The highlight of Solana Breakpoint, PayFi, shared what application scenarios and participation opportunities?
Author: flowie, ChainCatcher
Community users focused on the Solana ecosystem should be familiar with the concept of PayFi, which is a topic frequently discussed by Lily Liu, the chair of the Solana Foundation, at industry conferences this year.
At the recent Solana Breakpoint conference, PayFi remained a highlight of the Solana ecosystem, with several PayFi concept projects announcing their latest developments and participation opportunities.
Simply put, PayFi is about leveraging blockchain technology to innovate payment systems, achieving a more efficient and low-cost transaction experience.
The core of PayFi emphasizes the time value of money. In simple terms, money today is worth more than money in the future because today's money can be immediately used for investment, consumption, or savings, potentially generating more returns in the future. Future money, on the other hand, loses some opportunity cost and faces inflation risks and other uncertainties due to the waiting period before it can be used, thus its value decreases accordingly. What PayFi aims to do is help users maximize the time value of their money.
It may still be difficult to understand its future value purely from the definition and vision of PayFi. However, from the project updates at the Solana Breakpoint conference, we can see that some PayFi projects mainly focus on scenarios such as cross-border payments, creator monetization, commercial lending, and subscription payments. However, most PayFi concept projects still have a high participation threshold, requiring KYC and facing compliance issues.
Sanctum : Creator Monetization and Cross-Border Payments
Solana's liquid staking protocol Sanctum has launched two new PayFi products, namely "Creator Coins" and "Cloud Card."
According to the official Twitter introduction, "Creator Coins" is an innovative digital currency solution that allows organizations and individuals to create, develop, and monetize their communities without permission.
From the decline of Mirror to the soft rug of Friend Tech, creator tokens have almost been proven unsustainable. What are the characteristics of Sanctum's "Creator Coins"?
Firstly, the creator tokens using the "Creator Coins" solution are also a type of LST token based on SOL.
From the introduction in the registration form for "Creator Coins" provided by Sanctum, it can be understood that for just 1 SOL, creators can create their own community's "Creator Coins." Each token is supported by Sanctum's unified liquidity layer, with each creator token maintaining a 1:1 exchange rate with SOL.
Additionally, for every creator token held by a creator's supporter, the creator can earn approximately 1 dollar.
"Creator Coins" will change some traditional membership subscription models, allowing users to enjoy benefits without needing to subscribe. Creators can use their community's creator tokens to provide various benefits to community users.
According to the introduction by Haven's builder @umang_veerma, the provider behind the Creator Coin loyalty program, creators can offer three types of benefits to community users:
- Collaborating with Solana Mobile to provide discounts to the largest holders of their LST (creator tokens) at checkout on Shopify;
- Some entertainment content creators can offer exclusive TG group access to their LST community members;
- Artistic creators can airdrop works to holders of LST, etc.
The creators mentioned in "Creator Coins" are not limited to artists and influencers who create value through entertainment or social media; they also include professionals from various fields such as scientists, teachers, entrepreneurs, and inventors.
The first use cases of "Creator Coins" focus on the healthcare sector. For example, the world's first energy drink developed by neuroscientists, flojo, launched flojoSOL, which can help the flojo team build a loyal community and sell their energy drink directly, eliminating intermediaries.
Another use case of "Creator Coins" is healthSOL, provided in collaboration with community member @bengshark, which offers free blood tests and medications to people with medical needs worldwide for early disease detection.
healthSOL carries a certain public welfare significance, allowing community users to expand the global clinic network and save lives around the world by holding healthSOL.
Sanctum stated that the "Creator Coins" solution will be launched in a few weeks, and registration channels are currently open.
Sanctum's other PayFi product is the "Cloud Card," launched in collaboration with BasedApp and Jupiter, which will support users in over 100 countries/regions to use SOL and stablecoins. Sanctum mentioned that the user experience of the "Cloud Card" will differ from ordinary cloud cards from start to finish, but specific details of the differences have not been disclosed.
Sanctum plans to launch this card in the fourth quarter of this year, and early registration for participation is currently available. Additionally, Sanctum's "Creator Coins" will also have use cases within the "Cloud Card."
DePlan : Changing Traditional Subscription Billing Models, Supporting Payment Based on Actual Usage
According to DePlan's official introduction, the purpose of launching DePlan 2.0 on Solana is to address the pain points of traditional subscription models. It supports payment based on usage intensity and pay-as-you-go.
Under traditional subscription models, consumers are forced to pay monthly or annual fees to watch or use subscription content, but in many cases, users rarely use or do not use these membership benefits after subscribing.
Now, if users use DePlan's payment solution, they can avoid these unnecessary payments.
When users create an account on DePlan, a Solana wallet is automatically generated to record transactions. Every time users interact with some paid subscription products, the interaction data will be recorded.
DePlan can track users' usage intensity, provide corresponding proportional payment plans, and schedule payment time at the end of each month. At the end of the month, users can see a comprehensive subscription bill, and funds will be automatically distributed to the consumed products through smart contracts.
If some subscription content has not been used at all, no payment is required.
Huma Finance: Cross-Border Payments and Commercial Lending
From Huma Finance's recent speech and public interview at Solana Breakpoint, it can be learned that Huma Finance, focused on PayFi, was initially launched on Polygon but recently announced plans to launch on Solana and Stellar around October.
Huma allows businesses and individuals to access global investors on-chain and borrow against future income, providing accounts receivable purchasing functionality.
Huma's PayFi network currently focuses on commercial payments, trade financing, and remittance scenarios, which are worth trillions of dollars. In April of this year, Huma acquired the liquidity and settlement platform Arf to enhance the adoption of tokenized assets. Currently, Arf is also Huma's core application.
Arf can provide short-term loans to financial institutions worldwide. Currently, Arf's bad debt rate is 0, generating an annualized return of 20% for institutional lending, while the cost of obtaining funds is about 12% to 13%. Therefore, Arf offers investors low-risk returns of around 10%, which is about 7% higher than US Treasury returns. At the same time, Arf can maintain a gross profit of 8% to 10%.
In cross-border transfers, Arf addresses the prepayment issue through blockchain and stablecoins.
For example, traditional payment channels like Swift are costly and time-consuming, while Arf enables fast transfers from point A to point B using stablecoins, significantly reducing pre-funding pressure. Arf has integrated Circle's USDC to optimize the transfer process.
Currently, Arf has processed nearly $2 billion in on-chain transactions, with actual lending scale around $20 million. Arf aims to increase its lending scale to $80 million to $100 million by the end of this year and reach $200 million to $250 million next year.
According to the roadmap released by Huma Finance founder Richard Liu, Huma Finance will also launch new products such as "T+0 settlement systems" in the coming quarters. The T+0 settlement service aims to achieve same-day settlement, while many places can currently only achieve "T+1 settlement," meaning the next-day clearing.
Huma Finance will also expand its DePIN finance and decentralized platform plans.
Kast: Cross-Border Stablecoin Payments
Kast is a payment card that supports cross-border consumption of stablecoins, covering over 100 countries/regions. Users can download the Kast app from Google Pay and the Apple Store.
At the Solana Breakpoint conference, Kast launched four tiered payment cards exclusive to the Solana ecosystem: Solana Card (Free), Solana Illuma (10 SOL), Solana Gold (50 SOL), and Solana Solid (250 SOL), each tier corresponding to different costs and benefits.
Overall, by using Kast's Solana card, users can enjoy 0 commission, staking SOL annual yield, cashback on spending, and KAST points.
For example, the lowest tier free virtual card offers benefits where all spending in 2024 can earn 3-5% KAST points; the APY for staking SOL can increase by 3.5-7%.
The highest tier Solana Pure Gold Card is limited to 100 slots, requiring users to pay 250 SOL to purchase. However, the benefits include earning 12-18% on all spending in 2024, with the APY for staking SOL increasing by 14% to 21%, etc.
Fuse Wallet: Cross-Border Stablecoin Payments
The smart wallet Fuse wallet in the Solana ecosystem announced a collaboration with Bridge to launch Fuse Pay. Fuse Pay integrates Visa virtual cards, allowing users to make stablecoin payments and purchases through Fuse Pay.
Fuse Pay utilizes Squads Protocol's smart accounts to ensure that users' credit cards are fully self-custodied. Fuse Pay will initially target users in the United States and will expand to more countries and regions later this year.