Huma Finance: Redefining On-chain Credit and Asset-backed Lending

For many years, DeFi has been expected to completely change traditional finance thanks to its open, permissionless, and global access capabilities. However, even though tens of billions of dollars are being locked in protocols (TVL), the majority of lending activities in DeFi still rely on an over-collateralization model using volatile digital assets. This means that to borrow 5,000 USD, a user may need to lock up to 10,000 USD in ETH – a model that is unlikely to serve billions of individuals and businesses that do not own much crypto assets but have income streams, contracts, or assets in the real world. Huma Finance was created to fill that gap – to build an on-chain credit infrastructure, where lending is based on real financial activity off-chain ( rather than solely on digital assets. The mission and vision of Huma Finance Huma aims to create a large-scale decentralized credit system for real-world assets )RWA(. Instead of collateralizing with ETH or BTC, borrowers can use invoices, future receivables, salaries, or recurring cash flows to borrow funds. This opens up opportunities for many subjects: Small and medium enterprises in emerging markets. Freelancers, gig economy workers )Uber, Grab, Upwork...( in developed countries. Startups relying on recurring revenue from subscription services )subscription(. As a result, on-chain liquidity not only serves the crypto-native community but also impacts the global economy. Innovative mechanism: Data-driven assessment model Unlike traditional banks that rely on centralized credit rating agencies, Huma uses: Oracle blockchain: bridge to bring real-world data on-chain. Integrate Web2 data: from Stripe, PayPal, ERP... Decentralized identity system )DID(: validate identity and financial history. Zero-knowledge proofs: verify income data without revealing sensitive information. Thanks to this, lenders can assess risks more transparently, securely, and in a decentralized manner. Practical example A small logistics company in Kenya signs a delivery contract with a large supermarket for 6 months, with monthly payments. If they borrow from the bank, they often encounter difficulties due to a lack of stake. With Huma, the company can tokenize its receivables ) and put them into a lending pool. Global lenders can view verified contract data. Debt repayment cash flow is automatically channeled through the smart contract before reaching the business account, minimizing default risk. Specialized lending pool ecosystem Huma organizes lending pools based on different asset/cash flow types, for example: Payroll advances (payroll advances).Trade finance (trade finance).Subscription revenue (subscription).Payments from gig economy (Uber, Grab, Deliveroo...). Investors can diversify risk by participating in multiple pools. The role of the HUMA token The HUMA token serves multiple functions: Governance (: voting on upgrades, integrating new assets, adjusting fees. Staking for underwriter/risk assessor: credit assessors must lock HUMA as "skin-in-the-game". If a bad loan is approved, the token may be slashed → creating incentives for transparent and accurate work. Competitive advantage Compared to other RWA projects like Goldfinch, Maple Finance, or TrueFi, Huma strongly focuses on real income and cash flow rather than just targeting large institutional loans. This helps: Expansion for small borrowers. Easy to apply in emerging markets where the credit system is weak. Create a network effect when more people participate. Challenges and approaches Execution risk )default risk(: Huma designs the "direct debit" payment flow to limit defaults. Legal risk: The tokenization of debts may fall under securities regulations in many countries. Huma plans to expand in regions with clear RWA legal frameworks or collaborate with fintech to ensure compliance. Development roadmap In the future, Huma Finance will: Expand more types of pools. Connect with more international payment platforms. Launch a secondary market for tokenized loans → increase liquidity. Apply AI in risk modeling to adjust interest rates in real-time. Conclusion Huma Finance is not just another DeFi protocol. If it can prove that the income and asset-backed lending model is scalable, Huma will become a major bridge between traditional finance and the decentralized world, bringing global capital to millions of individuals and businesses who have never accessed DeFi before. ♡𝐥𝐢𝐤𝐞💬 ➤ @humafinance #HumaFinance $HUMA {future})HUMAUSDT(