Huma Finance has become popular yet controversial: Is the new PayFi model just a rebranding of P2P?

Huma Finance has recently caused a stir in the crypto world by launching its 2.0 PayFi ( payment financing ) model, with some users questioning its operation being no different from traditional P2P lending, fearing that its fund pool may carry high risks; on the other hand, supporters emphasize that Huma only serves licensed Financial Institutions, and its risk control mechanisms are robust, distinguishing it fundamentally from P2P.

( From straight lines to curves, how Huma Finance 2.0 combines yield incentives to create cross-border payment solutions )

P2P Shell Exchange? Analyzing Huma's PayFi Business Model

Huma Finance claims to be the first PayFi protocol dedicated to providing instant liquidity for global cross-border payments. PayFi researcher @portal_kay explains how it works as follows:

Investors deposit USDC stablecoin into the Huma fund pool → The cross-border settlement network Arf borrows funds from the fund pool to advance payments to licensed Financial Institutions that require cross-border payments → The Financial Institution completes the payment and repays within the agreed timeframe → Funds flow back to the fund pool, and profits are distributed to investors according to the revenue model.

Huma emphasizes that its service targets are compliant licensed Financial Institutions, not general individual borrowers, with the goal of creating a highly transparent and sustainable global financial ecosystem.

User Hot Topic: Is this really "New Finance"?

Controversial Viewpoint: P2P that changes the soup but not the medicine?

A few days ago, X platform user @0x0xFeng pointed out: "Huma is just a rebranded P2P, and high interest rates can only attract low-quality customers. The risk is extremely high and it will ultimately collapse."

He emphasized that its "funding pool" is essentially similar to the past Chinese P2P model, questioning its sustainability.

Supporters respond: The borrower is trustworthy, not P2P.

In contrast, supporters such as @portal_kay and @jcmeowjc believe that Huma's borrowers are licensed Financial Institutions, not individuals or small to medium-sized enterprises; and that KYC or KYB reviews have been conducted, along with the necessary structured risk control mechanisms.

Huma and Traditional P2P: Five Key Differences

Analysis of Fund Pool Security: Can Data and Risk Control Convince the Market?

In addition, @portal_kay also analyzed from a data perspective, examining what advantages and risks Huma has.

Advantages: Strict risk control discipline, data transparency

Arf has processed approximately 3.914 billion USD in funds, with a large volume of funds.

Operating for 883 days without any bad debts, with a default rate of 0%.

Introducing "First Loss Cover (" and "Tranches )" risk control design.

Potential risks: non-principal protection, Financial Institution still has default risk.

Non-bank deposits, therefore no government guarantee

In the unfortunate event of a default, the maximum compensation amount is only "100 dollars"

The collapse of cooperating Financial Institutions or banks remains a potential risk.

Founder on the front line: Discussing the fundamental differences between PayFi and traditional financing

In response to external doubts, the founder of Huma personally replied, emphasizing that its products belong to "payment transaction financing," which is fundamentally different from traditional financing:

He emphasized that "the essence of Invoice Financing is accounts receivable, where the counterparty has the invoice but may not necessarily have the cash. There is uncertainty about whether the borrower will make the payment on time, which involves higher risk; however, what we do is Payment Transaction Financing."

The money has already entered the financial system, it just hasn't "reached its destination" yet, which means the risks are relatively lower.

The founder described their service as "email" replacing traditional mail, "simplifying the payment process that originally required multiple layers of banking clearance systems to a direct transfer via on-chain USDC to reach its destination, achieving real-time settlement."

We only need to make sure that the sender's funds are locked in safeguarding or other custodian accounts, and we have legal claims (legal claim) to safely complete this payment.

This risk control approach keeps the risk at the level of "fiat currency already exists, only the speed of the channel is lacking," which to some extent reduces systemic risk and highlights its fundamental logic different from traditional P2P.

Is it a revolution or a risk? The market will provide the answer.

In summary, Huma Finance's PayFi model has key differences from traditional P2P, especially in its target audience and risk control mechanisms, which are becoming more institutionalized and professional. However, its "fund pool + non-principal guaranteed" characteristics still evoke the historical shadow of China's P2P. Whether it can achieve global payment financing innovation in the future remains to be tested by the market and time.

As @portal_kay said: "Whether to invest depends on whether you can accept the fluctuations of medium to low risk products and the regulatory gray areas."

This article about Huma Finance has become popular and controversial: is the new PayFi model just a rebranded P2P? It first appeared in Chain News ABMedia.