From the PayFi+DePIN Program to the Expanded PayFi Stack | PolyFlow

PolyFlow
7 min readDec 16, 2024

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We are thrilled to announce the launch of the first-ever PayFi + DePIN program — a groundbreaking collaboration between PolyFlow, Roam, and Huma Finance. This initiative not only elevates PayFi consumer applications but also significantly advances the decentralized physical infrastructure networks (DePIN) industry.

Through this partnership, PolyFlow transcends the traditional limitations within RWA projects of providing credit solely to institutions, thereby facilitating the transfer of institutional credit to project end users. PolyFlow empowers Roam’s participants to secure loans for DePIN devices. This breakthrough reduces barriers to entry and allows users to actively contribute to the development of Roam’s decentralized global operator network.

In the rapidly evolving world of digital finance, DeFi has become a standout success, with stablecoins driving widespread adoption in payments. This synergy is shaping the future of digital finance.

Enter PayFi, a term coined by Solana Foundation Chairwoman Lily Liu, to describe a shift toward digital assets grounded in Bitcoin’s foundational principles. PolyFlow, as a core PayFi infrastructure, is now harnessing blockchain technology and Web3’s potential to bring the vision of the Bitcoin whitepaper to life.

PayFi + DePIN Program

The groundbreaking PayFi + DePIN program unlocks direct on-chain liquidity for DePIN end users. Roam, a leading decentralized telecom network, secures loans from Huma Finance through a low-risk yield product backed by its growth and mining income, with interest paid in Roam tokens offering substantial rewards.

PolyFlow enhances this process by tokenizing Roam’s accounts payable through its Supply Chain Financing protocol. This approach allocates Roam’s credit to its individual miners, enabling them to secure loans indirectly from Huma Finace’s funding using mining yields as collateral. Mining participants repay Huma Finace’s funding through yields generated by Roam’s MAX60 gateways. Concurrently, PolyFlow’s Payment ID supports miners in establishing on-chain KYC and building robust credit profiles.

Figure 1: PayFi + DePIN Program

This innovative approach brings Lily’s PayFi initiative into reality and expands the boundaries of PayFi.

PolyFlow is central to the Roam ecosystem, offering essential transaction management tools. Its Payment Liquid Pool (PLP) enables decentralized payments for global eSIM purchases and mining equipment through a supported payment gateway, while also supporting its Supply Chain Financing protocol to connect institutional funds with end users. Its Payment ID (PID) harnesses zero-knowledge proof technology to empower miners with on-chain KYC capabilities and robust credit profiles.

By establishing a cutting-edge ZK compliance framework, PolyFlow seamlessly ensures regulatory adherence while preserving user privacy. Additionally, users’ positive transactional behaviors contribute to a verifiable trust layer, strengthening their creditworthiness. This innovative approach fosters a virtuous cycle of value generation, offering end-users an upward spiral of trust, utility, and growth within the PayFi ecosystem.

For Roam, this accelerates infrastructure deployment and strengthens decentralized network efficiency. For Huma Finance, this provides a low-risk yield product backed by Roam’s growth and mining income, with rewards in Roam tokens, offering strong investment potential.

By leveraging PolyFlow’s infrastructure, Huma Finance modernizes traditional SPVs by pooling large-scale investments into real-world assets and on-chain yield products, creating a bridge for Web2 equity funds to enter Web3.

This collaboration showcases how PayFi addresses key challenges, aligning with R. Liu’s original PayFi stack, blockchains record transactions, stablecoins handle settlements, PLP offers secure custody, PID ensures compliance, and Huma Finance meets financing needs.

PayFi Stack Expanded

Roam’s founder Y. Zhang’s proposed an updated PayFi stack, building on top of Huma Finance’s five-layer approach, it further expands the scope of PayFi and its participants.

Figure 2: PayFi Stack Discussion

Y. Zhang, founder of Roam, stated: “I believe that integrating an aggregation layer into the PayFi stack is crucial, serving as the user interface and extending the application layer, much like crypto wallets meet users’ needs. The Roam App similarly aggregates by supporting crypto payments and financing, integrating multiple protocols.”

Introducing the Expanded PayFi Stack

PayFi integrates payment and financial services using blockchain and smart contracts. By utilizing blockchain as the settlement layer, it combines the benefits of crypto payments and DeFi to improve efficiency and enable seamless value transfer.

The Expanded PayFi Stack builds on Huma Finance’s and DeFi’s established frameworks, paving the way for mass adoption. Its hierarchical structure — Transaction, Currency, Custody, Compliance, Protocol, Application, and Aggregation — supports scalability, interoperability, and user-focused solutions, driving the future of digital finance.

Figure 3: Expanded PayFi Stack by PolyFlow

Settlement Layer

The settlement layer forms the foundation of blockchain and distributed ledger technology. It allows the network to store ownership data securely and ensures that any state changes adhere to its ruleset. This layer is responsible for completing financial transactions and discharging the obligations of all involved parties.

Essential features include decentralized computation for smart contracts, account systems (native or abstracted), and account management for UTXO-based blockchains. High-speed, low-cost infrastructure, exemplified by Solana, is critical for efficient payments.

Asset Layer

This layer encompasses all assets issued on the settlement layer, including native protocol assets and any assets that are issued on the blockchain(usually referred to as tokens). Stablecoins, as a key medium of exchange, play a growing role in PayFi, facilitating real-world payments through Apps and DApps within the stack’s application layer.

With the advancement of tokenization, tokenized assets can be transferred easily and within seconds from and to anyone in the world. These assets, such as yield-bearing tokens like USDY and USDM, are increasingly being used in payment scenarios.

Utilizing blockchain as a new payment rail offers an elegant alternative to the complexities present in the current payment system.

Custody Layer

Asset custody, essential in finance, must address licensing, compliance, and security for on- and off-chain assets. On-chain custody solutions, like enterprise wallets integrated with Multi-Party Computation (MPC) and smart contracts, enhance security and operational efficiency. Blockchain-based custody enables direct user control, programmable automation, and seamless integration with PayFi protocols while minimizing reliance on intermediaries and reducing counterparty risk.

Compliance Layer

While DeFi protocols offer permissionless access, blockchain-based payments involving fiat currencies demand strict compliance measures, including Know Your Customer (KYC) and Anti-Money Laundering (AML). Ensuring transactions meet legal and compliance standards supports a healthy financial ecosystem.

The integration of ZK technology with compliance measures marks a groundbreaking advancement, enabling on-chain regulatory frameworks to serve as pivotal enablers for PayFi projects. This approach not only safeguards user privacy but also satisfies the requirements of on-chain regulatory oversight.

Innovations in on-chain compliance and credit management will be at the forefront of future developments, shaping the next generation of secure, transparent, and privacy-preserving financial systems.

Protocol Layer

The protocol layer plays a pivotal role in the overall stack, offering standards for specific use cases such as decentralized exchanges, decentralized lending, and on-chain asset management. This layer acts as the bridge between the applications and the underlying four fundamental layers, typically in the form of smart contracts.

For PayFi protocols, these standards are usually implemented across multiple smart contracts, which support PayFi activities by integrating blockchain-based payment systems with DeFi. These smart contracts interact with the Asset Layer to enable payment and connect with DeFi to facilitate on-chain activities. Consequently, these protocols exhibit a high degree of interoperability.

Application Layer

The application layer functions as a back-end layer that supports the front-end visible to users. It serves as the interface between use cases and the protocol typically manifesting as web or mobile applications. Generally, smart contract interactions are abstracted by a web browser-based front end, simplifying the use of protocols.

This layer creates user-oriented applications that connect to individual protocols, broadening PayFi’s accessibility. It enables users to engage with mobile-based Apps or web-based DApps for daily payments or to meet their financial needs. The ongoing trend is to allow users to log in using Web2 credentials.

Aggregation Layer

The aggregation layer extends the application layer, consolidating multiple Apps, DApps and protocols into user-friendly platforms. It provides an intuitive, one-stop interface designed to enhance user experience while significantly lowering the barriers to entry. By abstracting the complexities of different chains and protocols, the aggregation layer delivers a frictionless, streamlined interaction, allowing users to enjoy a truly seamless experience.

As the pinnacle of the PayFi stack, the aggregation layer bridges Web2 and Web3 with unmatched fluidity, offering a consistent and unified user journey. It enables traditional industries to harness PayFi’s privacy-preserving compliance, unparalleled convenience, and high returns offered by DeFi, while simultaneously introducing a continuous influx of new users and capital to the Web3 ecosystem.

This transformative innovation positions the aggregation layer as a cornerstone of the next-generation digital finance, empowering industries and individuals alike to unlock the full potential of PayFi.

PolyFlow is paving the way for PayFi

Thanks to Y. Zhang’s proposal for the updated PayFi Stack based on R. Liu and F. Schar’s pioneering work, we can see the progress made with Roam and Huma Finance in this innovative PayFi + DePIN program. As more PayFi participants join, this Expanded PayFi Stack accommodates everyone effectively and highlights the crucial role PolyFlow plays as PayFi infrastructure. It further expands the scope of PayFi and its participants, unlocking the world of PayFi for everyone.

In this emerging PayFi landscape, crypto payments complement traditional finance with instant settlements, reduced costs, enhanced transparency, and global accessibility. Combined with DeFi, they enable a decentralized network that fosters permissionless access, asset ownership, and self-sovereignty.

As a foundational PayFi infrastructure, PolyFlow harnesses advanced blockchain technology to drive innovative applications, accelerating adoption and guiding users toward a new financial paradigm. It aligns with the original vision of the Bitcoin whitepaper, unlocking the full potential of Web3.

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PolyFlow
PolyFlow

Written by PolyFlow

PolyFlow, the first modular PayFi infrastructure, bridges RWA and DeFi, pioneering a shift from "Buy Now, Pay Later" to the revolutionary "Buy Now, Pay Never."

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