20 Q&A: What is PayFi leader Huma? What are its potential and risks?

As global payment networks move towards a new era of digitalization and decentralization, Huma, as the leader of the first PayFi network, combines stablecoins and blockchain technology to redefine the speed and efficiency of money flow. This article will provide an in-depth look at Huma's product architecture, business model, and how ARF, the core application, works. (Synopsis: The former chairman of TON Foundation established TVM Ventures: focusing on TON ecological DeFi and PayFi projects, with a capital scale of 100 million US dollars) (Background supplement: Interpretation of Singapore's PayFi Summit lineup: 12 major projects have accumulated financing of more than 100 million) First, the purpose of this article is to introduce products and business models, not to promote or promote them. The starting point is to tell objectively and neutrally what Huma is doing and how it works. This article does not constitute investment advice. Any investment behavior comes with risks, so be sure to do your own research before making any decisions. 1. What is Huma's product and business model? Huma was the first PayFi network and included PayFi's underlying platform and a range of killer apps. Some apps are owned by Huma, while others are third-party apps. For example, Google has Android as a platform, and it also has some super apps of its own, such as YouTube and Gmail, and also supports many third-party apps. The platform creates imagination, third-party apps help scale up, and its own super app is the 'cash cow'. Since recent discussions have focused on Huma's business model, this article will focus more on our super app ARF. A separate article will be published in the future about the features and roadmap of our PayFi basic platform. With the launch of Huma 2.0, Huma has two products: Huma 2.0, Permissionless, and retail investors can participate. Offering real earnings from PayFi Strategy, the APR is now 10.5%, and this rate may change every month, but the expected change is relatively small. At the same time, the Huma Foundation offers incentives for Feathers. Huma 2.0 implements a PayFi Strategy, and the vast majority of funds will be invested in various PayFi assets in PayFi Institutional, and a portion of funds will be invested in market-neutral liquid DeFi protocols to meet LP redemption requirements. Huma Institutional, requires KYC/KYB, professional investors or institutions can participate. The main investment directions include cross-border payment advance business and some applications of credit card T+0 settlement. Cross-border payment business is a subsidiary ARF in concrete implementation, credit card business is a third-party partner now includes Raincards, and more partners will be released in the second half of this year. When users participate in Huma 2.0, they can choose either Classic mode or Maxi mode. After investing funds, they get LP tokens in $PST (PayFi Strategy Token) or mPST (Maxi mode ). PST tokens can be integrated with mainstream DeFi on Solana, allowing LPs to participate in DeFi composability. Huma's business model is straightforward. The APR provided to the LP side will be adjusted every month according to the macro view, but the overall situation will be relatively stable. Huma will invest these funds in PayFi assets and DeFi protocols that follow liquidity, and the benefits are mainly due to the spread between these two aspects. The Huma Institutional pool will also have protocol fee earnings. 2. What is Huma's relationship to Arf? What does ARF do? Arf was previously a customer of Huma. In 2024, Huma and Arf are combined. Since both brands are strong in their own fields, we are not forced to merge the two brands, or continue to use both brands. Huma focuses on liaising with the capital side and the demand side beyond cross-border payments, and Arf continues to cultivate the demand side of cross-border payments. Arf is a financial institution registered in Switzerland and regulated by the SRO (Self Regulatory Organization) system of the Swiss Financial Market Supervisory Authority (FINMA). Currently licensed with VQF (Verein zur Qualitätssicherung von Finanzdienstleistungen), it can provide stablecoin-based settlement services to licensed payment institutions worldwide. Arf is USDC's most successful application in payments, and you are welcome to learn more about Arf and Circle's Case study. Arf does not directly serve end customers of cross-border payments, whether 2B or 2C, it can only serve licensed payment institutions and financial companies. These clients themselves are under strict regulation and their client funds are held in a regulated protected Safeguarding Account and can only be used for settlement purposes. ARF's customers are currently concentrated in developed countries, including the United States, the United Kingdom, France, Singapore, and the United Arab Emirates. ARF does not serve countries with strong foreign exchange controls, such as China. The client that has been announced so far is Lulu Financial. 3. How did Huma's 10.5% gain come about? Will it be Ponzi? Is collecting customer fees sustainable? There are two main accounts to calculate here, one is in Huma, and the other is on the Arf Huma side: Cost of capital: 10.5% Revenue: The goal is to use 80% of assets for PayFi assets, with an annualized return of at least 12.5%; About 20% is spent on liquid digital assets, and the current income is 7%, and the overall income is 11.4%. After deducting the overhead and various handling fees, it will be about 11%. Even if all the funds go into Classic mode, there is a certain surplus. In fact, PayFi assets 12.5% is the lower limit. When more money matures from the Huma Insitutional end to Huma 2.0, the proportion of PayFi Assets will also increase, which in turn will drive up the overall return. In addition, the Maxi model will also bring more revenue surplus to the protocol. Arf side: Cost of capital: 12.5% Revenue: Arf charges 6-10 basis points per day from clients, often only on working days, almost 15%-25% annualized. Most of Arf's clients' requirements for its liquidity are committed, that is, they have to pay committed fees even if they don't need that much liquidity. We are designing Huma 2.0 and Arf...