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PayFi Rising: The Future Payment Layer
Author: Stacy Muur
Compiled by: Shanooba, Golden Finance
Although Bitcoin and Ethereum pioneered digital payments, their slow speed, high costs, and large price fluctuations make it difficult to achieve mainstream adoption.
We rarely see anyone use BTC or ETH to buy coffee or pay rent, for a simple reason: high transaction fees, slow settlement times, and price fluctuations make it difficult for everyday payments.
Although stablecoins (such as USDC and PYUSD) have improved payment efficiency, they have not fully released the time value of money or achieved seamless integration with traditional finance.
This is where PayFi comes in. It connects DeFi, Real World Assets (RWAs), and on-chain credit, making payments instant, efficient, and scalable.
PayFi: A new model of payment finance
PayFi (Payment Finance) is an innovative financial model that integrates traditional payment systems with decentralized financial services through blockchain technology to enhance the efficiency, transparency, and accessibility of financial transactions.
PayFi's core value proposition
The core concept of PayFi is the Time Value of Money (TVM), which means that money today is more valuable than the same amount of money in the future due to its potential for appreciation.
In other words, would you rather have 100 dollars today or 100 dollars in one year?
Most people would choose to have it today because the money can be invested, staked, or generate returns, while the future $100 may depreciate due to inflation and opportunity cost.
How does PayFi unlock the time value of currency?
Traditional finance traps capital in slow-moving systems. Delayed settlements, illiquid assets, and rigid credit structures hinder the efficient operation of funds, creating bottlenecks for both individuals and businesses. PayFi aims to change this situation by enabling real-time transactions, automatic borrowing, and instant access to future cash flows, thus maintaining liquidity flow.
Whether it is transforming the 'buy now, pay later' model into an income-generating model to help businesses access funds from unpaid invoices, or enabling creators to instantly receive income, PayFi is making the financial system more flexible and efficient. By connecting DeFi, risk-weighted assets, and on-chain credit, it ensures that funds are not idle, but actively in operation.
Buy Now Pay Now (BNPN): Beyond debt-driven consumption
BNPN redefines people's way of consumption by replacing the debt model with expenditure based on earnings. Users no longer need to borrow and repay in installments, but instead pledge assets and use their earnings to cover expenses. The principal remains unchanged, so users can consume without borrowing.
Before PayFi:
Traditional 'buy now, pay later' (BNPL) services may seem convenient at first, but they rely on credit and debt. Users often face hidden fees, interest, and late payment penalties, causing the cost of consumption to increase over time. Moreover, a single missed payment may impact credit scores.
With PayFi:
BNPN allows users to pledge assets and use the generated income to pay for consumption. Users can enjoy the benefits of consumption without bearing the financial burden of repayment. No interest, no overdue fees, no impact on credit scores - a smarter, more sustainable way of consumption.
Accounts Receivable Financing (ARF): solving the cash flow problem for enterprises
For businesses, waiting for customers to pay can be a major operational obstacle. ARF allows businesses to convert unpaid invoices into real-time capital, ensuring a stable cash flow without relying on expensive loans or credit limits.
Before PayFi:
Enterprises usually have to wait for weeks or even months to receive payments from customers. This delay increases the difficulty of operational management, making it more difficult to pay salaries and invest in growth. Many enterprises have to rely on loans or credit lines to fill the funding gap, thereby increasing additional interest costs.
With PayFi:
Accounts Receivable Financing (ARF) enables enterprises to tokenize invoices and immediately access working capital. Enterprises no longer need to wait for payment to be received, but can directly convert outstanding accounts receivable into funds, ensuring smooth business operations and reducing reliance on traditional financing.
PayFi Overview
Imagine PayFi as a multi-layered financial cake, where each layer plays a crucial role in making decentralized payments faster, more efficient, and more scalable.
It can be seen as the application you use every day, whether it's a payment platform, lending service, or DeFi wallet. These companies are building real-world user experiences on the basis of PayFi technology.
This is where users, businesses, and financial applications access PayFi. From DeFi lending to cross-border payments, this layer makes PayFi usable.
The following projects embed blockchain payments into the daily financial field and realize real-world applications.
Stripe makes it easier for businesses to accept crypto payments while maintaining compliance with traditional finance.
Rain and ReapGlobal focus on simplifying cross-border payments, addressing the issue of low efficiency in global transactions.
Arf is bridging instant credit with stablecoin-driven trade financing.
Other well-known players include Bitso, Sanctum, Sphere, Kulipa, Fonbnk1, etc.
This is where the real magic of PayFi lies - liquidity providers, credit markets, and financial instruments are all here. These protocols can help users unlock funds in real-time, borrow, and lend funds.
If PayFi is a car, then this layer is the engine - pushing funds to where they are needed in seconds rather than days.
Some pioneering entities in this field include: (
Huma is the first to launch loans for future cash flows, allowing enterprises and individuals to borrow based on expected returns.
Credora makes risk assessment more transparent and actionable, providing the confidence needed for lenders, borrowers, and ecosystem participants to make informed decisions.
Cryptocurrencies still need security and compliance, which ensures the safe and legal flow of funds. The company here focuses on fraud detection, KYC, AML, and regulatory risk management.
Due to unclear regulations, the adoption speed of PayFi will slow down. These platforms help to link DeFi with real-world regulations.
Chainalysis helps to track blockchain transactions, prevent fraud, and ensure that PayFi operates in a legal environment.
TrmLabs focuses on real-time risk monitoring, helping institutions and regulatory authorities ensure the security of financial transactions.
Polyflow is a PayFi protocol that connects real-world assets with DeFi through modular, compliant-friendly encrypted payment infrastructure.
Elliptic - a blockchain analysis company that provides risk intelligence, compliance solutions, and fraud detection for cryptocurrency businesses and regulatory agencies
This layer provides secure storage for assets, ensuring that institutions and individuals do not lose funds due to hackers or mismanagement. It can be seen as the cryptocurrency equivalent of a bank vault.
Large institutions need a secure way to hold funds before entering the PayFi market.
FireblocksHQ is one of the largest brands in the digital asset security field, providing enterprise-grade custody solutions.
Copper & Cobo focuses on multi-party computation )MPC security, helping institutions securely manage assets.
This layer provides support for actual trading, effectively transferring value across borders using stablecoins and digital assets.
If there were no digital currencies, PayFi would not exist - stablecoins ensure fast, cheap, and borderless transactions.
USDC and PYUSD (Circle and PayPal) are regulated stablecoins, making PayFi trading more reliable for enterprises and financial institutions.
Tether (USDT) remains the most widely used stablecoin, ensuring liquidity in the global market.
The underlying layer that makes all this possible. Here, transactions are processed, verified, and settled at lightning speed.
The faster and cheaper this layer is, the better PayFi performs. That's why high-speed blockchains like Solana and Stellar are leading the way.
This chart is not just a detailed analysis of the company, but also a snapshot of the future of decentralized finance. PayFi connects traditional finance and DeFi, making payments instant, scalable, and accessible at the same time.
Solana and Stellar are designed for financial transactions, offering high-speed processing at a fraction of the cost of traditional networks.
Future Outlook: The Integration of PayFi, DePIN, and RWA
PayFi, DePIN, and RWA are merging together as finance is evolving in real-time. Traditional systems operate slowly, DeFi has been stuck in its own bubble, and the integration with the real world has always been missing. This gap is narrowing, and everything is changing.
This is the first time, funds are not just flowing, but at work. PayFi turns payments into a revenue-generating system. Risk-weighted assets release liquidity from real-world assets. DePIN ensures that infrastructure can self-operate through automated on-chain payments. The boundaries between finance, infrastructure, and commerce are becoming blurred. As a result, the economy will rely on real-time, programmable liquidity rather than outdated financial rails.
This transformation is not about speeding up transaction speed, but about redefining the way currency, assets, and infrastructure interact. PayFi is not another DeFi trend, but the foundation of a system that integrates finance into everything we do.
Conclusion
PayFi is a structural upgrade to the way funds flow. With the deep integration of real-world assets (RWA) and blockchain, finance is transitioning from static traditional institutions to dynamic, programmable systems. Payments are no longer just simple transactions, but can generate returns, be automated, and embedded in infrastructure.
The boundaries of finance, business, and infrastructure are gradually blurring, and PayFi is at the heart of this transformation. Whether it's instant settlement, machine-driven payments, or income-based expenditure models, a real-time, frictionless, non-reliant on traditional financial rails system is being established.
The trend is already very clear: finance is being encoded, liquidity is becoming programmable, and financial access is becoming borderless. PayFi is not a temporary innovation, but the infrastructure of the next generation economic system.