PayFi Poised to Revolutionize Web3 with 81% P2P Payment Growth

PayFi, a burgeoning industry, holds the potential to accelerate the adoption of Web3 by creating a superior financial architecture compared to that of Web2. This architecture encompasses payment gateways, the monetization of current Web2 assets beyond Real World Assets (RWAs), faster cross-border payment settlements, and the utilization of cryptocurrency for everyday transactions. This article explores nine compelling use cases where PayFi could establish a sustainable and resilient infrastructure for Web3.
Ask Aime: PayFi's Web3 financial architecture poised to revolutionize payment systems.
One of the pioneers in the PayFi sector is Shardeum. A significant portion of individuals in the Web3 industry are now paid exclusively in cryptocurrencies, and many others are holding these digital assets, ready to use them for daily purchases. With over 280 crypto-based payment companies emerging in recent years, PayFi is poised to bridge the gap between cryptocurrency holders and everyday transactions. It is important to note that while the term PayFi is new, the underlying concept has been around for some time.
Peer-to-peer (P2P) transfers were a primary driver for the development of blockchain technology and the creation of Bitcoin. However, despite the passage of sixteen years, there has been limited progress in developing a proper P2P payment solution that can replace traditional apps like PayPal. PayFi aims to address this by not only facilitating P2P payments but also offering features such as finance tracking, reminders, bill splitting, and contributions towards house payments, similar to traditional finance apps. The recent rise in P2P payments on Polygon, which saw an 81% increase in the last six months, indicates growing confidence in crypto.
Millions of people are eager to spend their cryptocurrencies directly but are hindered by the lack of acceptance on most online shopping platforms. PayFi could fill this gap by providing end-to-end crypto transfer solutions, connecting customers and vendors who are ready to adopt crypto but lack the necessary infrastructure. This would enable a seamless transition to crypto-based transactions in the online shopping realm.
Real World Assets (RWAs) are widely recognized as the future of traditional finance within the Web3 industry. However, there is currently no RWA-based trading, investing, or portfolio managing service tailored for the retail sector. PayFi decentralized applications (dApps) could address this by facilitating the trading and settlement of RWA assets, as well as providing both self-custody and custodian solutions. With major players entering the market, crypto custody is expected to be better positioned to support new Web3 users.
Account receivables, which are payments due to a business or individual, are considered as good as money in traditional finance. These receivables can be used as collateral for ultra-short-term loans until the vendor receives the payment. PayFi, in conjunction with RWA, can revolutionize account receivables by integrating them with DeFi and providing instant monetization services. Since these loans are very short-term, they offer a quick way to earn money by collateralizing receivables to lend crypto loans.
Cross-border settlements were one of the earliest applications of cryptocurrency and are now a $600 billion market. However, there is currently no definitive solution that can send and receive crypto payments like traditional payment apps such as PayPal or Stripe. While wallets can handle basic crypto transactions, they lack the ability to track payments, generate invoices, collect automatic payments, and set reminders, among other tasks that traditional payment apps can perform. PayFi aims to address these limitations by providing a comprehensive solution for cross-border crypto payments.
Buy Now, Pay Never is an innovative concept within PayFi where rewards collected from multiple sources are used to pay for various needs, from shopping to medical bills. While the scale of its potential success is uncertain, it could provide significant support for financial needs. This concept represents a novel approach to leveraging rewards for everyday expenses, offering a unique financial solution.
PayFi, built on Web3, does not require complex financial documents to achieve financial inclusion in low-income areas. In such regions, the focus is on providing services rather than complying with globally set rules. A PayFi app could help people get paid on time, process faster and cheaper payments, save during times of abundance, and borrow during times of need. Unlike traditional solutions that rely heavily on financial institutions, Web3's decentralized nature can facilitate financial inclusion by building peer-to-peer connections and eliminating middlemen.
For individuals willing to share their online activity in exchange for rewards, PayFi could help monetize that data. Examples include browser data, shopping data, surveys, and opinions on products or services. While there are individual applications like Brave Browser in this field, they often operate in silos. There is a need for a unified platform that rewards users by monetizing multiple channels, providing a comprehensive solution for data monetization.

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