The World of Huma Finance
A Tale of Magic Huma
Introduction:
Remember when we used to trade seashells and cattle for goods? Well, we’ve upgraded slightly. Now we have Bitcoin, which is like regular money but with more Twitter drama. Enter Huma Finance, the new kid on the block(chain) who looked at Visa and said, “Hold my cryptocurrency.” On a more serious note; As of November 2024, the total issuance of stablecoins has surpassed $180 billion, with daily transaction volumes reaching $103 billion, underscoring their significance. The entry of traditional payment giants like PayPal and Stripe into the crypto space further validates the role of stablecoins. Similarly, the crypto lending market, led by platforms such as Aave, Morpho, and Spark, has grown into a multi-billion-dollar annual industry. The tokenization of RWAs, aimed at bringing tangible assets on-chain, has also emerged as a major trend in global finance. For instance, BlackRock’s RWA fund BUIDL recently exceeded $500 million, and JPMorgan, in collaboration with Apollo, has been exploring the industrialization of asset tokenization through Project Guardian.
PayFi, short for Payment Finance, is a new concept introduced by Solana Foundation Chair Lily Liu at the EthCC conference in July 2024. It’s an innovative paradigm that integrates payments with finance, emphasizing “instant transactions” to enhance the efficiency of speculative trading and various financial operations. According to Lily Liu’s definition, PayFi is a programmable financial structure that enables new financial innovations on top of the settlement layer while autonomously handling payment transaction
As the convergence of traditional finance and crypto accelerates, the financial industry is undergoing rapid transformation. At the intersection of these changes, a project has emerged with the ambition to create a next-generation PayFi (Payment Financing) network, potentially more powerful than Visa. Enter Huma Finance. Huma Finance is the first PayFi network. Huma powers financing of global payments, with instant access to liquidity anywhere, anytime
The Problems Huma is Fixing (Because Apparently Regular Banking is More Complicated Than Assembly Instructions from IKEA)
The Current Payment Market: A Comedy of Errors
Picture this: the global payment market processes 3.4 trillion transactions annually, which is roughly the number of times people check their phones during a boring meeting. Traditional cross-border payments take 3–5 business days, because apparently, money needs a vacation while traveling internationally.
Blockchain: The Solution That Doesn’t Involve Sacrificing Your Firstborn to Send Money Abroad
Huma Finance swooped in like a superhero wearing a blockchain cape, making transactions faster than your mom sharing your embarrassing baby photos. Their V1 platform connected people faster than a dating app, but with better success rates.
To address these challenges, Huma Finance leverages blockchain as a core technology. Blockchain facilitates fast, low-cost global transactions without the need for intermediary banks. By utilizing low-fee networks, the cost of remittances can be reduced to near zero. This capability is one reason stablecoins have already surpassed traditional payment networks like PayPal and Visa in transaction volumes.
The PayFi Stack: Like a Layer Cake, But With Money
Imagine a six-layer cake, except each layer is made of different financial technologies instead of sugar and flour:
- Transaction Layer: The bottom layer, like the foundation of your relationship with pizza — essential and unshakeable
- Currency Layer: Where stablecoins hang out, pretending they’re cooler than regular money
- Custody Layer: The bouncer of the crypto club, making sure your assets don’t go party-hopping without permission
- Financing Layer: Where Huma works its magic, like a financial wizard but with better spreadsheets
- Compliance Layer: The party pooper making sure everyone follows the rules
- Application Layer: Where the magic actually happens, like the frosting on our financial cake
Key Milestones in Huma’s Growth Journey
Huma Finance’s innovative vision has successfully captured the attention of investors. In February 2023, Huma raised $8.3 million in seed funding led by Distributed Global, with participation from Parafi, Folius Ventures, Circle Ventures, Robot Ventures, and Anagram Ventures. Following this, in April of the same year, Huma merged with Arf, a cross-border payment platform, to support the tokenization of real-world assets (RWAs). This partnership enabled USDC-based liquidity solutions without the need for pre-funded accounts. Under this operational structure, Arf manages lending and interest collection while Huma oversees user deposits.
Source: Startupticker.ch
In September 2024, Huma Finance accelerated its growth trajectory by securing $38 million in a funding round once again led by Distributed Global. Of this amount, $10 million was equity funding, while $28 million was structured as RWA-backed loans. Key participants in this round included Hashkey Capital, Folius Ventures, the Stellar Development Foundation, and TIBAS Ventures, the corporate venture capital arm of İşbank, Türkiye’s largest private bank.
These funds enabled Huma Finance to launch Huma V2, signaling a transformative shift from a simple income-based lending protocol to a global PayFi network. This evolution, which will be explored further in Section 3, positions Huma at the forefront of innovation in on-chain financial services.
Source: Huma Finance
Why Huma is Different (Besides Having a Cooler Name Than “Bank of Whatever”)
Compared to Ripple, which is like the boomer of crypto payments, Huma is the cool millennial who knows how to work with everyone. While Ripple built its own blockchain (weird flex, but okay), Huma is platform-agnostic, basically the Switzerland of crypto — neutral and efficient, but with better yields. Their risk management is so good, they have a 0% default rate. That’s right — even your phone screen has cracked more times than Huma has had defaults.
Huma Finance’s monthly capital turnover ratio stands at approximately 5.78 as of Nov 18, 2024, indicating that capital deployed for loans circulates through the platform an average of 5.78 times per month. In traditional financial analysis, capital turnover measures the efficiency with which deployed capital generates revenue. In Huma’s case, this metric emphasizes the velocity of loan capital circulation, reflecting the platform’s liquidity utilization efficiency. Huma Finance’s on-chain performance is not merely a testament to its rapid growth but also to its operational stability and capital efficiency. These achievements reinforce the platform’s competitive position, demonstrating its ability to carve out a differentiated niche in the PayFi market.
Huma stands out by offering high real yields to its investors. For instance, in its current Solana-based campaign, Huma’s three-month lock-up pools offer annual yields (APY) of 15% for senior tranches and up to 24% for junior tranches. Six-month lock-up pools offer even higher rates, with senior tranches yielding 16% APY and junior tranches reaching up to 24.71% APY. These attractive yields are made possible by transaction fees of 8–10 basis points charged to institutional clients using Huma’s liquidity and cross-border payment services. Despite these relatively high fees, Huma’s services remain faster, cheaper, and more efficient than traditional SWIFT-based solutions, making them highly appealing to institutional clients.
For instance, Huma recently expanded to Solana, one of the most active blockchain ecosystems as of November 2024. Solana outpaces Ethereum in DEX trading volume, achieving over $45.5 billion in weekly transaction volume — more than three times that of Ethereum. Furthermore, Phantom, a popular Solana wallet, ranked #1 in the Apple App Store’s utility category as of Nov 22, 2024, reflecting high user engagement. By integrating with such a vibrant ecosystem, Huma gains a substantial advantage in scalability and user acquisition.
Source: Apple App Store
Key Takeaways (Or Things You Should Remember Even After Your Third Coffee)
- Huma Finance is basically trying to be the cool kid in the PayFi playground, making global payments as smooth as your favorite pickup line
- They’ve somehow managed to handle $2 billion in transactions without messing up (0% default rate — even your smartphone has a higher crash rate)
- They just jumped onto Solana, because apparently having just one blockchain is so 2023
- There’s a token launch coming, which in crypto terms is like announcing a new season of your favorite Netflix show
Conclusion
The Future is Here, And It’s Less Boring Than We Thought. While everyone else was busy creating memecoins named after their pets, Huma Finance was actually building something useful. They’re like the straight-A student who’s also somehow popular — making finance both efficient and interesting. The upcoming token launch in 2025 is like the financial equivalent of a new iPhone release, except you might actually make money from it instead of spending it.
Remember folks, in a world full of crypto projects promising to go “to the moon,” Huma Finance is actually building the rocket ship — and this one comes with a proper navigation system.
Note: This article contains more financial jargon than a Wall Street happy hour, but at least we made it entertaining.
