PayFi: Building a New Paradigm for Web3 Payments, Promoting the Large-scale Application of Crypto Assets

The Crypto Assets market is seeking a path towards large-scale adoption. Although we have seen some progress, such as the rise of asset tokenization, the current on-chain model for asset migration in the early stage of RWA 1.0 still lacks sufficient liquidity and is difficult to sustain. Even if DePIN can drive the revival of the Internet of Things, it is still challenging to address the core issues.

Therefore, Web3 payments have become a key focus. It has the potential to drive the widespread adoption of stablecoins, especially in non-trading scenarios. According to data platform statistics, the total supply of stablecoins is approximately $170 billion, with a settlement value of several trillion dollars in assets each year. Around 20 million addresses conduct stablecoin transactions on-chain each month, and over 120 million addresses hold a non-zero stablecoin balance.

Web3 payments bring advantages such as instant settlement, 24/7 availability, and low-cost transactions to traditional financial payment networks, but this is far from enough. More importantly, the new financial market created by the innovative applications of PayFi. As a new concept that integrates Web3 payments, RWA, and DeFi, PayFi helps drive the industry toward a broader future.

PayFi Concept Analysis

PayFi (Payment Finance) is an innovative application model that combines payment functions with financial services based on blockchain and smart contract technology. It utilizes blockchain as the settlement layer, integrating the advantages of Web3 payments and decentralized finance (DeFi) to facilitate efficient and free value circulation.

PayFi aims to realize the vision of the Bitcoin white paper - to build a peer-to-peer electronic cash payment network without the need for trusted third parties, while fully leveraging the advantages of DeFi to create a new financial market. This includes providing new financial experiences, constructing complex financial products and application scenarios, and ultimately forming an innovative value chain.

In this emerging PayFi financial market, not only can the efficiency of Web3 payments be improved compared to traditional finance (such as instant settlement, reduced costs, transparency, and global reach), but it can also achieve decentralization of the global network, permissionless access, asset ownership, and personal sovereignty based on decentralized finance.

The Relationship Between PayFi and Related Concepts

PayFi is not simply equivalent to Web3 payments. It builds, expands, and deepens upon the foundation of Web3 payments, introducing DeFi to create a new financial market.

PayFi is not equivalent to DeFi either. The essence of payment is based on the transfer of value in the real world. PayFi focuses more on the receipt and settlement processes of digital assets, rather than the mainstream trading behavior of DeFi. By seamlessly integrating Web3 payments with DeFi through blockchain and smart contract technology, financial derivative services based on payments can be created.

The relationship between PayFi and RWA is also quite complex. RWA involves two aspects: asset tokenization and financing support. Asset tokenization is the foundation for seamless value transfer on the blockchain, such as stablecoins being a tokenized form of the US dollar. RWA financing provides liquidity support for financing needs in the PayFi scenario.

Therefore, PayFi is an innovative application that integrates Web3 payments, DeFi, and RWA, covering diverse financial activities such as digital asset payments, trading, lending, wealth management, and investment. Through blockchain and smart contract technology, PayFi not only makes global financial payments faster and lower-cost but also reduces friction and costs in traditional financial payment services.

The Significance and Value of PayFi

The true meaning of PayFi lies in promoting the application of digital assets in real-world scenarios. It can facilitate the migration of the Web2 community to Web3, helping traditional financial payment companies leverage blockchain technology to gain a larger market share. At the same time, the Web3 community can use payment as a medium to address the pain points of the traditional financial system through blockchain technology, achieving innovative financial paradigms and product experiences.

Currently, Web3 payments are still in the early stage of basic services, primarily using digital currency as a medium for payment transactions, such as scenarios like cross-border remittances, OTC, and payment cards. This semi-centralized approach makes it difficult to fully connect with the on-chain DeFi ecosystem, and the application scenarios are relatively limited.

With the development of PayFi, the value transfer methods based on blockchain and smart contracts will accelerate the integration of Web3 payments and DeFi financial services, enhancing the practicality and efficiency of digital assets in everyday transactions and complex financial environments. PayFi is expected to become a key driver for the large-scale adoption of Crypto Assets.

Advantages of Solana in the PayFi Field

Solana has the following advantages in the PayFi sector:

1. Blockchain Settlement Layer: High throughput, low cost, fast settlement, the Firedancer upgrade further enhances performance, which is beneficial for the rapid implementation of PayFi projects.

2. Currency Layer: Collaborating with Ondo Finance, Circle, Stripe, and others, supporting multiple stablecoins such as USDC, USDT, PYUSD, USDY, etc.

3. Asset Custody Layer: Focus on smart contract security, private key management, and compatibility with traditional finance and DeFi.

4. Compliance Layer: Ensure that transactions and fund flows comply with KYC/AML/CTF requirements and adapt to local regulations.

5. Application Layer: A diversified range of C-end application scenarios has been formed, including online shopping, social e-commerce, offline events, games, etc. Payment media include PYUSD, SOL debit cards, virtual Visa cards, etc. Payment gateways such as Shopify Blinks, Helio Pay/Solana Pay, etc.

Solana is actively laying out the B端 market, providing liquidity support for payment scenarios in cross-border trade and supply chain finance through RWA fundraising. Compared to Ethereum's "asset chain" positioning, Solana is gradually establishing its status as a "payment chain," becoming the preferred blockchain solution for consumer retail and payment-related products.

Conclusion

In the long term, the Web3 industry is trending towards off-chain and real consumption scenarios. PayFi provides a practical path for the industry goals of "making DeFi great again" and "promoting the mass adoption of Crypto Assets."

PayFi not only helps the traditional payment market to reduce costs and improve efficiency, but more importantly, it can truly connect the traditional financial market with the Crypto Assets financial market. Through the development of stablecoins, it accelerates the integration of payment and financial services, creating a brand new financial market ecosystem.

In the future financial landscape, PayFi will become a key driving force, bringing users more innovative, convenient, and efficient financial service experiences.