial Firewall" on Chain

• Core Projects: Chainalysis, TRMLabs, Polyflow

• Function Highlights:

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

• Emerging projects like Polyflow explore the new paradigm of "compliance as code"

3) Custody Layer: Balancing Fund Security and Flexibility

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

• Function Highlights:

• Fireblocks and Ledger provide institutional-grade custody solutions

• Phantom and Squads focus on user-side non-custodial wallet experiences

4) Currency Layer: Stablecoins as the 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 Chains Supporting Real-Time Payments

• Core Infrastructure: High-throughput chains like Solana and Stellar

• Application Scenarios: Micropayments, large-scale cross-border real-time settlements, etc.

6) Application Layer: From Payment Cards to DePIN Blossoming in Multiple Areas

Covered subfields 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 Financing: Jia, Trad.fi, ZOTH, Isle Finance, On.fund, BSOS

• Foreign Exchange FX: SureFX, Shifts Markets

• Over-the-Counter OTC: Yellow Card, BANXA, Fonbnk, Hashkey, etc.

III. PayFi is Not Just "On-Chain Payments"; Its Potential Goes Far Beyond

1) The Liquidity Engine for RWA

RWA brings assets on-chain, while PayFi makes these assets "come alive."
For example, invoice assets based on accounts receivable can be directly pledged for loans, engaged in secondary trading, or set up for streaming payments within the PayFi system, significantly accelerating the flow of funds.

2) The Accelerator for On-Chain Credit Systems

PayFi projects generally combine on-chain identity and payment behavior data to establish credit scoring models. In the future, a company's payment cycles, salary flows, and customer repayments can all serve as credit data inputs, providing customized financing services.

3) The Key Entry Point for Financial Embedding in Everything

From ride-hailing and food delivery to logistics nodes, PayFi can realize embedded financial services of "payment as credit," becoming the underlying financial infrastructure in ecosystems like DePIN and AI Agents.

IV. Future Outlook: Will PayFi Become the Next "Universal Narrative"?

Compared to the high barriers of DeFi and the institutional nature of RWA, PayFi offers truly user-oriented application scenarios:

• Salary loans and payroll cards

• Cross-border settlements and API payments

• Payment incentives in DePIN networks

• Long-tail financial needs of micro-entrepreneurs and developing countries

Moreover, PayFi naturally aligns with the current compliance trend:
It establishes a verifiable and risk-controllable payment financial system through on-chain methods, allowing regulators to clearly see the flow of funds, credit evolution, and compliance data, providing a pathway for "compliant on-chain finance."

It can be said that PayFi is gradually moving towards a new central narrative that combines Stablecoin + RWA + Compliance.

V. Conclusion: From PayFi, Observing the Real Path of On-Chain Economy

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

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

• It is a key turning point for Web3 to move from "speculating on tokens" to "real-life scenarios";

• It is the layer of financial foundation that should not be overlooked in building on-chain economies.

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